The price of Bitcoin (BTC) rose from $ 12,920 to $ 13,600 in four hours, recording a 5% rally. The uptrend coincides with positive developments from the European Central Bank (ECB) and bullish US employment data
Macroeconomic factors favor the Bitcoin rally
Throughout the past week, BTC has continuously rallied despite negative macroeconomic factors. The US stock market was in sharp decline and the number of COVID-19 cases in the United States and Europe rose sharply.
The perception of Bitcoin as a safe haven asset is strengthening noticeably due to the rise in institutional demand. But, when risky assets like stocks go down, they could put indirect pressure on BTC.
As such, when stocks rally and risky assets prosper, the short-term outlook for Bitcoin’s price improves.
On October 29, several events led to an increase in risky assets. First, the ECB has said it may seek a new stimulus package in December. Second, employment data in the United States reflected the lowest weekly demands since the start of the coronavirus pandemic.
A second stimulus package in Europe achieves two things. This would massively increase the appetite for risky assets in Europe. At the same time, it would put pressure on the United States to strike a much-needed stimulus deal.
Since US President Donald Trump made it clear that a stimulus package will come after the election, it prepares the United States for a December stimulus deal.
The ECB has said it will examine all possibilities to ensure the sustainability of the economy. This benefits Bitcoin, gold and stocks, as evidenced by the price of BTC. The ECB said:
“The Board of Governors will carefully assess the information received, including the dynamics of the pandemic, the prospects for vaccine deployment and the evolution of the exchange rate.”
Christine Lagarde, the president of the ECB, also stressed that the institution acted quickly when the first wave of COVID-19 hit. Hinting at the possibility of a second stimulus deal, she said:
“We have done this in the past: we reacted very quickly, very well, very strongly, some would say, to the first wave that hit the economies of the euro zone. We did it for the first wave; we will do it again for the second wave, ”said Lagarde.
BTC prevented a larger move towards the $ 12,700 area
When the price of Bitcoin fell below $ 13,000, technical analysts said BTC was in danger of falling to $ 12,700 and below.
The $ 13,000 level acted as a strong support area, supported by clusters of whales and significant by orders. BTC defending the region indicates that demand from buyers is overwhelming selling pressure, as the futures market shows.
The Bitcoin futures market funding rate has remained negative over the past few days. This suggests that the majority of the derivatives market is apparently betting against BTC.
Still, demand for Bitcoin in the spot market is offsetting the selling pressure and defending BTC against further decline.