Bitcoin – FED Chair Powell May Have Brought to an End the Sell-Off

Bitcoin gained just 0.34% on Thursday, following a 10.86% bounce on Wednesday, to end the day at $4,319.6 and more importantly, hold onto $4,000 levels through the day to support the more bullish view of a possible Bitcoin bottoming out at Sunday’s swing lo $3,657.6.

Things could have been far worse, with Bitcoin dipping in the early hours of the morning to an intraday low $4,167.2, but with current price levels drawing in side lined investors, there’s been the necessary support on the downside to suggest upward momentum, though it’s unlikely to be smooth sailing.

With volatility back in the cryptomarket and hacks and price manipulation a frequent occurrence across the broader market, in spite of the larger exchanges looking to ramp up security levels, negative news will continue to be there to weigh on Bitcoin and the rest and that’s before considering the planned moves by the SEC, the G20 and other governments and regulators.

We’ve yet to hear any updates on the G20’s unified rules and regulations, with anti-money laundering policies not anticipated until the summer of next year. Perhaps the get together in Buenos Aires today and tomorrow will give leaders an opportunity to discuss the hot topic, though with the U.S – China trade war and Britain’s rapidly approaching departure from the EU, there may well more important things to discuss and address.

After all, the FSB did come to the conclusion that the cryptomarket was yet at a size that could impact global financial stability.

What has been interesting of late has been the recent moves when considering what’s going on in the more traditional, mature markets.

Bitcoin’s upward momentum kicked in on Wednesday and one does wonder whether there is any correlation between the FED’s monetary policy outlook and the direction of Bitcoin in what could be not too dissimilar to the more traditional carry trade.

Dovish FOMC member chatter that included comments from both the FED’s vice chair and chairman, Clarida and Powell, suggested that the rate path for next year may need to be a less aggressive one, with both noting that policy was close to normalization.

Financial institutions and governments may have attempted to curb the funding of Bitcoin and the broader market with credit cards, but it would certainly be more of a challenge to curb margin financing in its entirety with the larger exchanges, and even some of the smaller ones making credit available to those looking to take on the risk.

This could address one of the debates on whether the cryptomarket has any correlation with the global equity markets, with a more dovish FED on policy and not economic outlook, likely to be supporting both, though perhaps for different reasons, corporate borrowing costs and profit margins influencing the equities markets and funding costs impacting both the cryptomarket and capital flows through the global financial markets.

Unsurprisingly, any correlation breaks down when talk of the effects of trade wars heat up, though even the adverse effects of a trade war could ultimately see Bitcoin and the broader market hit reverse should economic conditions deteriorate to the point where the bank account has dried up and Bitcoin is all that’s left to sell, other than the house and the car.

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