Currency
Bitcoin sharply dropped after nearing $18,500 on Binance and Coinbase, but top analysts predict institutional investors will buy the dip.
The price of Bitcoin (BTC) dropped sharply after approaching $18,500 on Binance and Coinbase. The plunge took place as large sell orders were spotted on both spot and futures exchanges.
As Cointelegraph previously reported, traders anticipated a pullback as the price of BTC neared the $18,000 to $19,000 resistance zone. Upon its first retest of the area in nearly three years, the market saw a strong reaction.
Bitcoin confirms $18,500 as a key near-term resistance area
There are two main reasons why Bitcoin saw a swift drop near $18,500, and this caused other cryptocurrencies like Ether (ETH) to correct even harder.
First, the $18,500 level remains the biggest resistance level before a new all-time high above $20,000. Hence, it is a key area of interest for sellers to defend, as breaching $18,500 would raise the chances of a broader rally.
Second, an overwhelming majority of Bitcoin addresses are profitable as BTC tests an important resistance area. According to IntoTheBlock, 99% of BTC addresses are now in a state of profit. This raises the probability of a profit-taking-induced pullback.
Based on BTC’s recovery in the past two hours, there is a high probability that dips will be aggressively bought. Following the initial drop to $17,214 on Binance, Bitcoin immediately recovered above $17,600.
The hourly chart of Bitcoin shows that the 20-day moving average hovers at $17,586. As such, if BTC remains comfortably above that level, the likelihood of a prolonged recovery increases…CLICK for complete article
In discussing yesterday’s market action, overnight Rabobank’s Head of Macro Strategy Elwin de Groot, writes that following the vaccine-inspired rally, “the market seems to have reached a delicate balance now where on the one hand, many investors are willing to long beyond the temporary resurgence of the virus as there is ‘light at the end of the tunnel’, whilst others remain concerned that the upcoming months could still prove rather challenging. This balance was well-illustrated by the performance in the S&P 500 yesterday, where the market opened lower, then regained almost fully the opening losses but then slipped again towards the end of the trading session. Yes, with the S&P only a whisker from its all-time high it is obviously ‘risk-on’, but somehow if feels different.”
This point was on full display this morning when in the third consecutive good vaccine news released since Pfizer’s covid news last Monday, in which the company followed up with an increased effectiveness estimate (from 90% to 95%) which should make the company’s application for emergency US authorization be accepted smoothly, the stock response was lukewarm at best, with futures now having faded the entire post-update spike higher…CLICK for complete article
Two of the best performing online sports betting stocks are sized up with new ratings from Loop Capital.
The Analyst: Loop Capital analyst Daniel Adam initiates coverage on DraftKings Inc with a Buy rating and $100 price target.
The analyst also initiated coverage on Penn National Gaming with a Hold rating and a $69 price target.
Total Addressable Market: Loop Capital lists the total addressable market for online sports betting and iGaming at $30 billion, which is higher than other analysts are projecting. Adam said analysts are viewing New Jersey as a mature market and basing the market size on the state, although he thinks New Jersey is far from mature.
Adam said the market size could be $34 billion to $40 billion based on 75% of the U.S. population having access to online sports betting….CLICK for complete article
For some of us, the idea of a Fed put hasn’t even been up for debate over the last several decades. We know it exists and, in fact, most of us believe it is the Fed’s main (and perhaps only) actual mandate: making sure markets only go up.
But that doesn’t mean the rest of the “straights” aren’t catching on a little late. And to them, we say better late than never.
And so now, a new study called “The Economics of the Fed Put” featured in Barron’s appears to show conclusively that the Fed put actually exists. The study’s authors, Anna Cleslak, a finance professor at Duke University’s Fuqua School of Business, and Annette Vissing-Jorgensen, a finance professor at the University of California, Berkeley’s Haas School of Business, found “compelling evidence” of the Fed put dating all the way back to the mid 1990’s.
For their research, the authors looked at “decades’ worth of minutes and transcripts of meetings of the Federal Open Market Committee, the stock market’s performance between those meetings, and the federal-funds rate.” CLICK for complete article
Not surprisingly, I received more than a few emails chastising me for “bailing on the bull market, which is going higher.”
Such is hardly the case. We reduced our weighting in some of the companies which have had substantial gains over the last year. We remain primarily long-biased in our portfolios, but given the extreme technical overbought and deviated conditions; it was prudent to raise some cash and protect our gains.
Interestingly, such was also a point made in this past weekend’s newsletter:
When people believe that they need to take ‘a little more risk’ to generate greater returns, they may be making a very BIG mistake if they underestimate what ‘risk’ really means to them.”
As we noted in “Moral Hazard,” the Federal Reserve believes that insuring people against investment losses is a dangerous one. While investors are encouraged to take more risk currently, as prices rise, they begin to disregard risk for what it is.
When people take “a little risk” and get rewarded for it, they are then encouraged to take “a little more risk.”
“People in the ‘crowd’ don’t appreciate the risks they are taking because they’re surrounded by people who believe the market will keep going up.
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