Key Bitcoin Takeaways
- Bitcoin witnessed a modest downside correction on Thursday after surging to a fractal resistance area in the previous session.
- An uptick in the US bond yields and the US dollar also capped the cryptocurrency’s further gains.
- Traders look forward to Jerome Powell’s speech for further guidance.
Bitcoin held onto its weekly gains heading into the US trading session Thursday albeit a weak follow-up to its previous session’s rally chopped some profits off its scalp. The flagship cryptocurrency was last trading around $49,415, down about 1.88 percent into the day.
Rising Yields, 20-day Moving Average
Having defended the 20-day moving average support in the recent sessions, Bitcoin managed to maintain its bullish bias despite a weaker intraday trading sentiment around the cryptocurrency market. The overnight sell-off in the government bonds raised fears about copycat selling in other asset classes, taking a toll on the glob risk-on sentiment.
In turn, traders in the Bitcoin market preferred to secure their short-term profits instead of raising bids for further upside levels. The cryptocurrency traded in sync with the US stock market sentiment, with the Treasurys market acting as a common catalyst.
The US bond market continued on its sell-off mood as investors flirted with the prospect of a relatively faster US economic recovery and a dramatic uptick in inflation. As a result, the yield on the 10-year Treasury note rose to 1,465 percent. It was 0.917 percent at the beginning of 2021.
The upbeat economic outlook appeared over a faster-than-expected vaccination program in the US coupled with a massive stimulus plan. That, alongside the rising yields, prompted the US dollar to recover further into 2021. A rising greenback typically reduces investors’ appetite for Bitcoin.
Apart from that, investors also seemed reluctant to extend their long bets in the Bitcoin market, rather preferring to wait for further guidance from Jerome Powell. The Federal Reserve Chairman will speak on Thursday, 12:05 ET, at the Wall Street Journal Jobs Summit.
His speech expects to shed more light on the US central bank views the recent uptick in bond yields. Meanwhile, traders will also watch out for clues whether the Fed would taper its dovish policies as inflation expectations boom.
“Powell’s comments today are going to be really important,” said Hugh Gimber, a strategist at J.P. Morgan Asset Management. “Clearly, what we’re seeing over the last few weeks is equities being disrupted by the pace of the rise in real yields, and that puts the Fed in a tough space.”
Bitcoin Technical Setup
BTC/USD is maintaining support above 20-day exponential moving average. A dovish outlook from Mr. Powell could depress yields and allow bitcoin to maintain its bullish bias. In that case, the price expects to reclaim $50,000 and target its previous record high near $58,000.
Conversely, breaking below the 20-DMA risks sending price to the horizontal support area, as shown in the chart above. That roughly coincides with the 50-day simple moving average.