Bitcoin has soared today in anticipation of closing the week once again in a lucrative way. The leading cryptocurrency was trading at $ 18,590 at the time of writing.
The BTC / USD exchange rate continued its bullish momentum as it jumped to $ 18,000, a psychological resistance level. At best, the pair has been shaking between weak selling and buying attempts all day while maintaining a strong price base around that level. But in the last hour, BTC took action again.
Bitcoin’s rise has come with a rather brutal macroeconomic outlook. Traders in the US stock futures and gold markets became even more grumpy after US Treasury Secretary Steven Mnuchin announced that he would close several emergency Federal Reserve lending programs. These possibilities supported corporate loans and municipal borrowing markets. But with Mr. Mnuchin’s decision, which economists believe to be under the pressure of Republicans, the approximately $ 455 billion that the Fed could use to support state and local governments will be eliminated.
Bitcoin has skyrocketed against the Fed’s credit facilities for the whole of 2020. Many analysts acknowledged that the central bank’s infinite bond purchase policy lowered returns. This led investors to seek returns from more risky assets. As a result, Bitcoin, stocks, and gold have benefited from treating bonds as speculative alternatives.
On Friday, the Bitcoin market moved with the shock of Mnuchin. The cryptocurrency soared as we focused on seeing its value hit a record $ 20,000 by the end of the year. Meanwhile, “Bitcoinists” also seemed to ignore Mr. Mnuchin as he was leaving the US Treasury Secretary’s presidency next month too soon. President-elected Joe Biden would swear on January 20, likely reviving the emerging credit programs, especially as the rising US coronavirus cases put more restrictions.
There is a Risk Waiting for Bitcoin
However, in the event of a split of Congress, creating new lending opportunities can become difficult for Democrats, leading to a deadlock-like scenario. This will make the US dollar stronger and put pressure on Bitcoin and other epidemic winners to lose some of their earnings. This could start the bear season in Bitcoin.
The Mnuchin story expects to put downward pressure on the US stock market. Meanwhile, Bitcoin’s unbalanced correlation with the S&P 500 index could drive prices lower over the weekend (as a lagging move).
Ronnie Liu, investment analyst at the OKEx crypto exchange, said:
“It is not yet clear whether a profound reversal will occur. The market reflects a bull run across all time frames, and at a disadvantage the zone between $ 16,500 and $ 17,000 is likely to provide strong support.”