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By Yashu Gola - February 23, 2021 in ETH Reading Time: 2min read
Is Bitcoin a safe-haven? Not this week.
The world’s leading cryptocurrency accelerated its losses on Tuesday as traders decided to realize their profits. It shed up to $9,318, or 17.19 percent, to an intraday low of $44,888. The move downhill extended its week-to-date losses to a little over 22 percent.
Bitcoin plunges amid an anti-risk-on sentiment. Source: BTCUSD on TradingView.com
The BTC/USD exchange rate slipped below a crucial support offered by its 20-day exponential moving average. In recent history, the pair’s breakdown below the green wave increasieed its possibility to extend the downtrend towards the next wave target near the 50-day moving average (blue).
Coincidentally, the blue wave sits right in the region that earlier was resistance to Bitcoin’s uptrend attempts. Now a flipped support, the area anticipates to act like a magnet to Bitcoin’s downtrend, exposing the cryptocurrency to levels near $40,000.
Bitcoin’s losses coincided with a similar sell-off across the US stock market, led by a retreat in the technology stocks. Futures tied to the S&P 500 slipped 0.5 percent, logging its fifth consecutive day in the red. Meanwhile, contracts for the Nasdaq Composite plunged 1.5 percent, suggesting that tech stocks would continue to lead the markets lower.
A sharp rise in US government bond yields has reduced investors’ appetite for riskier assets in recent sessions in recent sessions. The upside momentum in bond rates particularly affected markets that experienced massive bull runs during 2020. Thanks to its higher yields, traders and investors merely rotated out of their profitable positions to seek stable returns in the bond market.
Investors note it is the momentum at which yields have increased, rather than their level, that is hurting riskier assets. Bitcoin, which traded inversely to bond yields all across 2020, tends to move lower as a result.
The fall across the stock and cryptocurrency market has shifted focus on Jerome Powell’s testimony before the US Senate Banking Committee on Tuesday.
The Federal Reserve Chairman will likely signal that his office would keep the quantitative easing policies at place until the economy achieves “maximum employment” and inflation rates above 2 percent. That includes a monthly purchase of $120 billion worth of government bonds and mortgage-backed securities and a near-zero interest rate.
Bitcoin anticipates to hold its long-term bullish bias as long as Fed continues its dovish program. More upside tailwinds for the cryptocurrency also appears in the US president Joe Biden’s plans to pass a $1.9tn coronavirus stimulus package through the House of Representatives this Friday.
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The original article was written by Yashu Gola and posted on NewsBTC.com.
Article reposted on Markethive by Jeffrey Sloe
