It looks like Bitcoin (BTC) bulls are in the spotlight this week, as the largest cryptocurrency starts at around $ 40,000 on Monday.
After most trades last week, BTC / USD rose by 15% compared to seven days ago – so what?
Cointelegraph examines five factors that could affect the trend of Bitcoin in the next few days.
Shares hit record highs, but dollars fall
Bitcoin’s rise ahead of the weekend was accompanied by a well-known macro market scenario.
While the coronavirus and its demand continue to wreak havoc in many economies around the world, stock markets hit record highs and the S&P 500 ended its biggest weekly gain since November last year. Oil jumped $ 60 a barrel for the first time in more than a year on Monday.
Sentiment was boosted by the prospect of new spending in the United States as lawmakers sought to complete the details of President Joe Biden’s $ 1.9 trillion stimulus package.
As bitcoin spokesmen have repeatedly pointed out since the pandemic began, and before that, increased spending means concentrating more money closer to the government and the central bank – a phenomenon known as the “cantillon effect” – which paves the way for continued intervention in stock markets. among other areas.
Meanwhile, the US dollar has struggled in recent days with the ongoing rumor that the global reserve currency will continue to fall.
The US Dollar Index (DXY) unexpectedly fell below 91 on Monday, reversing a recent bullish trend that began in mid-January.
Despite conflicting views on incentives, political sources seem to be fully committed to inflating the money supply as the only option.
“I am still concerned that, due to the long-term recession in the medium term, I believe that fiscal policy should be more proactive in the coming years, and I certainly share the administration’s view that policy should be too wrong with enlargement. side in such a moment. Lawrence Summers, Barack Obama’s most important financial adviser, wrote in the Washington Post on Sunday.
“But such qualitative considerations do not provide a basis for judging whether to spend $ 900 billion in short-term stimulus of $ 1 trillion, $ 1.9 trillion or $ 5 trillion before making the final decision on $ 1 billion in public investment.”
As Cointelegraph often reports, DXY weakness is usually more pronounced in BTC / USD, although the negative correlation has eased significantly since September 2020.
BTC trades with a 90-day return correlation against US dollars, VIX, gold and the S & P500. Source: data on digital assets.
BTC price shows the best weekly closing
After waiting in the wings, Bitcoin is starting to look like it may soon exit the established short-term trading zone between $ 30,000 and $ 40,000.
Evidence that it was on the cards was already there – the basics were at a high level, and various indicators point to early 2021 to form the first, not the last, rounds of the bullish race.
The trend continues this week, with network fragmentation reaching record levels, and the difficulty of the next ten-day reset will increase by about 5%.
Sunday’s end of the week officially marks the highest Bitcoin ever.
Popular trader Scott Melker summed up the market on Saturday with a new map warning: “There will be setbacks and maybe even try on top of the flag as support.”
“But technically, this is a sure breakthrough that would eventually take BTC to $ 63K. Disclaimer – Patterns rarely reach their goals, but rules are rules. ”
The weekend saw the first distribution of the bitcoin value of $ 40,000 in almost a month, which led to expectations of a possible price and performance structuring.
D-Day for Ether Futures
As strong as Bitcoin may seem, Monday was specifically about altcoins and Ethereum (ETH).
After breaking record highs last week, the largest altcoin received its own Ether futures contract from CME Group.
With a wave of professional traders tempted to enter the market, market tensions were already evident last week when grayscale added a buying friendship that saw ETH / USD surpass $ 1,750.
Now, however, the focus is shifting to whether performance can continue, or whether futures launches will lead to a reversal that leads to corrective behavior.