The events of last Friday in Baghdad have been escalating to the reach of many businesses; from oil to gold, and now Bitcoin. While some markets are feeling the negative impact, some commodities are seeing an opportunity to thrive.
Bitcoin saw a huge leap in the wake of the conflict that started with the killing of Qassem Soleimani, an Irani Army General who represented a key interest between the United States and Iran. The price of Bitcoin hit $8,400 high in the wake of Iran’s retaliation that rained missiles on US military bases in Iraq.
Since 2017, the cryptocurrency has been fighting to maintain the level of performance that attracted the world to it. In mid-2019, the digital currency dropped below $5,000, creating a great loss and despair among its holders. But there was a lift in its performance toward the end of the year, when it rose to $11, 000, but it was not enough to close the gap that exists between its peak periods until now.
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The beginning of 2020 also followed the same pattern of dwindling growth but made a surprising turn around which was attributed to the US vs. Iran conflict. In January 7, Bitcoin exerted an upward trend from $8,080 to above $8,400 before topping out at $8, 438, in just over 40 minutes, according to Coindesk.
While this is going on, capital markets are closing trades on losses. Dow Jones Industrial Average was reportedly down 0.41 percent, and S&P index was down by 0.28 percent. A few items of trade beside crude oil have shown defiance to the negative effects of the brewing conflict between the US and Iran – gold, and recently cryptocurrencies.
Gold, inadvertently became the top gainer, jumping above $1, 600 for the first time since 2013. The significant growth has resulted in notable commodity switch, with many traders swapping with the commodity for sustainability.
But Bitcoin seems to be squaring up to gold in growth. After upping its price from about $6,850 low, the cryptocurrency has pulled a leaping gain of more than 20 percent since Friday. And it now looks set to punch a hole through gold’s wall and confirm a falling channel breakout on the weekly Gold/Bitcoin chart.
Coindesk noted Bitcoin’s trading agility in the current chart, above the falling channel resistance of $7, 960. If a break out confirms the week’s closing price at $7, 960, that would imply a continuation of the rally from April 2019’s low of $4, 100, and open doors for a re-test of $13,880.
The weekly chart is suggesting bullish developments on key technical indicators. A bullish divergence happens when an indicator produces higher lows, contradicting lower lows on price and it is considered an advance warning of an impending bullish reversal.
But the daily chart is reporting and inverse head-and-shoulders breakout, which is also a bullish reversal pattern. And that’s among other positive indicators in the weekly chart. According to Coindesk, the odds appear to be in favor of a possibility that the coin will rise to $8,626. So the odds of Bitcoin confirming a channel breakout on Sunday would drop if prices find acceptance below $8,000 with high volumes.
The indicators seem promising to entice more investors to Bitcoin in 2020, especially from Nigeria. 2019 yielded a low Return on Investment to many in the cryptocurrency business, especially those on long term investment. Nevertheless, it was a year of advent awareness of digital currency trading, getting many Nigerians involved. The CEO of the Cryptocurrency trading platform, Luno, Marcus Swanepoel, told BusinessDay that although there was low ROI, in 2019, there was some other gain.
“There is certainly a link with investors, for example, buying gold using digital assets for a small but potentially high return – part of their allocation, but at Luno, we think the price increase in BTC is down to more structural reasons.
“This year, we have seen a steady increase in Bitcoin sentiment which could be linked to the expected halving in May. And we have seen also hash rates, showing the level of mining rise to all-time high.
“In 2019, there was also a 17 percent increase in long positions, which shows that there is a lot of interest in the leading altcon which is helping to bring back buyers into the sector,” Swanepoel said.
However, the sustainability of the recent growth has come under question since it was spurred by the political tension between the US and Iran. What happens to the gains if de-escalation of the conflict is achieved is not certain. But the likelihood that the price would trace its steps backward cannot be overruled.