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Bitcoin Breaks $11.8K on Jerome Powell Speech; Is Rally Sustainable?

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A Jerome Powell speech on central bank digital currencies (CBDC) was enough to decouple Bitcoin from traditional asset markets.

The benchmark cryptocurrency surged above $11,800 in the hours leading up to the Federal Reserve chairman’s cautious remarks on CBDCs at a panel organized by the International Monetary Fund. At 0900 ET Monday, BTC/USD underwent a speculative jump from $11,523 to $11,650. One hour later, when Mr. Powell started his speech, the pair rested.

The next hour, however, it resumed its short-term uptrend by adding another $150 to it. Around noon ET, Bitcoin had established an intraday high at $11,833.

Bitcoin rallied ahead and around Mr. Powell’s speech on Monday. Source: BTCUSD on TradingView.com

It was a standalone act. None of the indexes that formed a positive correlation with Bitcoin matches its ascent in early Monday hours. The S&P 500, for instance, jumped 0.90 percent after the New York opening bell but later pared all those gains to close 1.63 percent lower.

Bitcoin’s daily candle, on the other hand, logged a 2.14 percent intraday return.

Xi Jinping Vibes

The uptick in BTC/USD on Monday served as a reminiscent of a short-term upward trend in October 2019. Only that time, traders raised their bids for the pair after Xi Jinping, China’s premier, endorsed blockchain – Bitcoin’s underlying technology – in a public event.

bitcoin, btcusd, btcusdt, xbtusd

Bitcoin jumped by more than $3,000 after Mr. Jinping’s pro-blockchain statements. Source: BTCUSD on TradingView.com

BTC/USD climbed by more than 40 percent – from $7,430 to as much as $10,540 – before succumbing to a strong selling wave that followed later. The pair crashed by more than 39 percent when the China hype faded.

An imminent correction was a word of caution among many traders as they addressed the Bitcoin rally’s size and pace. A pseudonymous one said that he’d be cautiously waiting for the crypto to hold above $11,660 before opening any new bullish positions.

“If I lose [the support], [then] I’ll be looking to short down to 11.2k,” he added.

Ivan Liljeqvist, a Sweden-based market analyst, ran a poll to understand the consensus behind the next Bitcoin move. The results came mixed, with 47.7 percent voting in favor of correction towards $11,000.

What’s Next for Bitcoin

In the short-term, Bitcoin expects to retain its positive correlation with the US stock market. The cryptocurrency’s direct relationship with the S&P 500 has been erratic, as shown in the Skew chart below. It rises and falls consecutively, but remain intact on a medium-term outlook.

bitcoin, btcusd, btcusdt, xbtusd

Bitcoin-S&P 500 correlation expects to bounce back. Source: Skew

The reason is that every market is waiting for the second coronavirus stimulus package. Once the negotiations settle – macro analysts expect a deal by the November 3 presidential election – all the riskier assets would likely surge in tandem.

Bitcoin also anticipates reaching a new yearly high as the stimulus reduces the bids for the US dollar – and even as it gives the Fed adequate tools to continue its near-zero lending rate and its infinite bond-buying program.





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Bitcoin sheds $2.5K amid warnings of a repeat BTC price dip

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Bitcoin (BTC) fell precipitously on June 25 after a rejection above $35,000 sparked a rout toward familiar support.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin heads back towards $30,000

Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it shed over $2,500 during trading on Friday.

The pair had hit local highs of $35,400 overnight before abruptly reversing trajectory to fall below $33,000.

For popular trader Crypto Ed, the situation was similar to events last month after BTC/USD first bounced at $30,000 support.

“Current, sluggish PA reminds me of a similar situation a few weeks ago….. I thought we did a 1-5 and started next cycle but after 1 more top, BTC made a deeper correction,” he commented on an accompanying chart.

“Thinking we might get the same here.”

BTC/USD scenario. Source: Crypto Ed/ Twitter

That would place Bitcoin in a position to rechallenge the $20,000 corridor which it briefly broke into several days ago.

As Cointelegraph reported, the mood among many traders remains skewed to the cautious side after BTC/USD failed to reach a $37,000 target before its latest rejection. The possibility of a new lower low is thus far from off the cards.

BTC buy interest remains

Signs of underlying confidence nonetheless remain.

Related: Bulls on parade: Galaxy Digital and Alameda pundits tip market recovery

On Friday, it was again El Salvador and its Bitcoin law in the spotlight after president Nayib Bukele announced that every eligible citizen would receive $30 free in BTC for downloading its wallet.

Institutional bullishness meanwhile came in the form of the Purpose Bitcoin ETF, which continued to add to its assets under management throughout the price dip.

Meanwhile, altcoins were flat, with no single asset managing to break out of established trading zones.