Bitcoin Avoids Deep Bearish Correction as Powell Pledges New Stimulus
- Bitcoin was holding steady above $9,100-support as the Federal Reserve Chairman Jerome Powell pledged to consider additional stimulus.
- The BTC/USD pair earlier recovered by more than 150 percent from its March 13 low on Fed’s expansionary policies.
- An analyst said Bitcoin might resume its uptrend towards or above $10,000.
Bitcoin was motionless in early Wednesday trading session as traders refused to break its price below a concrete support level of $9,100.
The cautious approach took cues from uncertainty in the traditional markets. On Tuesday, the U.S.’s two top economic policymakers pledged that they would consider additional relief to protect businesses and the labor market amid a resurgence in the COVID cases.
Limiting a Crash
Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell made the statement as their $2 trillion relief package nears expiry in July. Mr. Mnuchin clarified that the U.S. government had included “important features” to help “certain industries” through the pandemic.
Meanwhile, Mr. Powell highlighted the rebound in hiring, spending, and other economic activities amid the reopening of the U.S. states. He also warned about slow growth since a majority of businesses require people to step out of their homes. Close personal contracts raise the chances of catching COVID.
“Hypothetically, a second outbreak would force governments and people to withdraw again from economic activity,” Mr. Powell said. “The worst part of it would be to undermine public confidence, which is what we need to get back to lots of kinds of economic activity that involves crowds.”
Powell’s comments painted a bleak picture for the U.S. economy. They also came as California and Florida witnessed a surge in new COVID cases and rising hospitalization. Nevertheless, the U.S. stocks held on to their second-quarter gains as investors measured the risks of rising infections against the promise of additional stimulus packages.
The surprisingly strong performance of stocks might prevent a further downtrend in the Bitcoin market.
The benchmark S&P 500 surged 1.5 percent while tech-focused Nasdaq climbed by 1.9 percent.
Bitcoin Avoids Bearish Correction
Bitcoin, which more or less has tailed the S&P 500 in the last three months, limited its downside correction as the U.S. index moved higher this week.
The top cryptocurrency maintained a concrete support level above $9,100 on a low volumed and volatile Wednesday. A rising number of COVID cases blurred traders’ short-term outlook of the market.
Offended by this Bitcoin price action
Break down or pump already
— Josh Rager 📈 (@Josh_Rager) July 1, 2020
A trader, meanwhile, commented that Bitcoin’s outlook remains bullish as long as the Fed keeps injecting money into the economy.
“If we do manage to pump (possible future FED stimulus) and break 10.2K, it would signal some short term growth,” he said on Wednesday.
Bitcoin is trading 150 percent higher from its March nadir. Its price rally surfaced as Federal Reserve’s decision to introduce a $3 trillion stimulus package and cut benchmark rates to near zero.