Bitcoin prices continued to move between profits and losses as traders failed to make up their minds about the cryptocurrency’s short-term bias.
The BTC/USD exchange rate closed the Monday session higher after posting last-hour gains. Its upside move appeared after a bipartisan group of US senators presented an updated coronavirus stimulus bill of $748 billion. The proposal included aid to small businesses and capital for unemployment benefits.
Nevertheless, the stimulus left out aid to state and local governments, thereby lowering the package’s price tag from $908 billion. The Democrats, which has earlier demanded at least a $2 trillion COVID-19 aid, approved the stripped-out version on an emergency basis — in the face of mounting coronavirus cases, fresh lockdowns, and a sharp slowdown in the jobs market.
“This package does not include everything I think we need. But, it is an honest compromise,” Dick Durbin, the Illinois Democrat, said in a statement Monday.
Bitcoin bulls consider government aids as an indicator to gauge the US dollar’s strength against the cryptocurrency.
Per their observation, an oversupplied greenback into the US economy lifts its appeal of a global safe-haven among investors. As a result, cash holders move their capital into assets that generate better yields, whether it’s a developing country’s bond, gold, or cryptocurrencies.
“The dollar’s reign is likely to end when the rest of the world starts losing confidence that the US can keep paying its bills,” said Ruchir Sharma, the chief global strategist at Morgan Stanley Investment Management, in his pro-Bitcoin FT op-ed. “That is how dominant currencies fell in the past.”
But entering Tuesday, the effect of the stimulus news on the Bitcoin market was already wearing off. The benchmark cryptocurrency plunged 0.48 percent to $19,179 in the early Asian trading session, having established an intraday top near $19,565 around the Monday closing hours.
The correction pointed to profit-selling and an absence of strong upside bids for Bitcoin above the $19,500-region.
“It’s consolidation under the resistance pattern for BTC — can be evaluated easily based on medium-term averages, which recently have lost on momentum,” said YellowBlock founder CryptoBirb. “For massive upside continuation, it just needs one weekly candle to close through the resistance. Until then, lots of traps.”
What’s Ahead for Bitcoin
The next bullish cues for Bitcoin expects to arrive by Wednesday as the Federal Reserve concludes its two-day policy meeting for December.
As Bitcoinist covered Monday, the US central bank expects to shed more light on whether it would continue its asset purchasing program or not. Experts believe that the Fed would keep buying the Treasurys at the same pace while keeping interest rates near zero to keep their inflation target of 2 percent in check.
The move expects to push the yields on short-term government bonds lower. That, in turn, could turn investors away towards more appealing safe-havens, including Bitcoin.