Digital Currency Revolution Series: Key Driving Forces of Bitcoin And Hedging Perspectives Ahead of Halving Event

If you keenly observe bitcoin price trend of late, one must think that this pioneer cryptocurrency is trading with risk-on investment sentiment. Yes, Bitcoin has jumped back to $7.5k areas in major exchanges.

Despite the struggling financial markets and economic slowdown across the globe owing to the deadly pandemic covid-19, bitcoin price managed to stabilize and bounce back from the recent lows of $3,858 levels to the current $7,518 level with intensified buying interests, which is resounding resurgence of 94% just a month and a fortnight, and rallying 6% to $7,150 within the spur of the moments. As a result, short positions have been liquidated worth over $10 million.

Technically, the pair (BTCUSD at Coinbase) has risen above 100-EMAs and retraced 23.6% Fibonacci levels of the Dec’2018 lows and all-time highs in Dec’2017. Please be noted that from April'16, the BTC has spiked from $414 to the all-time highs of $19k, currently, trading decisively at $7.5k levels, which is still a mammoth 1,660% rallies.

By giving-in an analytical thought into such bullish interests in bitcoin prices as to why is it sustaining and consolidating, some important questions pop-up here.  

Are the prudent investors-class clustering into Bitcoin as a safe-haven sentiment? Is bitcoin continue to carry digital-gold narrative? Fundamental forces like block-halving event driving the price? Or Is this time of evolution for the global currency system?

Ahead of halving event, it seems that bitcoin’s hash rate has recovered, showing a clear upwards trend. In addition, the relative and absolute mentions of gold in headlines discussing Bitcoin have reached all-time highs. The digital gold narrative saw serious momentum from mid-December to early February 2020. After falling at the beginning of the month, the digital gold narrative has once again drawn significant interest as the broader economy has faltered in the wake of coronavirus. Journalists’ mentions of Bitcoin in relation to gold is nearing an all-time high.

Contemplating the confluence of fundamental and technical driving forces, we’ve accurately positioned our hedging perspectives on BTC using long hedges that have been advocated about a month ago when it was trading at $4k levels. Well, these positions have, so far, been functioning appropriately as per the expectations set-in while recommending.

The underlying price is now equipping to embark northwards. However, the scepticism has still been lingering due to the apprehensions engulfed by the struggling markets. As we could now foresee further upside traction for the bitcoin price to retest $9,000-10,000 areas in the next quite a few weeks to come, we wish to uphold long positions in CME BTC Futures of May’2020 deliveries on hedging grounds.