Yesterday, the price of bitcoin jumped above $6,600 and today in another upwards move we climbed to nearly $6.900. At the time of writing, BTC/USD has been trading at $6,650, still down over 9% YTD.
The stock market also enjoyed gains today as investors look forward to a coronavirus rescue bill. All their major benchmark indexes rallied over 5% to hit their upper trading limited. G7 finance ministers and central banks also pledged to do “whatever is necessary” to help the economies recover from COVID-19. Gold and silver are also surging, up 4.5 and 6.5% respectively.
“Everything seems to be going up today, which is good because we haven’t had a good risk-on rally in quite a while. Very likely this could have to do with the fiscal stimulus package that should be voted on any moment now,” said analyst Mati Greenspan in his Tuesday newsletter.
However, the question is if this jump in prices will last or if this just a ‘buy the rumor, sell the news’ kind of event?” As Greenspan said, “Only time will tell.”
The US Federal Reserve has announced unlimited QE that has the “money printer go brrrrr” meme flooding the social media, but despite this, the US dollar has been showing strength and is on way to its longest winning streak since 2012.
In a recent interview, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis also said there is “an infinite amount of cash at the Federal Reserve.” He clarified that this authority “to print money and provide liquidity into the financial system,” has been given to them by Congress.
But this is the biggest argument for Bitcoin as Bitcoin enthusiast and NFL player Russell Okung said, “consider what happens as the supply of bitcoin remains fixed (21M) while the supply of dollars becomes infinite.”
Bitcoin doesn’t have any experience with a crisis that it is currently going through but the market has the utmost faith in the world’s leading cryptocurrency.
“Bullish on USD liquidity squeeze and then I’m ultra bull on gold/crypto,” said popular former crypto trader Crypto Cobain.
In the long term, bitcoin trades and investors have a big price target for the digital asset but in the short term a “large bear flag right into horizontal resistance” could see us revisiting the $3,000 to $4,000 range, according to trader Jonny Moe.
Trader XO is of a similar opinion as he said, “Don’t be surprised if we see one more raid around $6,500s before a bigger drop – wiping out a large number of late shorts / tight stops,” said the trader.
It is possible that if equities fell another 30%, bitcoin and crypto will follow and decline as they remain risky assets.
Adamant Capital’s Tuur Demeester is also “not sure” about bitcoin’s upward move but believes the digital asset is in the re-accumulation phase.
There is a real possibility for a drop but the Wall Street focusing on depreciation and inflation 10 times more than it was in 2009 combined with the Fed announcing “infinite” money supply, BlockTower Capital CIO Ari Paul says, bitcoin can “catch a sustainable bid even before equities start recovering.”