With the S&P 500 down another 1.3% on Wednesday, and the Nasdaq down 1.87%, Bitcoin is looking strong at the $27,600 resistance.
Money printing hangover
The U.S. government and its economy are still coming to terms with all the money that was thrown at the COVID crisis. The ensuing rampant inflation has caused the Federal Reserve to raise interest rates to the most damaging levels for the economy, and Fed Chairman Powell has signalled that at least one more rate rise is possible even before the end of this year.
On top of this, the U.S. Treasury plans to borrow $1.85 trillion over this second half of the year just to fill up its own chest for now.
According to Politico, outside of the Fed and U.S. market concerns, it is in Europe and emerging markets where the spillover from money printing has been felt the most.
Dario Perkins, head of global macro research at TS Lombard, was quoted by Politico as saying in a note to clients:
“In trying to match Fed tightening and protect their currencies, some central banks – particularly in Europe – have been whipsawed into raising rates too aggressively,”
He added:
“The US post-COVID party has become a European hangover, another instalment of America’s exorbitant privilege.”
Bitcoin holding up well
Meanwhile, Bitcoin continues to be strong in the face of such rough times in traditional markets. Something it has not done for a very long time.
The king of the cryptocurrencies is however still battling with resistance at $27,600. This is underneath the 200-week moving average, and should it fail to pierce these two barriers, a lengthening of the first phase of the Bitcoin bull market could take place.
Looking on the bright side of things, China is putting plenty of liquidity into its own markets in order to bolster its economy, and the U.S. can only be one big breakage away from opening the floodgates of its own printing press.
With the SEC stymied for now on practically all crypto fronts, Bitcoin could be relieved of its shackles to continue making gains.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
