Dear Teroxx Community,
This week we saw volatility based on news!
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Latest crypto news
On 8 December 2020, Citigroup, one of the world’s largest banks, downgraded the shares of software producer MicroStrategy (MSTR). Since then, however, the shares of the major bitcoin investor have been up 113.27%, rising from $289.45 to $617.31. The advised “sell” would therefore have been an own goal. MicroStrategy has now invested large parts of the company’s capital in Bitcoin, making the cryptocurrency the company’s reserve currency.
The GameStop affair could be the beginning of the revolt against the established financial system, in which Bitcoin plays a central role. In the past few days, shares in companies such as GameStop (GME) and AMC Entertainment (AMC) have risen dramatically as a result of some users of the social network Reddit collectively buying up the securities in question, triggering a so-called short squeeze. “It is very important to create free and transparent markets for all market participants. All trading platforms have a responsibility to maintain open order books that are accessible to everyone”!
Bitcoin is struggling to reach the US$35,000 mark, but Chinese New Year threatens further selling pressure. Despite Bitcoin’s enormous volatility, institutional investors remain confident about the crypto market leader’s further price development, as can be seen from the CME options exchange’s Bitcoin futures. Even the increasing selling pressure from Bitcoin miners, who are currently selling at a similar rate as in July 2019, cannot cover the even greater demand.
Technical term of the week
Short-Squeeze: Is the shortage of supply of a security (usually a share) that has previously been sold short (“shorted”) in large numbers. After the short sales, the resulting open positions must be closed out again by buying back the shares. If – contrary to the expectations of the short sellers – the stock market price of the security rises, many short sellers have to buy back the security at the same time in order to limit losses, which can lead to excess demand that drives the price up even further and thus further increases the losses of the short sellers.
Bulish outlook: If Bitcoin manages to break through resistance at ~$38,000, we could see a bounce back to $40,000.
Bearish outlook: The Chinese New Year could lead to selling pressure.