Bitcoin was able to recoup a large portion of the losses it endured last week down to a strengthening dollar attitude. And the benchmark cryptocurrency is currently looking to continue its upward movement relying on a strong fundamental outlook in the week ahead.
BTC/USD was up by 1.05% to 10,891 USD during the start of Monday’s trading session. Its recent upswing appeared as buyers attempted to slow down the US dollar market. A trade through 94.74 on the US dollar index’s (DXY) local looked unlikely as traders reviewed the restart of the Coronavirus stimulus package talks this week.
DXY corrects lower after testing resistance at 94.74 level.
US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi advised that they will restart talks about the long-awaited aid. The package, which could scale up to 2.4 trillion USD, will support millions of American families and individuals who qualify.
Pelosi said on Sunday “I am hoping for a deal, I’d rather have a deal to put money in people’s pockets than to have a rhetorical argument.”
Last Thursday Mnuchin said, “I’ve probably spoken to Speaker Pelosi 15 or 20 times in the last few days … and we’ve agreed to continue to have discussions about the CARES Act.”
The next package is expected to be ready to vote on this Friday.
Stimulus-Led Pump.
Bitcoin responded well to a number of events seeing it surged 4.93% from 10,237 USD to 10,795 USD on Thursday. Following Mnuchin’s comments we saw It continue correcting higher, and with Pelosi’s remarks on Sunday only fueling the bullish attitude for the week ahead.
Bitcoin bulls believe that the massive supply of US dollars, combined with very low interest rates has increased the allure of the safe-haven assets in the long-term. This attitude was very clear following the crash in March 2020, where BTC/USD climbed by over 200% against the US Congress’s initial stimulus package.
Bitcoin remains on its March 2020 upswing despite the latest corrections.
One independent expert said “The DXY is always going to have a relationship with BTC, as it does in any currency pair, It’s the Denominator, or “Counter currency. Bitcoin is the “Base currency. If you are long BTC, you are essentially short the dollar.”
Bitcoin Technical Outlook.
BTC/USD has been bouncing off a short-term support level. It has been a lower trendline of a consolidation channel, a Symmetrical Triangle, as shown in the chart below.
These helpful fundamentals might support Bitcoin’s move towards the upper trendline. That would see a clear break over the 50-day moving average, followed by a close around 11,500 USD. If we see a stimulus package agreement, the rally might continue even higher over the weekend to close around 12,000 USD.
However, a failed package agreement could risk Bitcoin’s gains, driving it back towards the lower trendline. Subsequently, the cryptocurrency might move even lower towards the 200-day moving average of around the 9,000 USD level.
