The Bitcoin price (BTC) is climbing, while governments and central banks are putting together unprecedented aid packages for the economy. Whether the measures will have an effect will only be seen when the corona pandemic flattens out. But even now, the drastic interventions are already causing uncertainty in the traditional markets. In the long term, however, the crypto market could benefit from the current development.
Coronavirus and the international situation
The rescue programs of governments and central banks are vying for new superlatives. At present, all money taps are being turned on to cushion the economic damage of the Corona crisis. Among investors, however, the measures are spreading more panic than optimism. Instead of extinguishing the fire in the markets, the unlimited liquidity injections could prove to be fire accelerators to the contrary and cause the crypto-market to decouple.
Government puts up historical rescue umbrella
Germany's Finance Minister Olaf Scholz and Economics Minister Peter Altmaier made history at the Federal Press Conference on 23.03.2020. Never before has there been such a voluminous crisis program in Germany as the one that is now to help the economy through the corona period. With a total volume of 750 billion euros, it is intended to help the entire spectrum from the self-employed and small businesses to large corporations. In order to do this, the state will have to take on 156.3 billion euros in new debt.
RKI sows slight optimism
The coronavirus is spreading relentlessly. According to RKI President Lother Wieler, 182 countries are now affected by the virus. In this country, however, the first positive effects of the latest measures could already be seen, the virologist estimates with reservations. For example, there are currently signs of a slight slowdown in the spread of the virus. The analysis of mobile phone data has also shown that mobility in the population is decreasing. However, the data from all the authorities have not yet been included in the statistics, which is why the growth in the spread of the virus could be corrected upwards again in the next few days.
Fed uses the "full set of instruments"
The Federal Reserve is on a spending spree. "For the smooth functioning of the markets", the US Federal Reserve pulls out all the stops and has announced a program of buying government bonds in unlimited amounts. Bonds of companies with high credit ratings are also to be bought on the secondary market. In addition, companies will be supported with loans in the amount of 300 billion US dollars. After the currency guardians have already lowered the key interest rate to almost zero percent, "aggressive efforts in the public and private sectors" are needed to guide the US economy through the corona crisis, he said.
Uncertainties in the traditional markets
The rescue programme launched by the German government has so far had little effect on the stock market. Although the DAX was able to climb above the 9,000 point mark in the meantime, it slipped to 8,826.96 points at the end of trading, a drop of 1.14 percent compared to the previous day. When the stock market opens, the leading German index can gain 6.06 percent and starts at 9,271.23 points.
Even the Fed's crisis package was unable to calm the US stock markets yesterday and tended to create uncertainty among investors. The Dow Jones lost 584.48 points and closed with a loss of 3.05 percent at 8,589.50 points. The broad-based S&P 500 also had to give up its feathers and fell by 3.38 percent to 2,226.97 points in the course of the day. However, both indices may rise again at the opening of trading. The Dow Jones, for example, climbs 4.75 percent to 19,475.90 points, while the S&P 500 starts the day with an increase of 4.54 percent to 2,338.93 points.
The gold price of a troy ounce, on the other hand, was able to gain slightly again yesterday, rising by 3.5 percent to $1,551. At the beginning of the trading day, the price may continue to increase slightly and is currently traded at $1,580.70.
Crypto market rebounds: Bitcoin price is happy about profits
While the stock markets have continued to make losses despite gigantic emergency purchase programs, the crypto market is gradually showing signs of recovery. The Bitcoin price (BTC), for example, has gained almost 10 percent in the last 24 hours and is currently quoted at 6,530 US dollars. Spring fever is also making itself felt in the old coins after the drastic slumps of the last few weeks. The ether exchange rate (ETH) rose by 8.5 percent, while the ripple coin XRP, although it has recorded less growth, has nevertheless increased in value by 3.8 percent and is now quoted at USD 0.1585. The problem child IOTA (MIOTA) also climbed by 9 percent to 0.1393 US dollars.
According to Dominik Poiger, portfolio manager at VanEck, the gigantic financial aid from central banks and governments could lead to the correlation between the traditional markets and the crypto-market dissolving sooner or later.
Rapid deleveraging in recent weeks has led to massive price falls for both crypto and traditional assets; even classic safe haven assets such as gold and German government bonds have not been spared. Bitcoin behaved like any other risk asset in the current crisis and correlates with 1 with the markets. In the long term, however, the question arises to what extent investors can still believe the measures of the central banks or whether their powder has long since run out. Now that parts of the US yield curve are also negative and central banks will spend another trillion on buyout programs, investors' returns will probably deteriorate further once the corona crisis is over.
As a reaction to the unprecedented aid programs, the decoupling of the crypto-market from the traditional markets could therefore accelerate. In that case, the crypto market would face bullish times.
Technical analysis of the Bitcoin price
The Bitcoin exchange rate developed well and has so far been able to defend its position over 6,000 US dollars. Accordingly, it is maintaining the upward trend that it has been following since March 16. This positive trend is reflected in the indicators: both the MACD and the RSI are rising again. Only the Aroon indicator provides a neutral result. All in all, we therefore arrive at a rather bullish assessment. The following medium-term trading strategies are suitable:
- Long position: If you have not opened a long position since yesterday, an entry at USD 6,717.84 is a good choice. The targets remain at USD 7,220.24 and USD 7,956.29, while we set the stop loss at USD 6,213.78.
- Short position: Entry with a fall below USD 5,539.09, Target at USD 4,936.00, Stop Loss at USD 5,814.72
With a courageous pump, the price was now able to break away from the former resistance of the Triangle Pattern. The situation is bullish in the short term, and we are again basing our short-term trading recommendations on the Fibonacci retracement and come to the following results:
- Long position: Entry at USD 6,657.49, targets at USD 7,128.08 and USD 7,970.48, stop loss at USD 6,402.97.
- Short position: Entry in case of a fall below USD 6,002.24, targets at USD 5,537.74 and USD 4,963.02, stop loss at USD 6,153.33.
Overall market visualization
The Hodler heart is beating faster again at the moment. Nearly the entire crypto market is currently moving in the plus range and may have found its bottom after the massive slumps of the past few days. The visualisation of the entire market by coin360 illustrates the current trend:
