Bitcoin is down more than 3% despite Golden Cross and the Bank calling for more stimulus in the US
The price of bitcoin, which seems to be struggling with buyer exhaustion, has had a negative effect in the past 24 hours despite positive developments on both macro and technical fronts.
Leading cryptocurrencies by market value have dropped from $ 9,760 to $ 9,100 during trading hours on Wednesday, even as major investment banks JPMorgan Chase and Goldman Sachs called for an increase in the size of the The program of purchasing government bonds increased inflation due to the Federal Reserve and other organizations running large central banks. Bitcoin is increasingly being noticed as an investment alternative that is not prone to inflation.
The expected increase in supply this year - about $ 2.1 trillion - is offsetting the demand for bonds of $ 1.9 trillion to adjust $ 200 billion, JPMorgan said. .
The bank basically predicts an increase in bond interest rates and a decrease in prices due to a shortage of demand in the bond market. An increase in production or borrowing costs may discourage investors and companies from borrowing and investing, prolonging the coronavirus-led recession.
Therefore, analysts at JPMorgan think that central banks will have to strengthen their bond buying programs to keep yields down. Goldman Sachs strategists echoed the same sentiment last week.
Even so, bitcoin, widely advertised as digital gold due to limited supply and programmed supply cuts over a regular four-year period, dropped on Wednesday and came under pressure near 9,390. dollars at press time, down 3.8% on a 24-hour Base basis, according to CoinDesk's Bitcoin Price Index.
The decline seems more surprising when the technical studies have been biased up since the beginning of the week. For example, last week's candle penetrated the 11-month downtrend line, confirming a bullish spike. Moreover, the 50- and 200-day averages created a prince gold crossover early on Thursday, signaling long-term bullish conditions (as technical theory suggests, anyway).
For buyers who are not ready to step in despite the bullish signals, cryptocurrencies seem to be more vulnerable.
Some observers believe the movement of the bitcoin chain caused a price drop on Wednesday. The selling pressure increased sharply after an inactive address transferred some of the earliest mined coins in 11 years.
The subsequent recovery is shallow, and the price faced a decline at $ 9,600 at the beginning of Thursday before falling back to a low below $ 9,400. While Wednesday's price decline is an opportunity for investors to capture bitcoin amid rising macro development, a weak recovery suggests most are chosen to remain on the sidelines.
The sign of buyer exhaustion is not surprising since cryptocurrencies have increased by over 150% in the past two months. The rally is likely fueled by the story of price hikes around the halving of rewards, which took place on May 11, and due to the unprecedented liquidity of major central banks entering the market. traditional. G7 central banks bought bonds worth more than $ 1.3 billion in April, tweeted by Jeroen Blokland, a portfolio manager for Robeco multi-asset funds.
Analysts at Stack, a provider of cryptocurrency trackers and index funds, expect bitcoin to consolidate within $ 8,000 USD $ 10,000 for a while.
From a technical analysis point of view, immediate support is seen near $ 8,970 at an uptrend line from the March lows.
Accepting the support of the ascending trend line will show the 200-day moving average located near $ 8,000.
So far, the gold cross confirmation has not been invited to buy according to the stronger chart. The indicator tended to drop, leaving traders stuck on the left side of the market earlier this year, as warned by Darius Sit, co-founder and chief executive officer at QCP Capital. in Singapore.
On the higher side, $ 10,000 is the level to beat for buyers.
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