First Mover: Bitcoin Drops, Stocks Ral ly Ahead of Biden’s Budget Announcement

Everything you need to make sense of the crypto markets and beyond

By the CoinDesk Markets Team

Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets

May 28, 2021

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Bitcoin (BTC)

-8.5% $35,991

Ether (ETH)

-10.2% $2,501

(Price data as of May 28 @11:00 UTC)

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Market Moves

by Omkar Godbole

Bitcoin Drops, Stocks Rally Ahead of Biden’s Budget Announcement

Bitcoin is nursing losses on Friday despite hopes of more inflation-boosting U.S. stimulus to come.

On Friday, President Joe Biden is set to release his first full budget, seeking $6 trillion in federal spending for the fiscal year 2022 and $8.2 trillion by 2021, The New York Times reports.

The proposal shows the Biden administration remains undeterred by recent inflation fears and is unlikely to close the liquidity tap anytime soon, having already pumped trillions of dollars into the system to counter the economic effects of the coronavirus pandemic since March 2020.

That's potentially a bullish development for bitcoin, which is widely touted as digital gold. However, the leading cryptocurrency is changing hands near $35,800 at press time, representing a 7% drop on the day. The decline comes a day after buyers failed to establish a foothold above the $40,000 mark.

However, the prospect of more liquidity is pushing stocks higher. The pan-European Stoxx 600 index is trading 0.43% higher at new record highs above 445 points, according to Investing.com. Futures tied to the S&P 500 are also hinting at a positive start to trading on Friday with a 0.5% gain.

Bitcoin prices, May 27 - 28, 2021 (CoinDesk)

Fears that the Federal Reserve may raise the interest rate to counter inflation could be keeping the cryptocurrency under pressure. That's because rate hikes dilute the appeal of the store-of-value assets like bitcoin.

According to Bloomberg, rates traders have boosted bets that the Fed will raise borrowing costs next year, much earlier than policymakers have indicated.

The rate hike fears may amplify, if the core personal consumption expenditure (core PCE) – the Fed's preferred measure of inflation – blows past expectations. That could lead to a deeper drop in bitcoin. The April data is scheduled for release at 12:30 UTC today.

However, analysts expect the cryptocurrency to see range play in the short term. "From a technical point of view, BTC is in a consolidation phase. We expect that there will be choppy trade between $30,000–40,000 for the next two weeks," Matthew Dibb, co-founder and COO of Stack Funds, said.

Read the original story here:

Bitcoin Drops, Stocks Rally Ahead of Biden’s Budget Announcement

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Technician's Take

by Damanick Dantes

Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected

Bitcoin (BTC) failed to sustain moves above $40,000 resistance on Thursday as the broader uptrend weakens. The cryptocurrency was trading around $36,000 at the time of writing and upside appears limited into the weekend.

A bearish trend reversal is on watch after months of slowing momentum, consolidation, and a downside break below $50,000 and $40,000. Bitcoin is down about 37% month-to-date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.

Daily bitcoin chart shows support resistance levels with oversold RSI (Source: TradingView)

Despite signs of a broader trend reversal, there are still short-term opportunities for active traders. “BTC can be very volatile, especially compared to assets in traditional markets,” wrote Justin Chuh, senior trader at Wave Financial in an email to CoinDesk.

“No one is borrowing to short spot BTC, we sill have an upward sloping forward curve, and downside protection remains relatively light,” said Chuh, who added that support will need to hold above $30,000, or otherwise bitcoin would be down on the year.

Read the original story here:

Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected

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BOLO

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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