Jim Luorio, a managing director at TJM Institutional Services and a trader on CNBC’s Futures Now, believes the bitcoin dip at the $10,000 level is worth considering.
On CNBC’s Futures Now, Luorio said:
I am actually starting to see bitcoin for what it may be; and that really is a genuine dollar hedge safe haven asset, at least it has performed like that over the past six months. $10,000 seems to be a good level here. If it trades $10,850, I think it is a spot to buy.
Year-to-date, within about six months, the bitcoin price has increased from $4,000 to over $10,000, achieving its yearly high at $14,000 with a three-fold increase in value.
Is bitcoin as a safe haven asset angle viable?
In recent months, various data including the consistent inflow of institutional capital through regulated products such as Grayscale’s Bitcoin Investment Trust (GBTC) and the noticeable spike interest towards crypto assets in China has indicated that a growing number of investors may be considering the asset class as alternative safe haven assets.
There are safer and more reliable products for investors to utilize to hedge their holdings in the likes of treasuries, bonds, cash, and gold but it is possible that intensifying geopolitical risks are encouraging investors to explore an emerging asset class in crypto assets as alternatives.
“I’m impressed with bitcoin over the last six months but particularly since the beginning of June where it started to move higher whereas the dollar began to move lower,” he said.
Since April, due to the lack of progress in the U.S.-China trade talks, the demand for treasuries and bonds has surged, which may have been a contributing factor towards the swift recovery of the asset.
Interestingly, Wyre Capital general partner Louis Aboud-Hogben said that the increase in interest towards crypto assets has not correlated with local media coverage, which suggests that the rise in interest towards bitcoin in China has been genuine.
“Another interesting datapoint is that their ‘media index’ (reporting prevalence of the keyword on major news sites) is still reporting low numbers relative to last bubble, suggesting the Chinese media aren’t covering this rally – could indicate gov policy or room for growth?” he said.
Similar to other crypto investors like the Winklevoss twins, billionaire creators of Gemini, a leading U.S.-based bitcoin exchange, Luorio said that if the bitcoin price goes past a key resistance level above $12,000, it may initiate an extended upside movement in the near term.
Some speculate that Libra may trigger rally
When the Libra Association announced the release of the Libra whitepaper in June, the general interest towards the asset class surged, leading several crypto companies like Ripple to experience a record week for contracts and deals.
This week, the United States House of Representatives Committee on Financial Services released a letter to Facebook, Mark Zuckerburg, and David Marcus, the CEO of Calibra, to temporarily halt the development of Libra.
The document read:
“We write to request that Facebook and its partners immediately agree to a moratorium on any movement forward on Libra–its proposed cryptocurrency and Calibra–its proposed digital wallet. It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.”
Some investors in the likes of Anthony Pompliano indicated that the order to stop the development of Libra may demonstrate the merit of decentralized assets like bitcoin, further fueling its momentum.
Click here for a real-time bitcoin price chart.
Last modified: March 4, 2021 2:37 PM