Bitcoin Tests $6,500 After Fed Announced Unlimited QE
Bitcoin is trading higher on Monday as a reaction of the Federal Reserve announcement of an unlimited Quantitative easing program until markets recover its stability. In that framework, BTC/USD is testing the $6,500 resistance.
Against the Euro, bitcoin is also performing positive, but after trading as high as $6,200 earlier in the day, BTC/EUR is now below $6,000.
Other crypto currencies like Bitcoin Cash, Bitcoin SV, and Litecoin are posting gains in the day. But Ethereum, Ripple, Dash, and BNB are fighting to avoid losses.
COIN360 Cryptocurrency Heat Map performance on March 23, 2020.
The Federal Reserve to Buy Assets "in The Amounts Needed" With no Time Limit
The American central bank just announced on Monday that they would extend the QE program with no limit to support markets due to coronavirus economic impact.
According to the Fed announcement, “while great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”
Among other programs, the Fed will start purchasing corporate bonds for the first time ever as the central bank will take on investment-grade securities in primary and secondary markets and through exchange-traded funds.
Long story in short, the Fed will keep printing money with no limits and will expand its balance sheet as necessary, rather than setting an amount of money as it did in other financial crises.
The movement comes in line with the failure of the Congress in the passing of the coronavirus relief package that President Trump was pushing hard to get approved. The bill was short of votes due to the reluctance of the Democratic party to support a no-conditions bailout for corporate sectors such as airlines.
Remember that President Trump is pressuring Congress to approve a set of measures to fight against the coronavirus impact in the economy. It would include a bailout package for airlines to avoid economic problems during the coronavirus outbreak. It is dividing Congress.
Time to Invest
The high volatility that markets are experiencing in the last weeks has opened the eyes of investors. Declining stocks, wild moves in currencies, and cryptos are being monitored for traders all around the world.
In that framework, Allianz chief economic advisor Mohamed El-Erian commented in an interview with CNBC that there are "pockets of value" in the markets, but only for traders with high risk tolerance.
El Erian said:
Those people who entered this defensively and have a massive appetite for volatility, there are starting to be real pockets of value, and they should be looking at that, However, for most investors, I think you still want to be cautious out there.
There are two readings of markets in the same paragraph but a clear comment. There are value and potential profits in markets due to volatility, but traders should be cautious regarding how risk they can tolerate and how much they can get exposed.
Is Bitcoin Ready to Take Over The $7,000 Area
BTC/USD 1-year daily chart on march 23, 2020.
As mentioned earlier, Bitcoin is taking profit from the Federal Reserve decision for an unlimited Quantitative Easing program. Remember that easy money will always pump high risk assets, plus a flood of dollars will push the Greenback down, benefiting Bitcoin in the BTC/USD case.
After the announcement, Bitcoin reacted positively and traded as high as $6,500. However, it found selling interest at that level, and it is now trading at $6,255, which is 7.6% positive on the day.
The chart is becoming bullish in the one-day picture, and it seems that the 4,000 area reached on March 13 is acting as a floor for the upside. Also, $5,000 and $5,700 are identified as supports.
Now, BTC/USD is consolidating levels just below the $6,800-$6,900 area. As far as the cryptocurrency remains above the $5,700 level, bulls will maintain control of the coin.
The next step now is the attack on the $6,500 area, which, after breaking, will become the future support before the attack to the $7,000 level. Then, not only $7,000, but the $7,500 will be the critical resistance to focus.
On the other side, If the crypto asset is unable to consolidate levels above $6,500, it will turn dovish to $5,500.
Mauricio is a newer member of the team and a very welcome addition. He is a financial journalist and trader with over ten years of experience in stocks, Forex, commodities, and cryptocurrencies. This experience means he has an excellent understanding of the markets and current events.