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This post is a translation of the weekly cryptocurrency analysis by Block Insight, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group.
Bitcoin (BTC) started the week on a sour note, mimicking weakness in U.S. equity markets. Despite continuing concerns surrounding the spread of the Corona Virus and record jobless claims, both stocks and cryptocurrencies were able to claw their way back late in the week.
Bitcoin mining difficulty, the critical indicator used to measure competition among BTC miners, plummeted 16%. The recent drop in BTC prices has squeezed profitability for miners, forcing many to leave the market. Though profit margins have decreased, less competition likely means that operators who continue to mine can reduce costs. In other crypto-specific news, exchange giant Binance appears to be in talks to acquire CoinMarketCap, the most popular crypto data aggregator. If the deal is to go through, it will be one of the largest acquisitions in cryptocurrency history and will perhaps be a vote of confidence for stability.
In economic news, the U.S. Department of Labor announced on Thursday that 6.6 million workers filed for their first week of unemployment benefits. Markets seemed to accept the blow to the job market and took the number in stride. Meanwhile, new progress in the hopes of creating a vaccine to combat the virus helped to boost equity and cryptocurrency markets off the lows.
As economic numbers continue to deteriorate, the question on investors’ minds will be, “is this baked into the market already?”. Though markets tend to be forward-looking, unexpected “black swan” events like the Corona Virus are hard to discount. Like recent weeks, investors will be focused on any headlines relating to new scientific developments in the global effort to formulate a formidable vaccine.
At present, BTC is forming a price base under a large resistance area dating back to last year. Being that price digested this area for six weeks back in late 2019 it will be telling how BTC acts from here. BTC support lies at $6,000, while resistance can be found at $7,000.
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