Bitcoin Saves The World

Bitcoin – The New Darling of Governments?

Soon after El Salvador announced that Bitcoin will become legal tender in the country, there were rumors that Paraguay is looking to do the same. Since then, the long-awaited Bitcoin bill was presented in Paraguay’s National Congress but instead of aiming to make BTC legal tender, it simply laid out the framework for regulating cryptocurrencies.

However, more recently, Argentina’s President Alberto Fernandez declared that he is willing to take into consideration the adoption of Bitcoin. In an interview, the President was asked about his views on making Bitcoin legal tender and he had this to say: “I don’t want to go too far out on a limb […] but there is no reason to say ‘no’”. He then continued by adding “Perhaps that is a good path to take.” and “They say the advantage is that the inflationary effect is largely nullified”.

According to Bloomberg’s World Misery Index, Argentina is the second-most “miserable” economy, with alarming inflation. To paint a clearer picture: $100 at the beginning of President Mauricio Macri’s mandate would translate into $661 today (President Fernandez succeeded President Macri).

Introducing Bitcoin as legal tender would indeed nullify a big part of the inflation, thus making it very appealing but there’s a long road ahead and there are no certainties, considering that politics are weird, to say the least. Either way, Bitcoin is being talked about more and more, investors are being drawn to it, and big banks are jumping on the bandwagon and all this is reflected on the charts, at least thus far.

Technical Outlook – BTC/USD

At the time of writing, Bitcoin is changing hands at $46,250, with a 13.50% increase over the last 7 days. The pair is comfortably trading above the 50 days Moving Average and is bouncing off the $45K level after a brief pullback that confirmed the level as support.

The last time we talked about Bitcoin, it was attempting to break the long-term bearish trend line seen on the chart and since that feat was achieved, more bulls joined the fun, making it seem like $50K is the next stop.

However, there is a warning sign on the chart, which shouldn’t be overlooked: bearish divergence. The Relative Strength Index touched the overbought level twice in the recent period and the second peak is slightly lower. If we look at the corresponding price peaks, we can see that the opposite happened: the second price peak is higher. When price is making a higher high and the oscillator is making a lower high, we are dealing with bearish divergence, which often translates into trend reversal or some form of pullback.

That being said, we may see a dip below the support at $45,000 but the main bias remains bullish from a technical perspective but as we know, a tweet or a rumor can quickly change the picture.