Bitcoin approaches $35K as Fed official pour cold water on tapering plans

• Richmond Federal Reserve President Thomas Barkin talked about keeping tapering plans on hold
• The employment-to-population ratio will play a vital role in the decision to reduce monthly bond purchases
• Interest rate raise to happen upon threshold inflation figures and job market scenario
• Bitcoin market stands to gain from the Fed’s reluctance on tapering

JAIPUR (Coinchapter.com) – The time is not suitable to kickstart the recently announced tapering of the $120 billion monthly bond purchases. Feels Thomas Barkin, President of the Federal Reserve Bank of Richmond.

Speaking exclusively to The Wall Street Journal, the Richmond Fed boss asserted that the labor market is still in shambles. And has yet to reach the “threshold” figure, at which the central bank can start pulling support for the US economy. Mr. Barkin thinks that moment will arrive soon. However, if the job market delays its recovery, deduction in the monthly bond-buying stimulus too will be delayed.

“If the labor market can clear relatively quickly, then maybe it can happen sooner, but if it takes longer for the labor market to reopen, it goes a little later,” Mr. Barkin told the mainstream media giant on Friday.

Employment-To-Population Ratio Key

The employment-to-population ratio numbers would be instrumental in decelerating the pace of the bond-buying stimulus, Mr. Barkin said.

After falling from 61.1% in February 2020 to 51.3% in April last year, the ratio moved back up to 58% last month. According to the Richmond Fed President, an employment-to-population ratio beyond 59% is what he thinks would be appropriate for the tapering to kickoff.

Soaring inflation numbers have forced Federal Reserve chiefs of different states to declare bond purchase taper to begin as soon as possible. But Mr. Barkin thinks that a simple process that is easily understood and digested by markets would be the best one to move ahead with.

Bitcoin stands to gain

Mr. Barkin’s above comments come when the COVID-19 Delta variant is spreading rapidly across Europe. The latest mutation of the dreaded coronavirus has added a fresh dose of uncertainty in traditional markets. A sign that would require the Fed to keep its benchmark interest rates near zero. Or to step back on its hawkish tone. Until the renewed COVID-19 FUD loses its intensity.

Bitcoin would be at the receiving end as near-zero interest rates have buoyed the top cryptocurrency’s bullish sentiment. Nevertheless, BTC remains a better asset to hold than a government bond, especially as the latter’s yields have dropped to record lows even after a year-to-date spike. 

Also Read: Bitcoin week ahead Ep11: Time to add Delta variant to investment equation

One wouldn’t expect much from the flagship cryptocurrency after looking at the daily chart of the BTC/USD trading pair. However, Bitcoin’s ‘relative strength’ is on the rise. After the May 19 crash, BTC’s RSI (Relative Strength Indicator), after bottoming below 30, has been printing higher lows. An indication that even with the choppy price action, bullish sentiment is still alive.

Bitcoin price is currently trading within a classic Bollinger band squeeze. Massive breakouts follow such squeeze formations. BTC is firmly held upright by the $30,000 support. And given the rising trend in strength, Bitcoin’s technical setup suggests that it’s only a matter of time before a fresh bout of bullish pressure drives prices higher. In the event of a breakout rally, the near-term upside target lies at the $34,989 price level (coinciding with the 78.6% Fibonacci extension band).

Please leave this field empty

Subscribe Today
for our Weekly Newsletter

Email Address *

Free Weekly Crypto News without the spam.

Check your inbox or spam folder to confirm your subscription.