Price analysis: Bitcoin recovers modestly
Bitcoin was subject of interest for two major countries in the previous week. A new draft law was initiated in Germany with an aim to allow banks to support the sale and custody of Bitcoin and other cryptocurrencies by end of next year.
In order for the law to be adopted and promulgated, it first requires consensus from the country’s 16 states after it was endorsed in the Germany Federal Parliament - Bundestag.
“Starting in 2020, financial institutions will be able to offer their customers online banking, virtually at the touch of a button, along with classic securities such as stocks and bonds, as well as cryptocurrencies,” local news agency Handelsblatt notes.
It has also been reported that the Association of German Banks has officially endorsed the law. The Association reportedly sees a new bill as a major step towards the regulation of the cryptocurrency ecosystem, as the “supervised financial institutions have the experience and risk mechanisms in place to safeguard client assets”.
Furthermore, the bill has received support from the private businesses that operate in crypto and blockchain fields as well.
“Germany is well on its way to becoming a crypto-heaven. The German legislator is playing a pioneering role in the regulation of cryptocurrency,” said Sven Hildebrandt, the Head of Distributed Ledger Consulting firm.
This news caught a lot of people off guard due to the fact that only one month ago the Bundestag issued a statement to outline that Bitcoin is not considered real money. Their stance is based on the notion that Bitcoin “provides only a very limited portion of the features expected of traditional money.”
Although Bundestag issued a statement titled “Crypto tokens are not real money'', this opinion actually comes from the German Federal Government, which provided a written answer to a question from the Free Democratic Party parliamentary group.
Echoing a similar sentiment to that of the German Government, the Central Bank of Russia issued a rallying call to see the rubble, their national currency, as the nation’s only legal tender.
“The ruble is the only legal tender in the Russian Federation. We continue to believe that cryptocurrencies carry significant risks, including in the field of laundering of proceeds from crime and financing of terrorism, as well as in conducting exchange transactions due to sharp exchange rate fluctuations,” the translation of the Central Bank’s statement says.
This news has come out only a few days after it was reported that Russia is considering a blanket ban on digital payments. According to local reports, the Central Bank of Russia and the financial monitoring watchdog are preparing to make such a decision.
From the technical perspective, Bitcoin's price has slightly recovered last week as it closed 7.3% higher. Exactly one week ago, Bitcoin made a fresh 6-month low of $6515. The price action, in the meantime, has managed to recover to $7870, however, it failed to close above the 100-WMA at $7443.
Mike Novogratz, the founder of Galaxy Digital, has shared his opinion on the latest Bitcoin price action.
“BTC/USD chart needs to recover 7500 in next two days or we will be in a 6k-7400 range which would be less than pleasant. $BTC still up 95% on the year to keep perspective, but man, I liked it better above 10k😂.”
As seen in the chart above, the price action has managed to move back above the descending trend line (the red line) as it is retesting it now, in the context of a support. In case the bulls gain enough strength and momentum here, they would aim to clear the 100-WMA resistance next. The next target upside is 100-DMA, which comes at $8872.
On the downside, the bears may want to tag the 127.2% Fibonacci extension support as they failed to do so although they were close last week. An important horizontal support (the lowest blue horizontal line) is located just below the $6000 mark, while the 1618% Fibonacci extension sits at $5400. If we get to these levels this week, we may be in for an ugly end-of-the-year scenario for Bitcoin bulls. One way to take advantage of this scenario is by shorting Bitcoin.