An expert warned that in the next few weeks, the stock market could have a big rebuild when interest rates from Bitcoin of financial institutions is decreasing.
After a rather steady weekend, the largest cryptocurrency remains firmly in the price channel between $30,000 - $40,000. What will happen next?
Let's take a look at the factors that influence price performance this week.
Analyst says stock market will have a 'big bubble burst'
The stock market on Monday showed very clear momentum, led by Hong Kong, an emerging market for Chinese investors.
The market received a big boost earlier this month after US President Joe Biden announced a $1.9 trillion coronavirus stimulus package. Although it is close to reaching the peak, the amount of money injected into the market is still increasing.
Marc Chandler, head of market strategy at Bannockburn Global Forex, told Bloomberg: “Investors see monetary policy continuing to be deployed with massive amounts of money and lots of fiscal stimulus. than."
“Along with the vaccine rollout, this will put a lot of pressure on economic growth.”
The increase in the money supply is to serve even those interested in Bitcoin and traditional market players. Last week, Jeremy Grantham, CEO of asset management firm GMO, bluntly warned that the stock market is in a bubble and that stimulus only makes things worse.
He warned that there were only a few weeks left in the Bloomberg interview: “We have a few weeks to make some extra money, a couple of weeks to bet the last game and then there will be a bankruptcy. great."
“When the heat gets to this point, the bursting is only in months, not years, always and without exception.”
Bitcoin will also be affected by this bubble burst. While Bitcoin has a reputation as a safe-haven asset that is unaffected by traditional market forces, the exchange rate BTC/USD is still affected by macro factors, especially the strength of the US dollar. For example, a similar scenario is the cross-asset crash of last March that is also imprinted in the trader's memory.
Meanwhile, Grantham is far from optimistic about a post-coronavirus world.
"You won't be able to profit from US growth stocks in 10 or 20 years," he said.
In the short term, the dollar will move higher
Stocks rallied Monday while the dollar fell.
The US Dollar Index (DXY), which is calculated against a basket of currencies of the major trading partners, has fallen from the recent rise of testing the 90 level support by an hour. Again.
A reversal of last week's scenario, the dollar is now falling and Bitcoin exhibits a familiar negative correlation as it rises above $33,000.
Incoming US Treasury Secretary Janet Yellen has stated that she does not want the dollar to be too strong or too weak as during the Trump administration, she will not make financial plans based on her own decision.
BTC/USD surges at $31,000
After recovering from levels below $30,000, BTC/USD looks set to be less volatile this week.
Traders will have a period of relaxation following last week's volatile news and sell-offs.
Prominent trader filbfilb summed it up on Twitter Friday: “How do you usually explain Bitcoin corrections after a vertical rise? The answer lies in the question.”
However, with a relatively steady recovery over the weekend, the market is looking forward to a potential move higher within the $30,000 and $40,000 ranges that Bitcoin has held this month after establishing a top. $42,000.
Analyst Joseph Young said: “Bitcoin has plummeted at $31,000. The discount scenario has been disabled. Next the price is likely to rise to $36,000 and then correct again.”
Previously, Young has noted that on-chain indicators are declining, which makes the already opaque price action even less directional.
An upside move would take BTC/USD to familiar levels but would not break the pattern that has characterized the pair in recent weeks.
Ether sets new high
Bitcoin cools down and moves into volatility after vertical rally and creates perfect conditions for altcoin get a raise.
The signs that alts were waking up were in early January but Bitcoin's volatility last week dented some of the early gains.
The move beat out other large-cap altcoins.
Real Vision founder Raoul Pal predicts: “At this time and for some time to come, ETH will lead, followed by other altcoins and Bitcoin will also move higher. All will win.”
Pal once urged on Twitter not to listen to articles that disparage the crypto market.
“Enjoy and enter FUD with an open mind but remember, in an exponential bull market, everyone will scare you out of it. This is not pleasant at all.”