A recent sell-off in the Bitcoin (BTC) market pushed its prices below the key psychological support of $ 30,000.
While the downward move in the cryptocurrency led many analysts, including Vijay Nayyar of the Luno Exchange and Jehan Chu of Kinetic Capital, to predict another depressive move below $ 25,000, Anthony Pompliano offered an opposing bullish outlook.
Morgan Creek Digital Assets founder exposed risk markets to fears of the rapidly spreading delta variant of COVID-19. He noted that governments as a whole would introduce “more aggressive monetary stimulus programs” should the new coronavirus strain spread to the extent of its alpha version.
“History is not necessarily an indicator of the future, but it is hard to imagine that a second wave of lockdowns would not also give us more aggressive monetary stimulus,” Pompliano wrote in a newsletter.
“When that happens, we would probably see all assets go up and up.”
Pompliano envisioned that the path to more dollar liquidity would take seven consecutive phases, as shown in the following snapshot:
Risk-on FOMO expected
Pompliano’s statements appeared when the Bitcoin market fell in sync with other risky assets around the world on July 2nd.
For example, all three Wall Street indices – the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average – saw their sharpest declines in weeks. Gold also fell as low as $ 1,795.12 an ounce, but later rebounded to $ 1,812.145 an ounce.
Meanwhile, US Treasuries rallied against the dollar, showing that investors are heading for safe havens amid the global market turmoil.
Behind the defeat, global media reported, was a growing list of concerns about economic recovery. The delta variant of COVID-19 has spread quickly and rekindled the dialogue in several countries as to whether the authorities should reinstate the lockdown and curb economic activity.
“The hope was that [COVID-19] Vaccines would give us the endgame, “Mohammed Kazmi, portfolio manager at Union Bancaire Privee, told the Financial Times high.”
Kazmi added that markets are now stepping back from hopes for a V-shaped recovery and feeling uncertain about the future of their economies.
Connected: Stock-to-flow model may be invalid as Bitcoin price loses $ 30,000
Pompliano’s comments also appeared when the Federal Reserve was toying with the idea of hitting its lending rates near zero by the end of 2023 in an attempt to contain rising inflation.
In addition, several central bank officials endorsed the idea of scaling back their aggressive asset purchase program by $ 120 billion per month, despite Fed chairman Jerome Powell making it clear that this is how the Fed intends to end its quantitative easing policy long to continue until the US economy fully recovers.
James Wo, founder and CEO of global blockchain and digital asset investment firm Digital Finance Group, also noted that the fundamentals that have driven the value of their and other markets, despite the bitcoin industry experiencing downward volatility during this current market cycle has risen throughout 2020 remains unaffected. He added:
“Any combination of narratives that brought digital assets at this discounted price can be ticked off lists from FUD that would eventually have impacted the price of the entire market.”
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