Bitcoin on longest winning weekly run in 9 months ahead of Jackson Hole Symposium

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Bitcoin had an impressive rally ahead of the Federal Reserve’s annual economic symposium in Jackson Hole on Friday. Analysts say the virtual event could strengthen the cryptocurrency’s bullish trajectory.

Bitcoin was trading at a three-month high of $ 50,200 at the time of publication, having recorded gains for a fifth consecutive week in the seven days leading up to August 22. This is the longest weekly winning trend since November, according to data from CoinDesk 20.

“After Jackson Hole, the dollar could see some depreciation, and with institutions running out of bitcoin over the past two weeks and slowly coming back to work for the start of September, this will trigger further surges into crypto. -currency and also in equity, ”Laurent Kssis, managing director of exchange traded products at 21Shares, told CoinDesk in a Telegram conversation.

Related: Bitcoin Approaches Nearly $ 50,000- $ 55,000 Resistance

The Jackson Hole Economic Symposium, sponsored annually by the Federal Reserve Bank of Kansas City, welcomes prominent central bankers, finance ministers, academics and financial market participants. Until a few weeks ago, some observers suggested that Fed Chairman Jerome Powell would use the event to set the stage for a rapid reduction in central bank stimulus measures aimed at inflating asset prices. .

Those expectations have been watered down in recent days, with the new coronavirus cases spiking in the United States and other parts of the world, as ForexLive’s Justin Low noted. The Fed may now want to assess the impact of the virus resurgence on the economy before signaling a slowdown.

This could revive global macro trade of selling dollars and buying any denomination in terms of the greenback seen in the second half of 2020.

“We expect the Fed to remain accommodating and offer no surprises,” said Matthew Dibb, co-founder and COO at Stack Funds. “If that’s the case, we’ll see continued risk in most markets. “

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Related: Bitcoin Surpasses $ 50,000 For The First Time In 3 Months

Bitcoin nearly quadrupled to $ 40,000 in the last three months of 2020 as the dollar plunged. The cryptocurrency hit a record high of $ 64,801 in April before taking a beating in May and June.

The recent rebound from July lows below $ 30,000 looks impressive, given that it occurred alongside a rise in the dollar index (DXY), which measures the value of the greenback against the dollar. major currencies.

The DXY hit a nine-month high at 93.73 on Friday and was recently at 93.25. The rise was in part fueled by the minutes of the June Fed meeting confirming that the central bank could start shrinking later this year, as noted by Marc Chandler, chief market strategist at Bannockburn. Global Forex, in a blog post.

So the minutes seem to have stolen some of the thunder from Jackson Hole. So even a hawkish comment from Powell later this week might not significantly deteriorate the sense of risk.

Other crypto-specific factors are also supporting a continued rally. “The calm of the $ 50,000 break leads me to think that this could be sustainable with minor setbacks,” said Patrick Heusser, chief trading officer at Crypto Finance.

The market appears calm, with the perpetual fund rate – or the average cost of holding long positions in the derivatives market – still below 0.010%, according to Glassnode. That’s significantly lower than the highs above 0.10% seen during the first quarter bullish frenzy and suggests little to no speculative foam in the market.

“When it comes to funding and the options market, this rally always seems to be spot-determined,” Dibb said. “Our expectation is that this break in psychological resistance will likely lead to a return to bitcoin in the coming weeks, with the next target of $ 60,000.”

The cryptocurrency rally from the July lows has been supported by strong hands, according to data analytics firm IntoTheBlock.

A minor correction cannot be ruled out, however, as short-term technical indicators point to overbought conditions. This can weigh heavily on alternative cryptocurrencies like solana and cardano which have outperformed bitcoin in recent days.

“Recently the market has seen modest inflows of bitcoin, but rather large inflows of exchange traded commodities in all other coins, especially Solana, Polkadot, Cardano and of course Ether,” Kssis said. “The performance is attributed to the rise in bitcoin which could see a reset to $ 50,000 and a short correction ahead of expected institutional entries in September.”

Also Read: Bitcoin Trading Above $ 50,000 Psychological Resistance For The First Time In 3 Months

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