Bitcoin’s failure at resistance levels has seen a brisk sell-off after a rally in the U.S. dollar. BTC and the rest of the cryptocurrency market saw a rally in July and August after weakness in the greenback intensified.
The drop in BTCGBP started in mid-August and found strength last week as the U.S. dollar rallied on strong ISM Manufacturing numbers and a jobs number which showed the unemployment rate had fallen to 8.4% .
A recent data source has found that blockchain wallets worldwide have risen to 50 million in the second quarter of 2020. This is still a relatively small number based on the global population and highlights the potential for cryptocurrencies if they see the long-touted mass adoption in the future.
The path to mass adoption is actually based on the strength of a particular country’s financial system and the U.K. financial system is at threat from the Brexit situation, with talks starting again this system in their usual acrimonious fashion. Britain’s Prime Minister Boris Johnson threatened to pull out of the talks on Sunday if an agreement is not reached by the October deadline. A No-Deal Brexit would see the U.K. and EU revert to a World Trade Organization system of tariffs and other financial obstacles. We have seen crypto adoption grow in countries that suffered financial instability such as Venezuela and Turkey. If the banking system cracked in the Eurozone it would far outweigh any flows we’ve seen in these emerging or under-developed financial systems.
BTCGBP Technical Outlook
Bitcoin’s plunge last week saw the coin bounce around the 7,500 level and after a failure at 8,000, the pair is now threatening that same support level. A bearish daily close will open up a move to the 7,200 support that was last seen in July. The 8,000 level would be resistance for stop losses. The Investing Cube team is available for Trading Coaching. You can find more details here.