Macro Hedge?

Fed's inflation-boosting policy may be long-run positive for bitcoin

To view this email as a web page, go here.

November 29, 2019 Bitcoin is struggling despite U.S. Federal Reserve (Fed) running an inflation-boosting balance sheet expansion program. The central bank began purchasing treasuries (government bonds) in September after the turmoil in the market money markets pushed up short-term interest rates to 10 percent. When rates rise sharply, the Fed injects money into the system by purchasing treasuries. The resulting surge in liquidity puts downward pressure on interest rates. The Fed's balance sheet has grown by more than $270 billion since Sept. 11 due to purchases of treasuries. The balance sheet expansion, popularly known as quantitative easing (QE), is widely believed to be inflationary in nature and the crypto market community considers bitcoin as a hedge against such policies. So far, however, that narrative has failed, as pointed out by popular analyst Alex Kruger. Bitcoin has dropped nearly 30 percent ever since the Fed began bloating its balance sheet. However, a prolonged period of QE and low interest rates may force investors to pour money into bitcoin. This is because saving becomes difficult with low-interest rates and the falling purchasing power of the currency. Further, policies like QE may dent confidence in the fiat monetary system in the long run, boosting bitcoin's appeal as an anti-establishment asset and a macro hedge. The adoption rate has already gone up in the hyper inflated and politically unstable nations like Argentina and Iran. Bitcoin Eyes $8,000 BTC: Price: $7,800 | Market cap: $140 Billion | 24-Hr Volume: $20 Billion Trend: Bullish Bitcoin has jumped to $7,800, validating the inverse head-and-shoulders breakout confirmed yesterday.  The hourly moving averages are also indicating the path of least resistance is to the higher side. Notably, the 50- and 200-hour moving averages have produced a golden crossover.  As a result, the cryptocurrency appears on track to test the psychological hurdle at $8,000. More importantly, bitcoin looks set to close above $7,380 today. That would validate the hammer candle created in the three days to Nov. 26 and confirm a bullish reversal on the three-day chart.  On the downside, $6,515 is the level to beat for sellers.  Long-term trend: Neutral Bitcoin is on track to end November with a 17 percent drop, the biggest monthly loss in a year. The cryptocurrency has found acceptance below the 50-week MA – a cause of concern for the bulls. Historically, bitcoin has suffered deeper losses after falling below the key average.  Even so, the outlook remains neutral, as the miners’ reward halving, usually a price-bullish event, is due in May 2020. With BTC looking oversold on the daily chart, a notable recovery ahead of the supply-cutting event can’t be ruled out.  The outlook as per the weekly chart would turn bullish only if and when prices break higher from the five-month long bearish channel.  Read Analysis Algorand Rising On Bullish Prospects ALGO: Price: $0.28 | MCAP: $128 million | 24-Hr Volume: $149 million Short-term trend: Bullish An announcement from Algorand regarding a protocol upgrade may be driving bullish speculation, with its price having risen 23.1 percent over a 24-hour period after reaching a temporary bottom of $0.18 witnessed Nov. 25. Granted, the announcement coincides with a 31 percent sell-off on Nov. 21 with a "sell-the-news" effect rocking prices over that period, sentiment now appears to be shifting from bearish to bullish in the short-term. The daily RSI is above the neutral 50 level, an indication of bullish price action, combined with a higher low forming on the daily chart, which could lead to a continuation to $0.31 (prior highs). Long-term trend: Cautiously bullish Prices have stopped just short of prior Sept. 12-21 supports, now considered resistance and could be providing a temporary barrier for further gains. However, given its placement above the 50-day moving average, a continuation in its bullish market structure should not be ruled out. The awesome oscillator (AO), an indicator of trader momentum, is moving above the neutral 0 level, which if crossed above, would provide confirmation of a greater trend change, from bearish-to-bullish. 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. Copyright © 2018 CoinDesk, All rights reserved.  Our mailing address is:  250 Park Avenue South New York, NY, 10003, US  Want to change how you receive these emails? You can update your preferences or unsubscribe from this list