Last week, the world rejoiced as the COVID-19 vaccine Sputnik V, developed by Russia finally came to fruition. Safe-haven assets such as gold have faced huge selling pressures caused by this medical development news as it brings hope to the terminally-ill economy across the globe.
The vaccine is expected to have a direct impact on the real sector, putting aside the rumor that Russia has cut corners in order to speed up the testing phase of the potential COVID-19 cure. However, the growth and recognition of digital assets such as Bitcoin have proved to be resilient in the face of the economic turmoil. As the US dollar continues to weaken and shows signs of significant depreciation, there are certain demands in the market for a new asset class in the post-COVID era.
In the short term, the US dollar remains vital to the world economy as it is a crucial instrument for liquidity injection and relief packages for those who are affected by the virus. Gold, Bitcoin, and other precious metals are only fulfilling the role of speculative assets during the reign of the dollar.
All good things must come to an end. When the crisis finally subsides but the world economy needs to face a new reality where it has been flooded with excess amounts of US dollars, gold and Bitcoin might be able to step in and reshape the world’s financial system as we know it.
The swollen Fed balance sheet and massive amounts of US dollars, unlike the COVID-19, might be incurable. Since the introduction of the first quantitative easing (QE) measures back in 2008, the Fed is still struggling to put the genie back into the bottle and before solving that problem, now in 2020, they have already started printing yet again, creating a new slew of troubles for the US economy.
In the long term, gold and Bitcoin are poised for exponential growth as the dollar will one day come to an inevitable dead-end. It would be wise to store some of your wealth in these uninflatable safe-haven assets.
Bitcoin Technical Analysis
Bitcoin (BTC) is still stuck in the sideways price action as the overhead resistance of $12,300 has not yet been broken. The 25 days exponential moving average (EMA25) should be able to provide some sort of support and buy-in location. However, if the price dips below the crucial $10,500 which was not long ago a formidable resistance for a prolonged period of time, Bitcoin cloud loses its bullish momentum and slumps back into a bear mode.
The Bollinger Band is once again contracting as Bitcoin continues to go sideways. This indicates that a breakout into either direction is on its way, similar to what we have seen at the end of July when the bands squeezed in and Bitcoin broke out to the upside.
On the other hand, the SCN30 Index continues to rise in value as the second-largest cryptocurrency Ethereum (ETH) rises to the multi-year high. As well as ChainLink (LINK), one of the most prominent Altcoins in 2020, has climbed up to the third rank of SCN30 Index as it smashes through all expectations and rises to the new ATH at $20.
Disclaimer: This analysis is the view of the author’s alone, and does not in any way represent trading advice. all traders should trade at their own risk.
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