Bitcoin at odds with economic laws – Paul Donovan from UBS

• BTC/USD rangebound above $4,200.
• Chief economist from UBS blasts Bitcoin.

Bitcoin is hovering around $4,200 handle, off Wednesday’s high at $4,361. The first digital coin as calmed down after a strong rally and entered a phase of rangebound trading. What comes next depends on the sentiments of the European players that are starting to return to the market.  

While Tom Lee from Fundstrat recommends buying Bitcoin while it’s cheap, Paul Donovan, chief economist at UBS, creates a death note for the coin.

Recently, he published his vision for Bitcoin and cryptocurrency industry as a whole. It appears that he is not a standing member of the crypto fan club.

“A loss over 80% is not healthy. Economists said from the start that Bitcoin and the like would never be currencies,” he wrote in a note to the clients.

He explains that the ecosystem of digital money is at variance with fundamental laws of supply and demand, which makes it unsustainable and unacceptable as a means of payment.

Bitcoin’s technical picture

From the short-term point of view, BTC/USD rests above SMA200 (1-hour) at $4,100, which is a positive sign that implies further recovery down the road. The price needs to clear the congestion zone $4,500 before we can proceed to the next psychological hurdle $5,000.

On the downside, a sustainable move under $4,000 with exposing $3,900-$3,870 area that includes both SMA50 and SMA100, 1-hour. A break below will signal that bears are in control once again with next focus on $3,500.  

BTC/USD, 1-hour chart