09.02.202112:23 Forex Analysis & Reviews: Ethereum futures are associated with high risk

The bitcoin hype continues, and the price has already tested the 48,000 mark after yesterday's news that Tesla purchased bitcoins for a total of $ 1.5 billion. Such documents were submitted to the US Securities and Exchange Commission yesterday. The purchase of bitcoins by the test company is associated with a change in its investment policy. The statement said that the purchase of cryptocurrency will give the company more flexibility to further diversify risks, which will increase profits. This solution will allow Tesla to invest in certain alternative assets, including digital coins, gold, and funds. The company also noted that it plans to start accepting bitcoins as payment for the products it produces.

In other words, in the near future, a Tesla car can be purchased directly for Bitcoin. The statement also focuses on the fact that the price of cryptocurrency assets is often unstable, and that the financial condition of Tesla "may suffer" in the event of a sharp drop in prices. However, this point is unlikely to attract much attention from investors. In his latest statement, Tesla CEO Elon Musk noted that he believes in bitcoin, but admitted that he was "late to the party". But back in December 2020, Musk spoke with MicroStrategy CEO Michael Saylor, whose company has invested heavily in bitcoin.

Saylor was optimistic about Musk's decision to buy bitcoin, saying that if Musk wants the company's shareholders to earn $ 100 billion, the best solution would be to convert TSLA's available funds into #BTC. His example may be followed by other giants included in the S&P 500, which will lead to a new pump of bitcoin, allowing the company to achieve a capitalization of $ 1 trillion. TSLA currently has a market capitalization of approximately $ 818 billion.

It is worth noting that large institutional investors have recently been using bitcoin as a hedge against inflation, as the Federal Reserve and central banks around the world have been pumping trillions of dollars into their economies in the hope of keeping stock markets growing, thereby spurring a sharp inflationary spike in the future. This is an additional incentive for the growth of the bitcoin price. Due to the active growth of the cryptocurrency and the interest among large investors, the liquid supply continues to decline, which only spurs the price to increase. Large purchases, like yesterday's one in the amount of $ 1.5 billion, can not be ignored. Currently, about 78% of bitcoins are either lost or stored and do not actively participate in trading. About 4 million bitcoins are remaining, which will be distributed in the future among future market participants, including large institutional investors such as PayPal, Square, etc.

As for the technical picture, a new maximum is set, but even after that, there is no major profit-taking. It will be possible to talk about the continuation of the bull market only after bitcoin confidently trades around the level of 48,000, the breakdown of which will certainly lead to a new high and open a direct road to the area of 50,000. This is a psychological marker at which large profit-taking can be noticeable. In the event of a decline in the bitcoin exchange rate, a major support level will be the area of 42,500, from which you can gain new long positions in the continuation of the growth of bitcoin in the near future. A break in this range will push the coin into the 37,900 area.

Ethereum

Ethereum futures, which were quietly launched on the CME exchange on Sunday evening, did not lead to a serious change in the value of the asset, which only slightly strengthened after overcoming another historical high in the region of $ 1,800. The introduction of futures has made it easier for institutional investors to access the world's second-largest cryptocurrency. Now there is no need to own the underlying asset to make transactions with it in the market. Do not forget that ethereum futures can negatively affect the price. If you take a similar launch of bitcoin futures in December 2017, it coincided with the fall in the price of BTC from the then all-time high of $ 20,089 to almost 5,000 by the spring of 2018. Therefore, when opening long positions, it is worth considering this point. However, institutional clients are satisfied with the emergence of a new tool that creates new opportunities for them, regardless of whether they want to hedge ethereum positions in the spot market or gain access to this cryptocurrency in the regulated derivatives market.

As for the technical picture, the main task of the buyers of ethereum will be to keep the trading instrument above the new support of 1484, which they did with great pleasure at the end of last week. The breakout of the resistance of 1760, which is now taking place, should be accompanied by new large purchases, which will open a direct road to the psychological figures of 1800 and 1850 dollars per ethereum. If this is not the case, the ethereum may very quickly return to the level of 1760. However, if the rapid decline does not occur, and the ethereum will continue to stand around 1760, then most likely, the upward trend will continue in the near future, especially given that bitcoin is close to 50,000.