Institutions Still Bullish on Bitcoin, While Traditional Markets Remain Unchanged

● Iran Targets Bitcoin Mining Amidst Blackouts
● Institutions Still Target $100k for Bitcoin
● Traditional Markets Remain the Same in Spite of New US President

Hello and welcome again to this week’s Overbit insights.

Our first story of the day is related to Iran, a country in the top 10 for mining cryptocurrencies, and the recent blackouts it’s been plagued by as of late.

Officials raced to find a culprit for the blackout, and as smog blanketed the capital city of Tehran, officials soon began pointing fingers at an unlikely culprit: Bitcoin. As one would imagine, this finger-pointing led to a wide-ranging crackdown on Bitcoin mining centres across the country, resulting in a shutdown of almost 1,600 centres across the country.

Bitcoin has played a role in Iran as it allowed citizens to participate in online transactions by bypassing banking sanctions that have crippled the economy. Ziya Sadr, a Tehran-based Bitcoin expert, stated: “Iranians understand the value of such a borderless network much more than others because we can’t access any kind of global payment networks.” Electricity prices are nearly a third in Iran of what they are in the United States, which obviously benefits the Iranian miners’ operations. Nevertheless, it seems we have yet another headline of governments interfering with cryptocurrency operations, something we predicted to be a dominant theme in 2021.

In our second story of the day, we took a look at the Bitcoin markets. After a massive runup in 2020, some investors and traders may be reeling after BTCUSD’s drop from $42,000 to just under $30,000. In spite of this large selloff, it seems that institutional investors have not been shaken out yet.

According to a recent report from CoinTelegraph, the number of traditional finance players who have been speaking highly of Bitcoin has been piling up since the end of 2019. Based on their reporting, they view this as a reaction to the unprecedented levels of monetary inflation during the pandemic and even beforehand with these so-called “stimulus packages”.

These institutions, with their eyes on Bitcoin, seem to have their targets set high as well. JPMorgan’s Chase strategy team claimed earlier in the year that a target of $146,000 could be sustainable for Bitcoin by the end of 2021. Similarly, Pantera Capital restated these claims made by JPMorgan’s analysts. As time goes on, it seems that only more people will get into Bitcoin and be convinced of its value. That being said, this article shows that conviction in an asset should not be shaken just because of a minor correction.

We close out today’s edition of Overbit Insights with a look at the traditional markets, with a focus on the Euro and how recent news out of the United States could affect it going forward.

The Trump-era presidency may be officially closed for the US, but that does not mean the country’s previous issues have disappeared. Newly-elected Biden has made strides in his first few days in office to revert some of Trump’s legacy, such as pledges to re-join the World Health Organization and the Paris Climate Agreement, as well as revoking the license for the Keystone XL pipeline. Despite these departures from Trump’s presidency, it seems that one thing that won’t change anytime soon is its relationship with China.

As FXStreet reported, “the trade war [between US and China] is alive and kicking, under the shadow of the pandemic”. Furthermore, there are little signs of it improving, with the US condemning China’s actions in Xinjiang, and China retaliating by imposing sanctions on several Republican lawmakers. On top of an economic slowdown brought on by the pandemic, the US dollar certainly looks heavy fundamentally.

Although the Federal Reserve is set for a monetary policy meeting next week, little is expected to change. Similarly, the European Central Bank (ECB) had that very same meeting this past week on Thursday, 21 January, where policymakers took no action and predicted no changes through March 2022.

That being said, it seems traditional markets will continue in the direction of their current trend until catalysts arrive. In the meantime, we’ll do our best at to keep you updated on what’s going on.

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