Following a recent drop into the high $6,000 range, bitcoin – the world’s number one cryptocurrency by market cap – has surged back above $7,100, suggesting that this is where it’s likely experiencing the most resistance.
Bitcoin Surges Once Again
Bitcoin has gone back and forth over the past couple of weeks, falling and jumping between $6,700 and $7,200. There appears to be a $500 range of heavy activity, the bottom of which present necessary support, while the upper range is providing resistance and preventing bitcoin from making any headway. Perhaps the latest U.S. relief aid package will help bitcoin break this barrier.
Just yesterday, the stock market and oil incurred serious jumps, with the Dow Jones expanding by more than 450 points. In addition, oil – which has recently been trapped in negative territory after an expiring futures contract dropped below zero – is still being dealt a heavy hand, but managed to surge by more than 19 percent within 48 hours to trade at around $14 per barrel. Thus, things appear to be on an uptick as of late.
The new aid package involves an additional $484 billion in potential coronavirus relief. Since the announcement was made, bitcoin gained $300 in price. While the previous $2 trillion stimulus package approved about a month ago primarily had working individuals in mind, this one is directed more towards small businesses, which have been hit terribly by the shutdown.
Several non-essential businesses have been required to shut their doors and cease all operations until the government gives the go-ahead. This is to prevent further spread of the disease, and while some have permitted their employees to stick around and work from home, others have had no choice but to lay off entire staffs, bringing the economy in America to its knees.
In addition to aiding small businesses, the relief is also designed to up the ante on coronavirus testing packages, as well as deliver financial assistance to hospitals and other medical ventures.
Marcus Swanpoel – CEO of cryptocurrency exchange Luno – explains, however, that the recent bitcoin price surge may have nothing to do with the relief package or signs of a bettering economy, and instead relate to the upcoming halving set to take place in a few weeks. He’s convinced many people are moving to bitcoin in anticipation of the event.
Last month’s rush to cash hit bitcoin especially hard. This time around, the impending halving could have mitigated outflows from crypto into cash.
What Will Happen After the Halving?
Simon Peters – an analyst with e-Toro – offered similar sentiment, explaining:
It could be that investors are not choosing to sell their holdings as we might expect and instead are staying in bitcoin so as not to miss out on the anticipated gains in the months following the halving.