Bitcoin moved on Friday in anticipation of another week of gains (including the weekend) to close.
The BTC / USD exchange rate continued its upward momentum, rising again by $ 18,000, a level of psychological resistance. At best, the pair hovered between meager sell-offs and buy-out attempts all day while maintaining a strong floor price around this level.
Bitcoin remains unaffected by negative macro sentiments [for now]. Source: BTCUSD on TradingView.com
Bitcoin remains unfazed by negative macro sentiments [for now]. Source: BTCUSD on TradingView.com
The upside session appeared in contrast to a more gloomy macroeconomic outlook. Traders in US stock futures and gold markets weakened after US Treasury Secretary Steven Mnuchin announced that he would close several Federal Reserve emergency loan programs.
These facilities supported the corporate and municipal lending markets. But Mr Mnuchin’s decision – which economists believe was under pressure from Republicans – would remove about $ 455 billion that the Fed could have used to support Main Street as well as state and local governments.
The anti-risk rally
Bitcoin rebounded significantly against the Fed’s credit facilities over the course of 2020. Many analysts agreed that the central bank’s infinite bond buying policy lowered yields on them. This, in turn, led investors to seek returns on riskier assets. As a result, Bitcoin, stocks, and gold benefited from acting like speculative alternatives to bonds.
On Friday, the Bitcoin market absorbed the Mnuchin shock. The cryptocurrency rose higher as traders focused on the lighter spots, including booming institutionalization and the sheer community excitement of reaching $ 20,000 by the end of the year – a record high.
Meanwhile, the Bitcoiners also appeared to have ignored Mr. Mnuchin because of his upcoming resignation from the US Treasury Secretary next month. With President-elect Joe Biden taking an oath on Jan. 20, he will most likely mimick the looming loan programs, especially as rising coronavirus cases in the U.S. place further restrictions.
Impressive. BlackRock CIO of Fixed Income Rick Rieder talks Bitcoin to replace gold at CNBC this morning. pic.twitter.com/9KZR0muJVp
– Pomp @ (@APompliano) November 20, 2020
However, in the event of a split Congress, it could become difficult for Democrats to create new credit facilities, leading to what looks like a stimulus deadlock scenario. This would make the US dollar stronger and put pressure on Bitcoin and other pandemic winners to lose some of their profits.
The Bitcoin outlook for Friday + weekend
Ideally, it is time that bitcoin price was revised lower.
Bitcoin parabolic peaks and corrections. Source: BTCUSD on TradingView.com
Bitcoin parabola peaks and corrections. Source: BTCUSD on TradingView.com
The cryptocurrency tries to form a parabolic peak that typically follows a lower or lateral consolidation period. This is also reflected in its daily Relative Strength Index, which is overbought. This is also a form of price correction.
The Mnuchin story anticipates downward pressure on the US stock market. Meanwhile, Bitcoin’s erratic correlation with the S&P 500 index could lower prices over the weekend (as a lagged move).
“It is still unclear whether or not a profound reversal will take place,” said Ronnie Liu, investment analyst at OKEx Crypto Exchange. “The market is reflecting a bull run across all time periods. On the other hand, the zone between $ 16,500 and $ 17,000 should offer strong support.”