Bitcoin insures default risks
May 26, 2023 4:22 pmVideo
Latest News
- Market Comment – Gold shines bright, yen knocks on intervention door April 9, 2024
- Technical Analysis – AUDUSD steady after several sessions of gains April 9, 2024
- Technical Analysis – GBPUSD capped by 50-day SMA April 9, 2024
- Trading plan for GBP/USD on April 9. Simple tips for beginners April 9, 2024
- Trading plan for EUR/USD on April 9. Simple tips for beginners April 9, 2024
- Forecast for EUR/USD on April 9, 2024 April 9, 2024
- Forecast for GBP/USD on April 9, 2024 April 9, 2024
- Forecast for USD/JPY on April 9, 2024 April 9, 2024
- EUR/USD and GBP/USD: Technical analysis on April 9 April 9, 2024
- Bitcoin: Target for this bull cycle is $300,000 April 8, 2024
- The dollar has laid out its trump cards, it’s now the euro’s turn April 8, 2024
- GBP/USD. Analysis for April 8th. The pound remains expensive despite everything April 8, 2024
- Could the ECB adopt its June 2022 playbook and preannounce a rate cut? – Preview April 8, 2024
- Trading Signals for GBP/USD for April 8-10, 2024: buy if breaks 1.2634 (3/8 Murray – symmetrical triangle) April 8, 2024
- Trading Signals for EUR/USD for April 8-10, 2024: buy above 1.0833 (3/8 Murray – 21 SMA) April 8, 2024
- EUR/USD. Analysis for April 8th. The euro will continue to decline April 8, 2024
- US CPI data unlikely to ease sticky inflation worries, but will markets care? – Preview April 8, 2024
- Technical Analysis – AUDUSD surpasses SMAs within trading range April 8, 2024
- Weekly Technical Outlook – USDJPY, EURGBP, USDCAD April 8, 2024
- Video market update for April 08, 2024 April 8, 2024
If the dynamics of Bitcoin in the first quarter were exciting to watch, then in April, it lost some of its shine, and in May, it turned into a boring asset. The leader of the cryptocurrency sector is lagging behind the technology companies’ index. Nasdaq Composite is growing due to the success in implementing artificial intelligence in corporate activities. Unfortunately, BTC/USD lacks such a driver. However, looking at the token’s fluctuation near the $27,000 mark from another perspective is also possible. If despite the negativity, Bitcoin is still being held, it means it has growth potential.
The hallmark of this year is the decrease in correlation between cryptocurrencies and U.S. stock indices. By the end of May, it reached its lowest point since April 25. Prior to this, the indicator dropped even lower only in November 2021. For a long time, Bitcoin was considered a riskier asset than stocks, but the banking crisis changed everything.
Dynamics of Bitcoin Correlation with Nasdaq Composite
Unlike the U.S. stock market, cryptocurrencies benefited from a series of bankruptcies of financial institutions. They initially started functioning as an alternative to fiat money and the centralized banking system. Therefore, banking problems became a catalyst for the BTC/USD rally. On the contrary, stock indices declined due to concerns about the slowdown in lending volumes and a recession in the U.S. economy.
In May, the situation stabilized. Bitcoin no longer has such a strong trump card as the collapse of banks. On the other hand, it receives support due to concerns about default. If the U.S. government fails to repay its debts by mid-June, Fitch and Moody’s are likely to announce a credit rating downgrade. Similar to 2011, this will cause panic in financial markets and lead to a rush for safe-haven assets. According to a survey by professional investors MLIV Pulse, the main beneficiaries will be gold and its digital counterpart, Bitcoin. The need to hold this asset as insurance forces BTC/USD to stabilize.
The deal between Democrats and Republicans has not yet been concluded, but its contours are gradually becoming clearer. According to a Wall Street Journal insider, it involves raising the debt ceiling from the current $31.4 trillion to $3.5–4 trillion over a period of about two years. The stumbling block is the magnitude of government spending cuts.
Pressure on the leader of the cryptocurrency sector is created by the decline in daily trading volumes to the lowest levels in the past two years, as well as the decrease in volatility to the lowest point since January. We should also not forget about the rapid strengthening of the U.S. dollar against major world currencies amid the market’s abandonment of the idea of a Fed dovish pivot in 2023. Currently, CME derivatives indicate a 66% probability of a rate hike in July.
Technically, on the daily chart, BTC/USD has three reversal patterns—Wolfe Waves, Double Bottom, and a pin bar. To enter a long position, a breakthrough of resistance at 26,650 is required.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: