While in the united States the Federal Reserve is financing the country like never before, the price of Bitcoin will recover completely without the need of this type of aid. The market crypto has removed a good part of the relationship it had in the past month with the stock market, it seems that the ground is clean so that Bitcoin will discuss in a natural way.
Contents
The FED injects money into an economy devastated
The Central Bank of the united States is completely redefining its vision, trying to cope until the situation is classified as a black swan. At the beginning of April was approved by this body an economic rescue package of USD 2.2 billion, a stimulus never before seen. With this, they extended the debt limits of a central bank, an action that in other circumstances used to be avoided. Stressing that, in parallel, Bitcoin and the market crypto reacted to the actions of the FED. The members of the FED are not quite in accordance with this roadmap, the issue is that there is no other way out in these moments. “None of us have the luxury of choosing our challenges, the history and the destiny we put them in front. Our job is to face the trials that are presented to us“, in the words of Jerome Powell, Federal Reserve Chairman, during a press conference in the past month. The portfolio of the FED reached us $ 6,57 million last April 22. Expert analysts predict that this figure rises to between 8 and 11 billion us dollars in this 2020. Which means at least double the 4 billion a year from 2019. This figure also equates to almost half of the country’s exports. As a result of this massive injection of liquidity, the largest equity index of the U.S., the S&P500, managed to recover more than 60% since its lowest minimum of 2020, but not by this mean that the uptrend historical has been resumed. On the contrary, the data keep getting worse with each hour that passes.
GDP of the united States falls to 2008 levels
The decrease in the Gross Domestic Product of the united states to 4.8 general% is historic. The vision gets worse if we take into account that this score only summarizes the economic impact of the economic closure of the last 2 weeks of the 1st quarter. The month of April was drastically worse in terms of collateral damage by the terrible pandemic, therefore, it only remains to wait for data even more negative. Any way, the economy will recover, but it will take more time than many expect. Today the economy of the united States is based on a 70% by consumption. For consumption to exist, people must first produce through employment, and what is happening is totally opposite. At a pace that leads the economic slowdown, it is likely that the unemployment rate in the country to fall to a range between 15 and 20% in the next few months. According to data from the economic Policy Institute, applications for unemployment rose to 28 million. However, it should be noted that, in parallel, the work Blockchain, associated with Bitcoin and other projects, have increased. However, it is number could be substantially higher, because, according to a survey by the same agency, of every 10 people that submitted requests, 4 were not able to register. 20% of the total was not able to make application for impairments related to the large amount of people in waiting queue. As the average of the results, more than 50 million americans lost their jobs in the last few weeks.
With the rise of their price, Bitcoin has become one of the assets that has paid in 2020
Despite the fact that Bitcoin is not classed as a mature asset, the ones who are have behaved worse in this time of economic uncertainty. The oil is without a doubt the most clear example. The price of Bitcoin has recovered more than 140% since its lowest minimum of this 2020. This minimum is not reached in correlation with the fall of traditional markets this past Thursday, black. Today, the market for crypto is eliminating that correlation recently created. Thanks to the continuous breakdown of resistance in a week where the S&P generates losses for its investors. Manifesting in this way a rise in the price of Bitcoin. The approach of Halving is to be the main driver of this return of interest upward. While the Federal Reserve floods the market with dollars, Bitcoin is becoming more and more scarce and safe. For some, the massive injection of liquidity is being the drop that spilled the glass. Consider that as a minimum will reconfigure capitalism as we know it. Billions of dollars will lose its purchasing power in the process. A large part will go to values, really strong, and Bitcoin has a position of advantage in this list.
Stock to Flow, one of the most commonly used models to forecast the rise in the price of Bitcoin
The metric proposed by the analyst PlanB, uses scarcity as the main determinant of the price of the Bitcoin, to compare it as it happens with the existence of precious metals. Bitcoin is the first digital object is able to offer this quality, which in theory should be translated into value. PlanB proposes to average the value of the BTC considering the existence of the asset (Stock) and the flow of the same in the market (Flow), leading to the following expression: rSF=S/F. In summary, this metric calculates how many years of production are required, to achieve the current stock. The supply of Bitcoin is limited, impossible to fake, and with a string of blocks extremely safe that prevents that nobody can spend the coins to another person without your authorization. With the protocol of reduction to half of the speed of supply, Bitcoin becomes even more scarce. The stock to flow indicates that the price will increase even faster when this event happens. This metric has been fairly close to the real price of Bitcoin. For this 2020 forecast a new record high before the year runs out.
The recent rise in the price of Bitcoin may be just the beginning
Thanks to the upward trend in historical BTC, the various moving averages are used to identify areas where the risk to reward is attractive. An interesting graphic that can be used to average good areas of entry is the Bitcoin Rainbow Price Chart of Blockchain Center. This chart is based on the sentiment of the market to help in the decision making of entries for holding, as for the exits with profits. Investors tend to be carried away by the feelings to make inappropriate choices within the markets, entering the capital when the greed is the one who dominates, and leaving in fear because of price declines. Currently, according to this tool, Bitcoin is entering the zone where buying is the best option, out of the area of liquidations, and showing that the largest free space is to the bulls. For a novice investor, use this tool can be of great help, if what you think is in the long term, where decisions can be taken quietly enough, without the need for the emotions to have an influence.
Final words
Bitcoin had never before gone through a similar situation, and despite being affected in the beginning, with every day that passes shows more strengthened with a system where debt is becoming a problem extremely serious. With the closeness of the Halving, a wave of investment is coming to the market, crypto, trying to jump on the train for fear of losing it. The understanding of the population about the qualities of Bitcoin as active low and safe will be the main driver of its price. The rise in the price of Bitcoin will not be exempt from internal falls. These breaths are healthy, and generate better entry points for the great back to add positions, generating each time a mattress higher capitalization. The return to normalcy will be even better for the assets to be shown to be strong during the crisis. The return of the consumption to normal levels will lead to an environment of inflation, product of an increase in never-before-seen the amount of dollars circulating in the economy. We hope that this article has been of your liking, and remember that all our publications are of an informative nature. In no case should be followed as the advice of investment.