In 2020, if any asset can be deemed a rival of cryptocurrency in terms of returns, the only contender is technology stocks. In the traditional market, tech stocks have been ripping to consecutive all-time-highs and now serve as lifeboats that keep the market afloat. FAANG stocks have provided incredible gains despite the prolonged uncertainty.. Elon Musk’s Tesla (TSLA) is now up 390% year-to-date (YTD), but it also comes with a P/E ratio of 850.
Apple Inc (AAPL) is the first company in history to reach the market capitalization of $2 trillion. Jeff Bezos’ net worth also skyrocketed thanks to the rally in Amazon’s (AMZN) price. These price gains and business growths indicate a clear upward trend for technology stocks amidst the global pandemic.
The bad news? Yahoo Finance recently unveiled a new set of data from the Buffet Indicator, suggesting that tech stocks are now entering a bubble state. The indicator is showing that composite market value to total US GDP now has reached 64%, just an inch away from the Internet Bubble back in the year 2000 which reached a peak at 71%.
However, one factor that helps push the market higher is the fact that the Federal Reserve (Fed) massive amount of liquidity injection is not going to stop anytime soon. The bubble can continue expanding as long as there is enough liquidity inflow to feed this insatiable appetite of the market.
With all that said, despite seeing the biggest rally in history, there are clear traits and signs of unsustainability. The smart money will begin to hedge their investments into so-called safe-haven assets such as gold.
Now that Bitcoin has shredded its correlation with the S&P 500 and is moving more in alignment with gold, it could benefit from a potential hedge against the bubble burst as well. Increasing institutional interests, as well as growing demand in Bitcoin and other cryptocurrencies, indicated by the Grayscale’s premium is a clear message that smart money is looking into investing in digital assets intensively.
Bitcoin Technical Analysis
Since the breakout to the upside on July 21st, Bitcoin (BTC) has been riding on the EMA9 and EMA25 in the daily time frame.
In the short-term, despite the price falling below EMA9 but the EMA25 still providing support as BTC bounced back from the $11,500 level. If the EMA25 fails to hold, the next stop would be at the EMA50, but Bitcoin should never break below the previous resistance at $10,500 in order to maintain bullish momentum.
The overhead resistance is still the $12,500 level. Bitcoin will have to break and close above this level before we can aim for any higher targets.
The SCN30 Index now retraced back from the high of 276.10 points to the heavily traded level at 247 points. The focal point of Altcoin investors is still ChainLink (LINK) despite a large pullback from $20 to $15, the project remains strong and now consolidating in a sideways manner.
Crypto.com (CRO) jumped three positions and now is sitting on the 7th rank while EOS (EOS) seems to be losing steam and fell back to the 10th rank.
Disclaimer: This analysis is the view of the author’s alone, and does not in any way represent trading advice. all traders should trade at their own risk.
You may also want to read: Gold and Bitcoin Drops in Tandem, Altcoins Suffer as the Dollar Strengthens
