- Bitcoin has crossed $10,000 the first time since June as tensions between US and China increase.
- China and US ordered tit-for-tat closures of consulates in both China and US last week.
- Naeem Aslam of Avatrade, said: “We believe, the next resistance for the bitcoin price is 15K now.”
- Nigel Green of deVere thinks bitcoin could also become a safe haven-asset in the way gold has if tensions do not recede between the world’s biggest economies.
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Bitcoin surged Monday and crossed the $10,000 mark the first time since June as tensions between US and China, showed no signs of receding.
Bitcoin is trading around $10,283 as of 7:30 am. ET, up 3.5%. The last time the bellwether cryptocurrency closed above $10,000 was at the start of June at $10,194.
Naeem Aslam, chief market analyst at Avatrade, said: “The price has cleared a major psychological level that has been there for a long time. If the bitcoin price does pick up the momentum, nothing else will be able to match it as bitcoin is a different kind of beast.”
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He added: “We believe, the next resistance for the bitcoin price is 15K now. Traders are also paying attention to the Ethereum price that has cleared the 300 price.”
US-China tensions are increasing demand for bitcoin
US-China tensions have resurfaced in recent months due to Draconian law on Hong Kong’s autonomy and over who is responsible for the coronavirus outbreak.
Tensions were further exacerbated between both countries after China ordered the closure of the US consulate in Chengdu following a similar decision by the US to close the Chinese consulate in Houston last week.
On Monday, American diplomatic staff departed their consulate in Chengdu, after a 72-hour deadline given to staff expired.
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Nigel Green, chief executive of investment firm deVere, also said that bitcoin could eventually become a safe haven asset in the same way gold has become. The latter reached its highest level ever on Monday following weakness in the dollar, and the breakdown in US-China relations.
Green explained that he feels bitcoin is rising because investors want to avoid geopolitical risk in traditional assets.
Bitcoin is becoming the digital gold
He said: “Bitcoin is currently realising its reputation as a form of digital gold. Up to now, gold has been known as the ultimate safe-haven asset, but bitcoin — which shares its key characteristics of being a store of value and scarcity — could potentially knock gold from its long-held position in the future as the world becomes ever-more tech-driven.
“Geopolitical issues, such as the US-China spat, will prompt many savvy investors to increase exposure to decentralized, non-sovereign, secure digital currencies, including bitcoin, to shield them from the turbulence taking place in traditional markets,” Green added.
But Simon Peters, cryptoasset analyst at eToro cast doubt whether the breakdown in geopolitics is the main reason bitcoin has risen above $10,000.
He said: “One possible reason is the rising stablecoin market cap. For example, Tether (USDT) crossed the $10billion mark this month and USD Coin (USDC), Circle’s stablecoin, is also at its highest level, having reached a market cap of over $1billion. Perhaps some of this liquidity has made its way into bitcoin.”
“I would imagine the ‘Depth of Market’ on exchange order books has been pretty low, given that over the last 5 months, more bitcoin has been taken off exchanges than put on. A big enough market order could have shifted the price significantly over the weekend,” he added.