Where Will Bitcoin Land?
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Where Will Bitcoin Land?

The technicals are all over the map.

By Daren Fonda
Thu, Jan 27, 2022 11:37amGrey Clock 3 min

Bitcoin and the broader crypto market were trading higher ahead of a key Federal Reserve decision on monetary policy, expected this afternoon. Bitcoin was trading at around $38,100, up 4%, while Ether was ahead 6% to $2,600.

But crypto has been especially volatile as the markets try to digest new regulatory pressures and a tougher macro climate, including higher interest rates and tighter liquidity conditions. The outlook is hammering tech stocks, and cryptos aren’t being spared with Bitcoin and Ether down more than 40% from all-time highs last November, wiping out $1.2 trillion in the crypto market’s overall market cap.

The volatility reflects the fact that crypto is looking increasingly correlated to equities. It’s also an emerging asset class that trades 24/7 on a variety of centralized and decentralized-financial platforms. There are no orderly-trading mechanisms or circuit breakers that stock exchanges use to pause a steep price drop. Liquidity can also dry up quickly, amplifying the impact of a few large sell-orders.

Moreover, Bitcoin serves as collateral for borrowing other cryptos, and it’s used for pair trades with alt-coins in “smart contracts” on DeFi platforms. As prices for alt-coins tank, positions may be automatically liquidated if traders don’t add more Bitcoin as collateral. That can add to downward price momentum.

The market is now clearly on edge with a bias toward short positions, or traders expecting prices to decline. That’s evident in the futures market, where funding costs for perpetual futures contracts have turned negative. Demand for short contracts is so strong that short sellers are paying to open positions, pushing the cost, or funding rate, negative.

“That gives us a clue as to which way the derivatives market is positioned,” said Sean Farrell, head of digital asset strategy at Fundstrat Global, in an interview. “There’s high demand for Bitcoin short positions with funding rates going negative.”

One implication is that Bitcoin could bounce higher if the Fed policy turns more dovish than the market expects. Short traders could face a “squeeze” if Bitcoin prices jump, forcing them to buy Bitcoin to cover the positions. Conversely, if the Fed proves more hawkish than anticipated, long positions would be forced to liquidate, adding to the downward pressure in Bitcoin.

“The takeaway is that trading ahead of the Fed is tough sledding in either direction,” says Farrell.

Technical indicators, meanwhile, are all over the map. Relative strength indexes are neutral, implying that Bitcoin is neither oversold or overbought. But Bitcoin is trading well below its 200-day and 50-day moving averages, $48,700 and $44,900, respectively. That indicates key support levels have long been breached, making it more likely that Bitcoin could bust through other technical levels.

Some technical analysis indicates a floor at $33,000, where Bitcoin recently hit a bottom and buyers came in to support a move back up. But $29,800 is also a credible floor, based on historical patterns; Bitcoin fell to that low last July and then went on to rally to nearly $70,000.

“A lot of investors would back up the truck and open their chequebooks at prices around $29,000,” says Farrell.

Other analysts see support at $30,000. Mike McGlone, senior commodity strategist at Bloomberg LP, says that Bitcoin has found support at 30% below its 52-week moving average, which would be $30,000 based on the last year’s charts.

“That’s a key level to hold a floor and bounce back to the upper end of its trading range,” he said in an interview, noting that it’s been rangebound between $30,000 and $60,000.

“It’s been a range-trader’s delight between $30,000 and $60,000 for over a year,” he says. “Institutional holders are responsive buyers on an approach to $30,000, and I would see the tide rising at that level.”

Wilfred Daye, head of Securitize Capital, a digital-asset marketplace, also sees support at $30,000. But if Bitcoin drops below $30,000, its next stop could be $27,000.

That’s the price at which Bitcoin mining operations generally break even on their operating costs, he says. Miners earn Bitcoin as payments in exchange for processing transactions on the network; when the price falls below their electricity costs, it’s no longer profitable to keep the machines humming and they tend to scale back.

“A lot of miners will shut down their operations, and start selling Bitcoin to fulfil operating costs if prices hit $27,000,” says Daye. That, in turn, would add to downward price pressure.

And what happens if Bitcoin does drop to $27,000? “That’s a very scary thought,” he says, since it could usher in another “crypto winter” with prices falling more than 75% from all-time highs.



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Even amid two international conflicts and an upcoming U.S. presidential election, some philanthropic leaders are optimistic about the direction of overall giving through 2024.

Penta spoke with heads of several non-profits and leading philanthropists to gauge whether charitable giving will continue its reported slump from 2023 or rebound alongside renewed interest in various political and economic issues.

“Contrary to what some might expect, philanthropy has had resilience in these times,” says Stacy Huston, executive director of Sixdegrees.org, a youth empowerment non-profit based in Virginia founded by actor Kevin Bacon in 2007.

Huston’s view echoes recent data from the biennial Bank of America Study of Philanthropy published last year, which found that while affluent giving is largely down, the value of the average philanthropic gift is up 19%, surpassing pre-pandemic levels.

The notion of what these gifts look like is changing, and is partially responsible for the growth. Philanthropy can be executed through more avenues than ever, whether through celebrity association, tech titans stewarding large endowments, or  athletes using their platforms to advocate for and create meaningful change.

“The industry and movement is creating new models, and you want to get it right,” says Scott Curran, CEO of Chicago-based Beyond Advisers. “No one should take their foot off the gas pedal.”

Curran spent a number of years with the Clinton Foundation in its infancy before leaving in 2016 to open his own consultancy, which focuses on philanthropy strategy at the highest levels. Curran and his team work with celebrities, athletes, multi-generational family foundations, and other affluent givers who need guidance in directing their philanthropic efforts. It’s a growing area of interest: Over half of affluent households with a net worth between US$5 million and US$20 million have, or are planning to establish, “some kind of giving vehicle” within the next three years, according to the Bank of America report.

Corporate philanthropy, rather than individual giving, is the cornerstone of Marcus Selig’s work as chief conservation officer at the National Forest Foundation, a Congressionally chartered non-profit based in Montana responsible for protecting millions of acres of public lands.

“Our outlook is business as usual,” he says, advising that giving may slow down, but not enough for the foundation to change course.

Factors such as political polarisation in the U.S. and the wars in Eastern Europe and the Middle East are pushing nonprofits to consider their niche, and how they might work with other groups, both on the corporate and philanthropic levels, Selig says.

“It leads to a little more sharing on the ground in what needs to be done,” he adds.

Steve Kaufer , founder of Massachusetts-headquartered e-commerce giving platform Give Freely and founder of TripAdvisor, says that the economy has a much bigger role in election years, as he looks to build and grow something that can act as a “counterbalance.”

“There’s a trend towards democratisation, and acting collectively can lead to greater impact,” he says.

Kaufer’s new platform hopes to leverage the everyday philanthropist through online shopping dollars to benefit major charity partners like UNICEF and charity:water, who earn funds as shoppers choose an organisation to benefit through an online clickthrough process.

“Whether a good year or bad year, e-commerce will continue to keep growing,” he says. “Nobody doubts that.”

Whether a legacy foundation, corporation or individual, the political landscape this year is requiring some to exercise caution as they consider what their own charitable actions might be and how it could be viewed more broadly. For the personal philanthropist, every move is now scrutinised more closely. On the nonprofit side, entities are exercising more due diligence to understand if a specific donor aligns with their mission and that there aren’t any underlying issues that could cause greater pushback.

“You have to be able to walk the walk,” Huston says. “For example, we’ve had to turn down very large donor checks from corporations because there’s a Reddit stream calling them out on their human rights practices.”

She adds that even a routine charity activation could now be aligned with a political party, and that adds complexities to how a higher-profile organisation like Six Degrees can activate, especially as the film Footloose turns 40 in 2024 (which Bacon starred in).

“A lot of organisations and states want to align themselves with this feel good moment, and we should be able to stand side by side with everyone, but we have to be aware,” she says.

Another topic attracting donor interest today is  mental health, an area that historically has been underfunded and under-resourced by philanthropy, according to Two Bridge partner Harris Schwartzberg, who has been closely linked to the mental health space for more than a decade.

Today, the issue for mental health nonprofits is less about resources and more about societal divisiveness and polarisation around the topic. There’s an “overwhelming demand” for solutions, but the space is in a “perfect storm” for the broader political issues to make things worse, Schwartzberg says.

In Curran’s opinion, the storms brewing are troublesome, but they are also creating new opportunities for corporate and personal giving. The  current state of philanthropy is one of “dynamic, expansive, and blurred lines,” meaning a careful blending of targeted giving combined with an understanding of the broader geopolitical landscape could lead to a successful overall philanthropic strategy.

“There are a lot of headlines that distract, but shouldn’t,” he says. “2024 needs more serious philanthropists than ever.”

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