Bitcoin At Crossroads With Its Biggest Bearish Fundamental: US Treasury

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 rather bleak macroeconomic outlook. Traders in the US stock futures and gold markets were after US Treasury Secretary Steven Mnuchin announced that the Federal Reserve would complete several 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 and 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 never-ending 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 behaving 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.

However, in the event of a split Congress, Democrats could find it difficult 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, cryptocurrency, BTCUSD, BTCUSDT
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 a profound reversal will take place or not,” said Ronnie Liu, investment analyst at OKEx Crypto Exchange. “The market is reflecting a bull run across all time periods. On the flip side, the zone between $ 16,500 and $ 17,000 should offer strong support.”