- Fed to keep benchmark interest rates near zero, to continue monthly $120 billion bond purchases
- Reason pertain to economic risks posed by the highly transmissible delta variant
- Favorable scenario for Bitcoin as BTC/USD exchange rate floats near $40,000
JAIPUR (Coinchapter.com) – Bitcoin inched towards $40,000 amid talks of the Fed’s continuing support for the U.S. economy. Traders adopted a bullish stance on the top cryptocurrency after assessing the U.S. central bank’s supposed decision to keep federal fund rates near zero, along with a continuation of monthly bond purchases.
Economists cited the mounting U.S. economic risk from the upsurge in delta variant cases as the reason for Fed’s ‘patience.’
The argument to be patient is much stronger and Jay Powell is a patient guy. They are worried about the pandemic, of course. They are pleased with unfolding economic data, but there is a long way to go,Mellon’s Chief Economist Vincent Reinhart told Bloomberg.
Traditional Assets Down On Delta Variant Fears
Also, low-risk assets such as the US 10-Yr Treasury Note depreciated since the Federal Open Market Committee (FOMC) last convened in June. Such adverse traditional market developments point to an impending downturn in the economy. Bloomberg economists noted this as one of the solid reasons for the FOMC to keep rates steady.
“The Federal Reserve will maintain a steady policy course this week amid market gyrations and some tempering of economic expectations since the June meeting. Accelerating infection counts attributable to the delta variant mean heightened attention on downside economic risks.”said Bloomberg economists Andrew Husby, Eliza Winger and Niraj Shah
Financial influencers and investment professionals strongly criticized the Fed’s ultra-accommodative stance.
“The U.S. economy has never been more screwed up or in worse financial shape than it is today. It got this way due to artificially low-interest rates and excessive QE. If the #Fed dials back the monetary stimulus those problems will be fully laid bare, which is why it never will.said gold avocate Peter Schiff
Nonetheless, the above dovish scenario is where Bitcoin earns brownie points. And it did this time as well.
Bitcoin Flirts With $40,000 Again.
Bullish bitcoin investors went long on the cryptocurrency. As a result, the BTC/USD exchange rate raked in 10% gains after buyers pushed prices up from $36,386 at the opening bell of the previous trading session to $40,430 at the opening bell of the ongoing session.
$41,329 remains a significant resistance for Bitcoin bulls. A successful close above the stated price could open the gates for further upside, as was the case during February.
“The current momentum is strong” and $45,000 is in sight but a conclusive break above $50,000 “will take some doing,”Pankaj Balani, chief executive officer of crypto derivatives exchange Delta Exchange, wrote in a note Tuesday.
However, as BTC/USD surpassed crucial Fibonacci retracement levels again after dropping through them a couple of sessions back, the latest progress is worth considering. Bitcoin bulls have held the support near 78.6% Fibonacci retracement level ($39,683.55) firmly. What they need to do next is manage a close above $40,581.3 (100% Fib retracement level).