Bitcoin failed to break through the high of $20,000 and hovered around it. Is a bull run on the way?

Source: FX168

On Tuesday (December 1), Bitcoin failed to continue its rally after breaking through its all-time high the previous day and failed in its attempt to break through the important mark of $20,000, falling 1% today to around $19,000.

(Source: Coindesk)

Gary Cohn, President Trump's former economic director, said the coin "lacks some of the basic integrity of a real market" and could eventually fail. "Part of the integrity of the system is knowing who owns it, knowing who has it, knowing why it was moved," said Cohn, the former CEO of Goldman Sachs Group Inc. "There is no transparency in the bitcoin system today. So a lot of people are asking, why do you need a system that doesn't have an audit trail?" Cohn said bitcoin's "integrity" flaws could lead to its failure.

There are undoubtedly various reasons for Bitcoin's all-time highs, from PayPal's recent entry into the space to the massive outflows from the OKEx cryptocurrency exchange after a five-month redemption suspension, which caused collective market volatility. But "institutional adoption" has become one of the hottest buzzwords among Bitcoin bulls and market participants. Another driving force is the desire to hedge against inflation. "With so much liquidity in the system, the original investment case for Bitcoin is being proven," said Rich Rosenblum, who oversees trading at cryptocurrency firm GSR.

Jeff Dorman, chief investment officer of Arca Funds, wrote in his weekly blog that due to regulatory concerns, some big investors may use futures on U.S. commodity exchanges or publicly traded investment vehicles in traditional stock markets to gain exposure to Bitcoin — rather than directly entering the digital asset market. He provided a chart showing that key closes in the U.S. public markets over the past week coincided with large moves in the 24-hour, 7-day-a-week cryptocurrency market. “The institutions are all here, but they’re riding the local buses while the rest of us are riding the express trains,” Dorman wrote.

On Tuesday, BlockFi, a New York-based crypto company known for its lending business, interest-bearing crypto products and trading platform, announced that it will launch its long-awaited Bitcoin rewards credit card in the first quarter of next year.

The card will be the first of its kind in an industry already saturated with bitcoin rewards debit cards, according to CEO Zach Prince. The company will work with Visa and customers can earn 1.5% back on their purchases.

Cryptocurrency analysts expect that the next target for bullish traders could be the $20,000 mark, however, the market may find it difficult to break through this mark if large potential holders choose to take profits at this level.

“The breakout above $20,000 resistance is probably more of a psychological thing,” said Denis Vinokourov, head of research at Bequant, a prime brokerage for digital assets. “It makes sense that the rally has support once we are finally able to cross that threshold.”

Marcus Swanepoel, CEO of London-based crypto exchange Luno, said bitcoin could enter a range of $20,000 to $25,000 before a sharp sell-off. Then, "we could see a 20% to 30% pullback. That's a predictable pattern and there's no reason not to expect it."

Bitcoin's one-month implied volatility has risen to a 6.5-month high, reflecting rising expectations for price volatility over the next four weeks. The metric, driven by demand for both call and put options, has risen to 89%, the highest since May 18, according to data provider Skew, after bottoming out near 44% in September. The doubling of implied volatility coincided with Bitcoin's rise from $10,000 to $19,920, which appears to have been caused by relatively high demand for call options (bullish bets). This is evident from record lows in the 1-year, 3-year and 6-month put-call skew, a measure of the cost of puts relative to calls. The options market looks ready to continue its rally.

According to data source CryptoQuant, some analysts say Bitcoin may be about to see a healthy correction as inflows into exchanges have outpaced outflows since the Thanksgiving sell-off. CryptoQuant CEO Ju Ki Yong said: "This on-chain indicator could signal a short-term bearish trend, pushing Bitcoin back to around $16,000."

(Bitcoin's implied volatility rises to multi-month highs, source: Skew)