Bitcoin (BTC) surged to a new all-time high over the weekend, but what’s in store as a new week begins?
With $24,000 still in play, Cointelegraph takes a look at five factors influencing BTC price action over the coming days.
Coronavirus stimulus deal includes $600 direct payments
A sigh of relief from the United States as Congress was poised voted to accept a $900 billion coronavirus stimulus bill.
The dollar rose amid news that the bill, which includes a second round of stimulus checks for eligible Americans, was agreed after months of failed talks. Previously, direct payments had been absent from the bill, but since returned as a modest $600 versus $1,200 in March.
The move nevertheless beat the $787 billion stimulus tag for the 2009 financial crisis in one fell swoop.
Eyes will now be on whether the bill can pass in a vote on Monday — the flagging U.S. dollar would suffer as a result of a rejection, likely to Bitcoin’s advantage.
“Brrrrrrrr another $1 Trillion to be printed by the Fed,” James Todaro, a popular commentator on Bitcoin and coronavirus-related topics on social media, summarized in response to the news.
“Bitcoin was created for this exact reason during the Financial Crisis of 2008. Is it really surprising that #Bitcoin is making new all time highs?”
Cointelegraph Markets analyst Michaël van de Poppe meanwhile sounded the alarm about the longer-term impact of adding more debt to the U.S.’ tally through financing the stimulus bill.
“Agreement on the $900 billion coronavirus relief bill. Another step towards weakening the U.S. Dollar,” he wrote on Monday.
“This printing won't end well at all, as historically, it never does. It's just extending and trying to continue our failing financial system. Adopt. Buy Bitcoin.”
In a curious contrast to March, mainstream media are already suggesting to recipients how they can put their stimulus check to work by buying BTC.
BTC/USD remained near $24,000 on Monday, having hit all-time highs of $24,217 on Saturday and retained $20,000 support without any major tests.
Fed allows banks to buy back their own stock
Adding to the power of the banking sector was a decision by the U.S. Federal Reserve to allow the six biggest banks to start buying back their own stock again in 2021.
Worth $11 billion, the permission means that stock buybacks — something scorned by proponents of Bitcoin and sound money — can resume for the first time since the March crash.
The Fed was unfazed about negative fallout further down the line, however, with Bloomberg quoting Vice Chairman for Supervision Randal Quarles describing banks as a “source of strength” in 2020.
Fed stress tests, he said, “confirm that large banks could continue to lend to households and businesses even during a sharply adverse future turn in the economy.”
As Cointelegraph reported, Bitcoin seemed to benefit from rising central bank balance sheets, with price gains coming in step with the Fed and other institutions heaping money onto their existing debt mountains.
While BTC/USD stabilized over the weekend, a jump in the U.S. dollar currency index (DXY) meanwhile failed to produce noticeable selling pressure on the largest cryptocurrency. DXY bounced off lows of 89.7 on Dec. 18 to hit 90.5 overnight on Sunday — still circling nearly three-year lows.
Analyst eyes $19,500 BTC price dip
Short-term price action meanwhile focused on a large range with $26,000 as its top, but a bottom that could stretch below $19,500.
That was according to Van de Poppe on Sunday, who in his technical analysis highlighted various lows from earlier in the month and before which need to be liquidated.
Specifically, these involve CME Group Bitcoin futures gaps, two of which are over $1,000 in size and remain unfilled, leaving the potential for a wick as low as $16,900.
“Lower timeframe, we’ve got some critical things we have to watch,” he said. “We did see a higher high, a new all-time high yesterday. However, less volume on the whole for potential bearish divergence.”
He said that support levels at $22,800 would need to hold this week to fuel any further upside, but that a period of “consolidation” similar to other recent bouts of low-volatility trading action could soon reappear.
“That would fuel a potential strong move on ETH/BTC,” he added about the prospects for the largest altcoin Ether (ETH) to gain in Bitcoin terms.
Bitcoin doesn't care about Elon Musk tweets
A high-profile Twitter exchange which even made it into mainstream media over the weekend has meanwhile failed to impact Bitcoin price action in real terms.
Elon Musk, CEO of Tesla, briefly discussed sending “large transactions” in Bitcoin with MicroStrategy CEO and serial BTC stockpiler Michael Saylor.
After calling Bitcoin his “safe word” — contradicting another popular tweet from earlier this year — Musk then told followers that Bitcoin “is almost as bs as fiat money” before tweeting about Dogecoin (DOGE).
Despite the tongue-in-cheek nature of his content, Musk managed to excite a wider audience keen for bullish statements on Bitcoin. Even naysayer gold bug Peter Schiff joined the fervor.
“It seems like @elonmusk was only joking about exposing Tesla shareholders to Bitcoin,” he considered.
“So I don't need to convince the board not to turn Tesla into a double bubble. But I'm still willing to debate @michael_saylor on #Bitcoin verse #gold. Perhaps @joerogan is willing to moderate.”
Tesla stock rallied almost 6% at the end of trading on Friday, with markets yet to open at press time on Monday.
OTC buys mean Bitcoin bull run could "never stop"
Despite the looming sense of an incoming price correction, Bitcoin investors stayed prudent over the last week, data shows.
Analyzed by on-chain monitoring service CryptoQuant, outflows to exchanges kept going over the past week, with more and more BTC moving away from trading arenas and into private storage.
The overall balance on exchange was at its lowest since mid 2018 on Monday, a sign that unlike the previous all-time high of 2017, $24,000 BTC is not a product of a speculative trading frenzy.
While calling it a “speculative guess,” Ki Young Ju, CEO of CryptoQuant, suspected last week that spikes in BTC outflows at exchange Coinbase Pro were down to large institutional buys using over-the-counter (OTC) trades. Should that status quo continue, the Bitcoin bull run would face no genuine hurdles.
“Conclusion: This BTC bull-run never stops as long as these OTC indicators keep saying institutional-buying,” he wrote in a subsequent Twitter thread.