Bitcoin continued trading in a downtrend range last week. Bitcoin is currently back above $30,000 and a glance at daily chart reveals the bearish trend is about to breach above $30,750 and the RSI indicator has formed a bullish divergence. And in case the price moves above $31,400 - Bitcoin may start on a new bullish leg that will take it back into the uptrend channel that it broke out to the downside three weeks ago.
Against the backdrop of global financial markets rebounding after Federal Reserve minutes publication last Wednesday, both European Central Bank and Goldman Sachs highlighted crypto currencies threat to financial stability while JP Morgan said Bitcoin is 25% ‘undervalued.’
The European Central Bank warned crypto industry’s deepening ties to banks will pose a risk to financial stability in its Financial Stability Review last Tuesday, according to Reuters. ECB President Christine Lagarde declared on Dutch television on Monday that Bitcoin and other cryptocurrencies are “worth nothing.”
Goldman Sachs said DeFi’s interconnections can increase systemic risk. The bank pointed to the decline in the staked ether token (stETH) compared to ETH - stETH token was trading at a 4.5% discount to ETH – attributing it to Terra blockchain halts after Terra USD depegging. DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without traditional intermediaries.
JP Morgan report last week noted sentiment among crypto investors was negative as were most flow and positioning metrics, with JPM's position proxy for Bitcoin futures approaching oversold territory. JPM states the fair value for Bitcoin based on a volatility-ratio of Bitcoin-to-gold of around 4x would be $38,000 - significantly above its current price.
