Bitcoin Weekly Outlook: Expect Downside Correction as Stimulus Enters Deadlock

Bitcoin Weekly Outlook: Expect Downside Correction as Stimulus Enters Deadlock

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The benchmark cryptocurrency has opened Monday in positive territory. As of 0516 UTC, it was trading for ,405, up 16.27 percent from its recent bottom and down 8.62 percent from its year-to-date high.
Second, the ongoing stimulus negotiations are at an impasse as US policymakers spew allegations over one another ahead of the November 3 presidential election.

After literally rage-tweeting about the House Speaker Nanci Pelosi–words that pushed Bitcoin, gold, and equity markets lower at the beginning of last week–he announced that he now desires an even bigger coronavirus aid for American households and businesses.

Resistance Everywhere

For Bitcoin, that means a lack of US dollar liquidity in the short-term. The market expects investors to hold onto their cash unless there is concrete evidence of government spending. That reduces the appeal of riskier and other safe-haven assets, including stocks and gold.
A significant price rebound in the Bitcoin market last week is now at the risk of paring in the current one.
It is because of the fading impact of the catalysts that started the Bitcoin pump in the first place. Last week, news of Square, a global payments firm headed by pro-Bitcoin Twitter chief Jack Dorsey, purchasing about million worth of BTC fueled the cryptocurrency higher.
In a letter to House Democrats on Sunday, House Speaker Nanci Pelosi criticized the .9 trillion stimulus package from Treasury Secretary Steven Mnuchin. Calling it “inadequate,” she said that the Republicans proposed lesser-than-anticipated funds for testing, contact tracing, and treatment of the coronavirus.

But one cannot expect Bitcoin to hold its gains for a longer timeframe for two reasons. First, MicroStrategy, a public-traded firm, bought about 5 million worth of BTC that later followed a significant price correction towards ,200. In comparison, Square’s investment is peanuts.
— Pomp 🌪 (@APompliano) October 9, 2020

Stimulus Plays a Spoiler

— Donald J. Trump (@realDonaldTrump) October 9, 2020

But for this week, one can expect the cryptocurrency to turn lower towards its newfound support near ,000.

Technically, Bitcoin’s strong upside move met an equally robust resistance at ,500. The said level held the price from jumping any further, as it had done on July 27 and on some days of August 2019.

Covid Relief Negotiations are moving along. Go Big!
Nevertheless, gold bugs are hoping that a clear Joe Biden-win would have the US Congress to release a gracious relief package. That, in turn, would act as a bullish catalyst for Bitcoin in the long-term.

Simultaneously, President Trump stepped away from canceling stimulus negotiations with the Democrats.

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