27.05.202116:16 Forex Analysis & Reviews: Bitcoin's large institutional investors return to gold. What to expect next?

Bitcoin has stumbled on a 200-day moving average and cannot go back beyond it. This is a very serious problem, since from a technical point of view, a very powerful downward trend is forming, which in 2018 led to the crypto winter for almost three years.

But before we talk about the prospects of bitcoin, I would like to say a few words about the Bank of England and how they treat digital innovations, of course, related to cryptocurrencies.

In a recent speech, Bank of England Governor Andrew Bailey raised concerns about digital currencies, saying there is a danger of being "caught up" in financial innovation that could pose a huge number of problems in the future. "I don't want to be seen as a Luddite," Bailey said in response to Treasury questions in parliament. "To be honest, I am skeptical about crypto assets because they are dangerous and cause a huge bubble."

Bailey said that financial innovation is good for the economy, but investors need to remain vigilant about assets like cryptocurrencies. It is worth noting that this month, the Governor of the Bank of England has touched upon the topic of cryptocurrencies and digital assets for the second time, and this clearly makes it clear that the regulator is serious about the current situation. Bailey also oversees banking regulation and is responsible for assessing threats to economic stability. "I'm afraid that cryptocurrency and currency are two words that do not suit me," he said at a press conference held back on May 6 this year. The Governor of the Bank of England is firmly convinced that cryptocurrencies have no intrinsic value.

Many investors have long understood what is happening now. The unprecedented monetary and fiscal stimulus that has poured into the global economy, pushing up the prices of various types of assets - from stocks to real estate, goods, and cryptocurrencies, all create bigger problems for the future of the global economy. And talking about bitcoin and the fact that it has no intrinsic value is the same as talking about how promising the yield on US Treasury bonds looks now, which are not even ahead of inflation in the country.

Digital currencies, which are currently being developed in many countries, remain an equally interesting topic. The US Federal Reserve is expected to publish a paper very soon outlining their own research on central bank digital currencies. The Chinese authorities, who are now actively fighting against mining and cryptocurrencies, are also developing their own digital yuan, which may appear in the near future. But it is unlikely that such measures will put significant pressure on bitcoin and other altcoins. Most likely, this is a threat more for stayblecoins, to which the US regulator is showing increasing interest.

As for the recent major drop in bitcoin by 31.1%, it was the fourth largest drop in cryptocurrency on record. A report from JPMorgan indicated that large institutional investors are ditching bitcoin in favor of gold, which has generated a lot of discussions and raised a number of questions about institutional support for the cryptocurrency. This was the main focus of traders this year, after Elon Musk was the first to announce his purchase of bitcoin.

More recently, the US Treasury announced that it would require stricter cryptocurrency compliance with the IRS, which could discourage new investors from entering the market. Be that as it may, while the cryptocurrency market is in disgrace, and it is possible that we will see new lows before the situation stabilizes.

As for the technical picture of bitcoin, it is clearly visible how a large position accumulates in the area of 36,300-41,100. The further direction of the trading instrument depends on the direction in which this channel will be broken. The fact that bitcoin hasn't been able to get its 200-day moving average back for quite some time creates additional problems. If the area of 41,100 is broken, then we can follow the strengthening of the rate to the 46,700 mark and the return to the maximum of 52,000. If the level of 36,200 is broken, then, most likely, we will again go to test the minimum of 29,000, the breakout of which will quickly collapse the rate to the support levels of 25,700 and 21,600.