New York Stock Exchange 

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Billionaire American investor Jeffrey Gundlach who is commonly known as the Bond King has recently predicted about the future of markets and bullion prices around the world. According to him, the stock market is in for a big crash while Gold and Bitcoin price index are expected to increase big time. He gave these comments during a recent interview in the Rosenberg Research webinar

Who is Jeffrey Gundlach?Jeffrey Gundlach - The bond king

Gundlach is widely known for being the CEO of Doubleline Capital, an investment firm based in Los Angeles, California, His considerable investment credentials include being named Money Manager of 2013 by Institutional Investor, being named on Bloomberg Markets’ list of Top 50 Individuals in 2012, 2015 and 2016. His nickname Bond King was first used back in 2011 when he was featured on the cover of Baron with the title “The New Bond King”. Later on, he simply began to be known as Bond King.

Bears Circling Around Stocks and Bonds

Gundlach is bearish on the near future of the stock markets. He predicted that the stocks are going to “crack pretty hard”. Just a little while ago, the stock market was trading at record levels due to government bailouts and increased trading activity despite the actual economy suffering on the ground. He believes that a new stimulus package may be necessary for the survival of the financial markets, a measure that has been stuck in the US congress for a while now due to the ongoing 2020 elections. 

He is also not keen on long-term government bonds despite being called “Bond King” and owning them in his own portfolio. He considers them like a kind of necessary evil.

He said about bonds:

“I hate long bonds, but I still think you’re supposed to own some, and in a deflationary environment, you would want your portfolio to have that hedge,”

He also predicted that the US election will be won by Donald Trump and the US’s top markets will perform poorly for the next five years, causing much deeper economic troubles. He also made an extraordinary claim that the US might break apart in the near future which can prove to be quite an apocalyptic scenario for the world economy which is tied across the globe. As we write this piece, Joe Biden is ahead of Donald Trump and some networks have already declared him the winner of the election, but it is far from over as long legal battles remain to be fought in the courts which can complicate things for the US economy even more. 

The Bond King is Bullish on Bitcoin and Gold

Gundlach has been known to speak his mind in a calculating manner without paying heed to personal likes and dislikes about a particular asset. He considers Bitcoin and Gold as credible hedges against inflation of fiat currencies. While admitting that he himself doesn’t like Bitcoin, he cannot deny the potential it has as a hedge against inflationary practices by central banks. During this interview he was asked about negative comments regarding Bitcoin that he made during a previous interview with Realvision only a month ago. Gundlach responded that while he personally doesn’t like Bitcoin and thinks it is all tracked, he is not a Bitcoin hater. This shows that despite his apprehensions against these digital currencies, he is interested in them and may have already invested some money in them. 

The Covid-19 pandemic has resulted in massive quantitative easing efforts by the governments to help prop up the markets. This is why Bitcoin and Gold are often touted as hedges against inflation as their supply is not manipulated by governments at will.

Verdict

The Bond King has an interesting public personality, but he does give some interesting insight into the markets. He is quite bearish on both bonds and the stock market, the two sectors that helped him make most of his wealth while being bullish on Gold and Bitcoin, the latter of which he doesn’t even like. But, he doesn’t mince words and it seems like his prediction of the traditional markets might turn out to be correct in the near future as multiple analysts are reporting the same long-term bearish trends.

PayPal in crypto 

PayPal, one of the leading payment processors in the world, has recently announced the launch of new cryptocurrency functionalities implemented into the platform. Support for digital assets such as bitcoin will shortly be available for PayPal users in the entire United States, and international support will start to be introduced after the service debuts in the US.

The CEO of PayPal, Dan Schulman, who has previously disclosed that he is personally a bitcoin owner, announced details regarding the introduction of cryptocurrency support to the popular payment processor in a Q3 2020 earnings call that took place recently. According to Schulman, crypto functionality is already becoming available to PayPal users in the US, with international launch of the service following soon after. PayPal’s CEO has also mentioned that cryptocurrency support will also be implemented in the Venmo platform in about a year.

Crypto-payments in stores 

Instead of launching a separate service dedicated only to cryptocurrencies, PayPal has decided to integrate blockchain-based currency support directly into the platform. PayPal users will be able to purchase, sell and store digital assets such as bitcoin from their user accounts, just as they would normally do with fiat currencies.

One of the most significant new cryptocurrency-related functionalities introduced by PayPal will be the ability to effortlessly use crypto payments to make everyday transactions. Because of PayPal’s entry into the blockchain ecosystem, owners of digital currencies will be able to use their favourite coins and tokens to make purchases at 28 million merchants who accept PayPal as a payment method.

Accepting cryptocurrency transactions made with PayPal will require no additional effort on the part of the sellers. Payments sent with cryptocurrency will be automatically settled into fiat, so that the integration will be completely seamless. Since transactions will be settled in the preferred fiat currency of the receiver’s account, manually converting crypto to fiat will not be needed.

The future of cryptocurrencies 

In the call which included details about the company’s cryptocurrency plans, Dan Schulman also shared his general views about blockchain technology and the future of digital assets. He stated that he has discussed the matter extensively with representatives of both the traditional banking and finance system as well as with crypto experts, which led him to believe that “digital currencies are going to be rising in importance, having increasing functionality and increasing prominence.”

PayPal’s entrance into the cryptocurrency market is definitely one of the most important bitcoin-related news of the current year. Although 2020 has seen many major companies investing in bitcoin, a true industry giant such as PayPal introducing cryptocurrency support is an event of an unprecedented scale. The market reacted enthusiastically to this development, and BTC price raised to over $15,000 following the news.

Bitcoin whales 

Binance, the leading cryptocurrency exchange, made history by witnessing more than 58K Bitcoin (BTC) leave the platform and into personal wallets. And it all happened within 24 hours.

Although Binance is a beehive of crypto activities, this is the first time such vast amounts of BTC are moving out of the exchange.

According to CryptoQuant, a virtual currency data platform, the withdrawals amounted to 58,861 BTC and estimated to be worth slightly above $900 million at the time of writing.

However, the destination and intention were not clear. But, the trend is a common practice by whales anticipating a BTC rally. Also, the whales could be moving their wealth to conduct an OTC trade. One thing is exact, whether a Bitcoin rally is in the offing or an over the counter trade has occurred, whales are moving money.

According to a firm analyzing Bitcoin blockchain data, Whalemap, whales have been recently spotted above the waters, and funds are moving.

On November 4, the firm posted on Twitter, saying they have witnessed unusually high levels of activities on the coin's decentralized platform. Consequently, the activities have culminated in "large volumes" of BTC belonging to hodlers "moving in profit" and deposited in the hodlers' wallets.

Why's it moving in profit, but out of crypto exchanges?

"Moving in profit" is a common phrase used when funds are moving between whales instead of cryptocurrency exchanges. The occurrence is interpreted to mean BTC is headed for a significant rally. Due to the massive amounts of funds held by whales, and to boost the security of the coins, whales prefer using offline wallets that they have complete control.

However, when they're ready to empty a section of their bags, they deposit the funds into custodial wallets such as in a digital currency exchange. The current trend is, however, different. Instead of offloading their cold wallets, they're loading them. They are moving their funds from Binance to their hardware storage.

This shows that they may have wanted to sell on the exchange but changed their minds. Now, it's time to hold on tight in anticipation of better prices during the presumed upcoming rally.

Analysts from Whalemap, while interpreting the large volume of BTC moving from Binance and the general heightened level of on-chain activity, noted that the signal is a "strong level" and may last for "some time."

Unfortunately, they added, it's a "bubble." Therefore, when and for how long it will stay inflated is largely unpredictable since it can burst at any time.

Are whales fearing the security of Binance and other exchanges?

But even with a projected rally, why are whales moving such huge amounts from crypto trading platforms? Won't they incur costs when moving them back to exchanges since a rally is on its way?

Well, there are possible explanations as to why the whales are loading more funds to their offline addresses. For example, Bitcoin has been on an upward trajectory making more investors hold on to their virtual wealth at prices above $13K. At this level, there's less willingness to sell.

In the recent past, technical indications show that after Bitcoin price hits $14.2K, there's a high chance that it will have an almost clear and smooth path towards $20K. Apart from a reduced appetite to sell, a considerable number of the whales packed their bags at a price of between $13K and $13.3K.

Over the counter trades involving whales may be another reason huge amounts of funds are moving off exchanges. In such a scenario, massive BTC hodlers may be seeking liquidity from OTC platforms when dealing with huge orders. Note that seeking liquidity from regular trading on Binance and other exchanges will have a substantial negative impact on Bitcoin's overall price. The effect can send Bitcoin spiraling, forcing it to abandon its current upward trajectory.

Are the U.S. elections having an impact on Bitcoin's price?

Not negatively. During the entire election period, BTC has been appreciating in value. For instance, during the early days of the elections, the king crypto was hovering around $13.8K and $14.2K. When the voting was closed, the price stayed above $14K.

At the time of writing, as the U.S. waits for the final verdict to know who, between Donald Trump and Joe Biden, will be their next president, Bitcoin was at $15,615 according to Coinmarketcap.

However, for Bitcoin to have an impactful rally, it has to keep a strong resistance above $13.8K. Also, establishing a stable ground above $14K provides more fuel for a sustainable upward trend.

bitcoin price 

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Bitcoin is continuing its considerable upwards trajectory and has recently crossed the $15k level. It hit a price of $ 15,974 (BitMEX) after which it dropped a bit. This represents a sizable 10% price increase within the last 24-36 hours and shows the bullish outlook of the cryptocurrency. Smaller cryptocurrencies (aka altcoins) have posted small gains but overall, they are lagging behind in performance.

bitcoin price graph 

2017 All Over Again?

The last time Bitcoin posted gains like this was back in 2017. The cryptocurrency’s price index rose from $1000 to $20,000 during the last five months of the year showing an increase of more than 20 times. It was during that time that the cryptocurrency reached its all-time high of $20,000. Similarly, altcoins also posted considerable gains at that time with Ethereum reaching $1400, XRP around $4, Litecoin around $360 and so on. The big Bitcoin break energized the crypto sector and most of the altcoins followed its meteoric rise most of the time. 

This was the time that really put Bitcoin on the map. Previously, the volume and awareness was quite low overall. 2017’s performance brought the cryptocurrency revolution to the mainstream and investors from all over the world started becoming part of the sector. But, the bears took over soon in 2018 and dropped its price index considerably and the cryptocurrency has remained below $14k after mid 2018. 

Now with the Bitcoin price index showing a double digit growth week in, week out, there is excitement and buzz around the cryptocurrency’s performance. Analysts believe that this is now the start of the next big bull market in the cryptocurrency industry, one that will break the previous all-time high record. Currently, the cryptocurrency has scaled all major price barriers in route to challenging the all-time high of $20k. The previously stubborn resistances of $12k, then $13k and finally $14k have simply melted away. So, the cryptocurrency is on track to reach this big psychological resistance in the future. 

But it's Not so Great for Altcoins….

But, the altcoins are giving underwhelming performance across the board. Ethereum is still stuck below $420, Litecoin is hovering around $60 while XRP is actually losing its ground in the mid $0.20s. The rest of the altcoins and new DeFi projects are also performing very poorly overall. This is an indication that this may not be like the last time when Bitcoin went high and took the rest of the pack with it. Rather this time around, this seems like a solo flight but altcoins have become bargains now and they may take off yet again. 

What is Causing this Massive Price Increase?

One of the reasons why Bitcoin is experiencing such a big price uptick is because it is finally leaving the long crypto winter behind. The gloom of 2018, 2019 and early 2020 has now been washed away and investors are now bullish on the crypto considerably. Another reason why the price is increasing is because of the Bitcoin halving event earlier this year. The latest Bitcoin halving of May, 2020 reduced the supply of the cryptocurrency and that helped increase the overall demand of the cryptocurrency. The number of Bitcoin wallets holding long-term positions have also reached all-time high levels which are also indicative of long-term HODLing that puts buying pressure on the market. 

Another big reason that is currently driving the prices up is the contested US election. Since the US market is a big player in the crypto world and the elections still haven’t been called 2 days after the election itself, the dollar keeps on weakening. A long, drawn out US election will result in further weakening of the current world reserve currency and help continue the phenomenal bull run of the crypto market. As things stand right now, it is more and more likely that the election will continue to drag on and on and therefore, the next few weeks are likely to be bullish for the cryptocurrency.

BTC up DeFi down 

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Major Decentralized Finance (DeFi) tokens and other alternative coins (altcoins) have experienced a considerable price plunge as much of the market moves to Bitcoin as the cryptocurrency of choice. The move had been predicted by cryptounit.com and it seems like Bitcoin is in for more gains in the near future as it consolidates its position at the top of the charts. The largest cryptocurrency in the world is now trading above the $14k level while Defi tokens are posting often double digit losses against it. 

The Great DeFi Price Tank

The big DeFi plunge has puzzled analysts around the world. This year was supposed to be the breakthrough year for the industry. Billions of dollars were invested in the new coin platforms mushrooming in the crypto world starting with the Uniswap exchange. It was the first fully working effective decentralized cryptocurrency exchange the world had seen. It allowed coin listing, finance and other transactions that the cryptocurrency sector had only been dreaming about before. 

Naturally, the investing community responded and an outpour of big money was put into these projects. They include Uniswap, Hex2T, Yearn.Finance and others. Now most of these coins are in deep trouble. Yearn.finance is among these tokens and has lost over 70% of its value during the last month alone. Hardly a few weeks ago, it was trading at around $30k level but soon it dropped down hard and is now being traded under $10k. Couple with the phenomenal success of Bitcoin in recent times, the YFI/BTC pair has seen a record tumble and has trapped many of the shillers on the wrong side of the market. Similarly other DeFi tokens are also flashing red, often showing double digit price drops as the industry gets less and less interested in them. Uniswap’s UNI token has gone down from $4.4 to $2.4 in the same amount of time showing a decrease of around 45%. Throughout the once emerging DeFi sector the story is the same of losses. 

The Weaking Altcoins

The rest of the cryptocurrencies apart from Bitcoin are called alternative coins or altcoins in short. These coins are also mostly showing either a bleak unimpressive performance in recent months or even big losses at times against the USD. Since Bitcoin continues to rise against the greenback, the altcoin/BTC pairs have posted considerable losses. This has puzzled some analysts as many previously believed that Bitcoin sets the tone and then the altcoins follow it. However, altcoins aren’t showing the same kind of gains as Bitcoin in the long-term and they continue to post losses against it. Even bigger coins like Ethereum, XRP, Litecoin, Bitcoin Cash, DASH, etc have remained largely stagnant throughout this time against the USD and posted losses against Bitcoin. Some of the altcoins holders are still waiting for their accumulated coins to take off considerably but many have already liquidated. It seems like it is all about the largest cryptocurrency in the world right now that has increased its market share back to 65% after initial drops during the course of this year. 

The Future

The altcoins aren’t following the ages-old principle of following Bitcoin wherever it goes. It seems like they and Bitcoin have decoupled at times with Bitcoin being considerably bullish while they keep alternating around the yearly highs and then coming back. However, this poor performance by the smaller coins has resulted in many crypto investors pulling their investments out from them. Once they realize they are priced low and have considerable potential for profiteering, investments are expected to pour into them once again. The same trend might hold true for the DeFi sector as well. The DeFi industry energized the cryptocurrency sector throughout the year and while it did appear like a bubble in between, it has more than corrected its price index considerably. It will also be looking towards a hopeful future. 

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