First Mover: Bitcoin Passes $12K, Dollar Worries Grow, OMG Jumps

Bitcoin (BTC) was flat after jumping on Monday to a new 2020 high above $12,400.

Analysts are now speculating whether the largest cryptocurrency can hold the higher ground. The latest move up came on high volume, and it was a “convincing break,” Denis Vinokourov, head of research for the crypto prime broker BeQuant, told CoinDesk. Monday’s high was just 11% off the 2019 peak of $13,880.

Elsewhere, prices for the recently-and-strangely-launched Curve DAO token slid 26% on Monday, even as total value locked into the affiliated Curve Finance protocol rose above the $1 billion mark. That’s a five-fold increase over the past week, in the latest episode of this year’s frenzy in decentralized finance, or DeFi.   

Suddenly, It’s Not Just Bitcoiners Who Think the Dollar’s Going Down

By Bradley Keoun 

As the news broke in recent days that Warren Buffett’s Berkshire Hathaway had bought shares in a gold miner, commentators immediately began to wonder if the billionaire investor might be betting against the U.S. economy or the dollar.

Bitcoin analysts and investors wondered why it took him so long, given the trillions of dollars of money pumped into the financial system this year by the Federal Reserve to help fund the ballooning U.S. national debt.

“The money printer working overtime is obviously causing Buffett and his board grave concern,” Mati Greenspan, of the foreign-exchange and cryptocurrency research firm Quantum Economics, wrote Monday. “While Buffett is perhaps not so sure how to react to a world that no longer values bonds and government debt, others are sure.”

There’s a growing sense among members of the cryptocurrency community that their longstanding assessment of the traditional financial system as unsustainable is finally gaining traction among Wall Street experts and mainstream investors. If the concerns spread, it might buoy prices for bitcoin, which many digital-asset investors view as an inflation hedge similar to gold.

Goldman Sachs, which in May of this year panned bitcoin as “not a suitable investment,” hired a new head of digital assets earlier this month and acknowledged rising interest in cryptocurrencies from institutional clients. The firm warned in July that the U.S. dollar was at risk of losing its status as the world’s reserve currency.

Dick Bove, a five-decade Wall Street analyst who now works for the brokerage firm Odeon, wrote last week in a report that the U.S. dollar-ruled financial system could come to an end amid challenges from a possible multi-currency system, which include digital currencies.

“The case for bitcoin as an inflationary hedge and sound investment is being articulated with crystal clarity by influential people outside of our crypto bubble,” the digital-asset analysis firm Messari wrote last week. Buffett didn’t return a call for comment.

Whether or not bitcoin and other cryptocurrencies are the answer, there’s little on the horizon that might turn investors away from the gnawing sense that U.S. finances are becoming more precarious.

Goldman Sachs economists predicted in an Aug. 14 report that the Federal Reserve will pump $800 billion more into financial markets by the end of this year, followed by another $1.3 trillion in 2021.

According to Bank of America, there’s a risk investors might shift their “portfolio allocation out of U.S. dollar assets” to position for the “erosion of the hegemony of the dollar as a reserve currency.”

“A constitutional crisis is one dynamic that could potentially accelerate the process of de-dollarization,” they wrote, noting that November’s presidential election might be “fiercely divisive” and “contested.”

According to the bank, a recent survey of fixed-income money managers showed nearly half of respondents expect foreign central banks to decrease their reserve holdings of dollars and dollar-denominated assets over the next year.

It may not sound outlandish to bitcoin bulls.

By Omkar Godbole

Bitcoin rose 3.2% on Monday to about $12,300, confirming an ascending triangle breakout on the daily chart.

The pattern resumes the uptrend from July lows under $9,000. The focus now is on resistance at $13,200 (July 2019 high) and $13,800 (June 2019 high).

“The market is looking at the 2019 high, and that’s the level to watch,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk in a Twitter chat.

The on-chain data is supportive of continued gain in bitcoin. For instance, the balance of coins held on cryptocurrency exchanges sank to 21-month lows on Monday, indicating a strong holding sentiment in the investor community.

The bullish momentum looks strong as the cryptocurrency’s recent gains have been accompanied by increased miner supply. According to crypto data company ByteTree’s miner’s rolling inventory (MRI) figure, miners have run down inventory by selling more than what they mined over the past five weeks. In other words, buyers have been able to absorb extra miner supply.

From a technical analysis perspective, the bullish bias would be invalidated if prices dropped back below $12,000 on Tuesday.