Bitcoin Pops Up on More QE But No Reason to be Overly Bullish Yet
After falling below $9,000, Bitcoin is back to hovering around $9,500. The leading cryptocurrency has been trading in this range since early May and continues still but on low volume.
The Commitment of Traders (COT) report doesn’t paint a good picture with CME Dealers net short, the bias actually increased by 35% last week, the biggest exposure the sell-side had.
But these gains came in line with the US stocks market after the Federal Reserve said on Monday that it will start buying individual corporate bonds. Although nothing new, markets went wild with FOMO (Fear of Missing Out).
The Fed has already committed to prolonged use of QE which “may represent a major turning point for the US Dollar,” said Koyfin. Currently, sitting on medium-term support, if DXY breaks below, it would likely be the start of a downtrend.
This suggests future outperformance of Technology, Materials, Energy, and Industrials, emerging markets, and bitcoin.
A primary advantage #gold and #Bitcoin have in this unparalleled time of central-bank easing is that each is recovering from periods of enduring disdain. Still below all-time highs, the quasi-currencies should continue to outperform the #stockmarket. pic.twitter.com/kfzoi6LLXu
— Mike McGlone (@mikemcglone11) June 15, 2020
San Francisco Federal Reserve President Mary Daly in turn called on fiscal policymakers to boost spending on education, healthcare, and digital infrastructure.
“Much more will be needed in order to build a strong economic foundation that will allow a full recovery and sustained expansion,” Daly said.
DALY: IF THERE'S A SECOND WAVE, EXPECTS FED AND FISCAL AUTHORITIES WOULD RESPOND
— *Walter Bloomberg (@DeItaOne) June 15, 2020
There are also reports that President Donal Trump’s administration is preparing for a $1 trillion infrastructure proposal.
Bitcoin pumped in response with added support from Bank of Japan’s decision to pump $1 trillion to combat the effects of the pandemic.
On Monday, the markets were driven by the fear of the second wave of coronavirus. But today, Bitcoin is yet again back to trading like a stock as equity volatility spikes.
Bitcoin is consolidating
Stocks might have jumped higher but according to analyst Benjamin Blunts, S&P 500 and other equities had a “5 wave decline on 4h,” which “indicates the start of a larger pullback.”
Now, that bitcoin is correlating with risky assets again, although it is not expected to last forever, “a 5 wave decline on equities does not bode well for BTC in the next few weeks.”
Price had a consistent $9400-$9500 range over the weekend without getting back over $9600 before the drop
I'll look to scalp short a retest of resistance above $9250
Still not bullish unless $9800 is reclaimed
— Josh Rager 📈 (@Josh_Rager) June 15, 2020
Analyst Rekt Capital believes currently there is no reason to be overly bullish until bitcoin breaks above $9,800 on the weekly and overly bearish until we break below $8,700.
Bitcoin ranging isn’t anything new either, historically, there has been a lot of consolidation after every halving and this time is no different.
“This is the 7th week that Bitcoin has been consolidating within a $8700 – $9650 range,” noted the analyst.
Bloomberg has already made a call for bitcoin to target $20,000 this year. But the more important thing here is the fact that Bloomberg has now made this data available to over 300,000 Bloomberg Terminal users and now those institutional investors don't have the excuse to ignore this asset class anymore, said Arca CIO, Jeff Dorman.