Cryptocurrency market continues the growth data on Libra

On June 26, 2019, the main cryptocurrency Bitcoin (BTC) updated a high of $ 13,850. It caused immediately a wave of speculative statements that the cryptocurrency market is ready to repeat the dynamics of 2017.

Earlier, increased risks had a support for Bitcoin and the cryptocurrency market. The current situation is described more detailed in the article “Cryptocurrencies as new safe haven assets”. But it is worth noting that since mid-June, the dynamics of risk aversion has changed, which supported the cryptocurrency market.

In fact, the correlation between Bitcoin, stock indices and VIX indexes of fear has changed. The reason for the cardinal change of winds on the cryptocurrency market was the introduction of the Libra cryptocurrency (Libra).

BTC/USD pair chart is the Japanese candlestick, the DOW 30 index is the red line, the VIX index is the blue line.

How Libra supported cryptocurrency

So, in June 2019, Mark Zuckerberg introduced Libra, a new name for Facebook Coin. In fact, Libra is something between a cryptocurrency and classical world currencies. Libra transactions will be carried out using blockchain technology with a private network.

Also, the Libra rate will adhere to a basket of currencies, such as: US dollar, euro, Japanese yen and pound sterling. This will make the rate of this currency more stable in comparison with cryptocurrencies. At the same time, it makes it look more like ordinary world currencies.

Also, as it is known at the moment, 27 participants participate in the Libra project, such as: MasterCard, Visa, PayPal, Uber and others. This may actually mean that Libra can be reborn as a kind of new payment system.

But, despite the ambiguity of Libra, this phenomenon and the recognition of the blockchain technology by large market participants supported the cryptocurrency market. Against this background, the BTC/USD pair has updated the highs of the current year.

It is worth noting that from the technical analysis, the BTC/USD pair is overbought significantly. Especially after the rebound from the level of 13,600 (Fibonacci level from the maximum of 2017 to the minimum of 2018). Overbought indicates uncertainty and potential for correction after growth in April – June.

Development of the correction is expected when BTC/USD is fixed below the level of 11,600, which will open the way to support levels: 9,600 and 8,000-7,100.

BTC/USD chart

Anton Hanzenko