Weak Dollar Equals Strong Bitcoin

Fibo Quantum

The Federal Reserve in the US has taken all the actions that would normally cause a drop in USD exchange rates. However, as the world is in the early phases of an economic shutdown due to coronavirus, the demand for US dollars is still intact.

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Since, last week the US financial regulators increased the supply of US by more than $2.2 trillion dollars along with decreasing the interest rates to 0%. This is perfect recipe of a collapse of USD due to heightened supply.

The massive sell-off in the traditional stock and commodities markets to increase cash positions, along the global demand for US dollar liquidity seems to be balancing the supply shocks that US keeps delivering.

However, the FX markets are now absorbing the shocks as the demand price creeps back up near the 50-Day EMA as the demand of US dollar is increasing due to the virus scare.

usd japenese yen
USD/JPY 1-Day Chart (TradingView)

The crisis has brought Bitcoin at an important cross-road in it’s history. The general sentiments are bearish with negative funding rate and basis points across BitMEX and Okex. The price continues to be in a range with $5,500-$5,650 as levels of resistance.

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Crypto Rocket

btcusd four hour chart
BTC/USD 4-Hour Chart on Bitstamp (TradingView)

As the situation of the virus is getting is worse, the demand for liquidity in the dollar is rising. This is necessary in the short-term to avoid depression due to lack of liquidity in the markets.

However, in the long-term, the money printed out of thin air will eventually slow down the economy further. Gabor Gurbacs, the CEO and digital asset strategist at VanEck tweeted,

The trillions printed by central banks out of thin air reminds me how #Bitcoin is the only remaining free-market world-currency. It’s time for plan ₿!

The short-term bearish along long-term bullish views of Bitcoin is currently holding the uncertainty. At the same time, crypto markets might be gearing up for a lot of volatility in the near term as well.

How do you think global FIAT markets and crypto markets will react to the crisis? Please share your views with us. 

Summary

Weak Dollar Equals Strong Bitcoin - Analyst, but Coronavirus Keeps up USD Demand

Article Name

Weak Dollar Equals Strong Bitcoin – Analyst, but Coronavirus Keeps up USD Demand

Description

The Federal Reserve in the US has taken all the actions that would normally cause a drop in USD exchange rates. However, as the world is in the early phases of an economic shutdown due to coronavirus, the demand for US dollars is still intact. 

Author

Nivesh Rustgi

Publisher Name

CoinGape

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Coingape is committed to following the highest standards of journalism, and therefore, it abides by a strict editorial policy. While CoinGape takes all the measures to ensure that the facts presented in its news articles are accurate.

Disclaimer
The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.



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