As Retailers Eye Crypto Payments, can the Bitcoin Flag Soar Again?

Key Insights:

• United States retailers plan to accept crypto or stablecoin payments within the next two years.
• BTC’s price presents long-term bullish divergences, while short-term bearishness persists.
• Bitcoin as a digital gold narrative could get stronger as BTC MVRV sees exciting divergences.

Despite the recent market pullback and largely bearish narrative around risk assets, cryptocurrency payments are still on US customers’ list. According to many, the same could propagate a bullish narrative for cryptocurrencies like bitcoin (BTC).

According to a new survey published by Deloitte, three-quarters of United States retailers plan to accept crypto or stablecoin payments within the next two years. The “Merchants Getting Ready For Crypto” report was released in collaboration with PayPal on Wednesday.

The survey also revealed that more than half of large retailers with revenues over $500 million are currently spending over $1 million on building the required infrastructure for cryptocurrency payments.

Additionally, around 85% of the surveyed merchants anticipated that cryptocurrency payments would be ubiquitous in their respective industries in the next five years.

Retailers plan on providing crypto payments to improve customer experience and increase the customer base in the hope of their brand being perceived as “cutting edge.” However, one notable thing was that the survey was done on December 3 and December 16, 2021, when crypto prices were relatively higher.

On the contrary, when top cryptocurrencies are down by over 50% from their all-time high prices, there could be a shift in the market sentiment. That said, once prices gain momentum, the demand for cryptocurrencies could go up, pushing prices of digital assets up.

Nonetheless, looking at bitcoin’s current price consolidation commenting on bitcoin’s mid-short-term price trajectory has been somewhat tricky for traders and analysts.

Bitcoin (BTC) Price Action

Bitcoin’s price has been trading between the tight range of the lower $28,540 and higher $31,420 price mark. The lack of positive volatility in the market has left traders and investors anticipating more significant market moves.

From May 2021 to January 2022, Bitcoin’s Dominance has risen by nearly 40%. Analysts are expecting a bullish pattern to form as BTC dominance picks up.

That said, the top cryptocurrency’s relative strength index (RSI) has also seen a decent bounce as weekly RSI saw a divergence. Weekly RSI divergences are crucial for change in trend reversals.

BTC’s Digital Gold Narrative

At press time, while BTC’s price oscillated close to the $30,000 zone, market anticipation and decent buying pressure could push prices higher. However, BTC’s daily RSI highlighted that the coin saw a rising sell-side pressure as RSI continued the downslope from June 6 to press time.

Interestingly, according to CryptoQuant analysts, macro indicators like the MVRV ratio presented a strengthening narrative of BTC as Digital Gold. MVRV is calculated by dividing the bitcoin market cap by the realized cap. This metric can be used to determine the bull market tops and the bear market bottoms.

Looking at the chart given below, it is evident that previous bear market bottoms have occurred while the MVRV ratio had values below one.

These often-lengthy periods are when the smart money and intelligent investors tend to accumulate bitcoin, creating sufficient demand to form a price bottom. The MVRV ratio currently sits around 1.3, indicating that the price could still experience more decline before a cyclical bottom forms.

Another interesting observation was the diminishing returns and losses over the last decade, which pointed to bitcoin’s decreasing volatility on the road to becoming the ‘digital gold’, as it tries to transition from a highly volatile risk asset into a more stable, deflationary safe haven. For now, though it seems like BTC could see another dip before rising.