Bitcoin Sees Big Gains as U.S. Dollar Weakens
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Bitcoin Sees Big Gains as U.S. Dollar Weakens
The greenback was down 0.65 percent, which makes cryptocurrencies look more attractive for investors
Bitcoin was trading up 10.24 percent to $21,299.70 on Friday at 3:30 p.m. ET, and Ethereum (Ether), was also up 4.72 percent to $1,712.84.
WHAT TRADERS WERE SAYING: Edward Moya, senior market analyst at Oanda, said in a note Friday that bitcoin was “welcoming the return of risk appetite and a falling US dollar,” according to Business Insider.
“The broad market rally has rejuvenated cryptos and that could continue if investors continue to look beyond hawkish central bank overtures and lingering recession risks,” he said.
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WHAT WE’RE SAYING: The value of bitcoin will continue to hit resistance at the $24,000 to $25,000 range based on the likelihood that the Federal Reserve will continue its monetary tightening strategy to bring down inflation, which is still high.
Arcane Research noted that June saw a net outflow from exchanges of 119,000 bitcoin, “the highest outflow since November 2020,” Kitco reported. “July also saw massive outflows, with 96,000 bitcoin being withdrawn from exchanges. The exchange outflows have continued in August, with a net of 65,000 bitcoin withdrawn in the first 22 days of the month.”
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HISTORY: We have noted that bitcoin has taken a hit since its highs in November but has shown signs of life since hitting its recent low on 18 June, when it was trading at $17,592.78. The crypto has hit a lot of headwinds in recent weeks. The Trends Journal has noted that bitcoin tends to do well when the U.S. dollar is weakens and interest rates remain low.
MORE HEADWIND FOR CRYPTOS: Jay Powell, the Fed Head who downplayed inflation for months before admitting there’s a problem, is expected to continue raising interest rates in the U.S. to tame inflation. The current key U.S. interest is 2.25 percent. Inflation is at about 8.5 percent.
David Rubenstein, Powell’s former boss at the Carlye Group, told CNN last week that he believes Powell may be thinking that if the unemployment rate goes up to about 6 percent, “inflation will [probably] be tamed a bit.
“But he can’t come out and say, ‘I hope the unemployment rate goes up to 6%.’ That doesn’t sound politically very attractive to say that,” Rubenstein said, according to Yahoo!.
The current unemployment rate in the U.S. is 3.7 percent.