Bitcoin Recoups Weekly Losses as Fed Signals Latest Stimulus Support

  • Bitcoin staged a dramatic reversal on Monday after falling below $9,000 for the first time in three weeks.
  • The cryptocurrency rebounded by as much as 7.82 percent to $9,590 as of midnight Tuesday.
  • It is looking to head further higher into the session as the Federal Reserve’s latest stimulus announcement raises risk-on sentiment.
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Bitcoin was trading higher on Tuesday after falling to as low as $8.895 a day before.

The benchmark cryptocurrency climbed 7.82 percent from the said local bottom. As of midnight Tuesday, it topped near $9,590, expressing its willingness to hold a short-term bullish bias above $9,000, a technical support level. Meanwhile, bitcoin’s upside sentiment also took cues from the global stock market.

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Bitcoin price chart on TradingView.com showing BTCUSD intraday recovery. Source: TradingView.com

International equities, like Bitcoin, rallied on Tuesday on growing optimism over the Federal Reserve’s latest efforts to support markets through the Covid-19 pandemic. The U.S. central bank announced Monday that it would broaden its corporate bond-buying program.

Meanwhile, Bloomberg reported that the Donald Trump government is planning to introduce a $1 trillion infrastructure package to aid economic growth. Together, the announcements helped ease investors’ risk-on sentiment, which was otherwise suffering from the fears of the second wave of Covid-19 infections.

As a result, the S&P 500, which has developed an erratic yet positive correlation with Bitcoin, reversed dramatically following its sharp losses in the early Monday session. Bitcoin tailed the U.S. benchmark and closed above $9,500.

What’s Next for Bitcoin

The BTC/USD exchange rate is looking to head higher further into the Tuesday session as global markets open on a positive note. As of this time of writing, London’s FTSE was trading 2.2 percent higher while the eurozone-focused Stoxx 600 was up by 2.5 percent.

Futures tied to the S&P 500 were also higher by 1.4 percent, pointing to a profitable start for the index after the New York opening bell. Meanwhile, the U.S. dollar index, which currently moves opposite to Bitcoin, was heading down by 0.05 percent.

Technically, Bitcoin reclaimed the support of its Ascending Triangle pattern, rubbishing its latest downside move as a fake breakout – or fakeout. The cryptocurrency is now looking to hold its interim price floor above $9,500 to retest $9,800, and then $10,000, a level it has repeatedly failed to break since February 2020.

Meanwhile, any surprising downside swing could push bitcoin back below the support of the Ascending Triangle. That would allow it to retest support near $9,000 for a potential pullback. If failed, the bearish action could continue towards $8,100, $7,500, and even near $6,000.

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