Bitcoin rises above $11.8K – but how sustainable is the rally really?

A speech by Jerome Powell on Central Bank Digital Currencies (CBDC) was apparently sufficient to decouple Bitcoin from the traditional investment markets.

The benchmark crypto currency rose above $11,800 in the hours before the Federal Reserve Chairman made cautious remarks about CBDCs on a panel organized by the International Monetary Fund. On Monday at 09:00 ET, BTC/USD underwent a speculative jump from $11,523 to $11,650.

An hour later, as Powell began his speech, the pair rested. However, in the next hour, it resumed its short-term bullish trend and rose another $150. By noon ET, Bitcoin Code had reached an intraday high of $11,833.
Bitcoin recovered before and around Mr. Powell’s speech on Monday. Source: BTCUSD on

It was an independent act. None of the indices that have formed a positive correlation with Bitcoin corresponds to its rise in the early hours of Monday.

The S&P 500, for example, rose 0.90 percent after the New York opening bell, but later lost all those gains and closed 1.63 percent lower.

Bitcoin’s daily candle, on the other hand, recorded an intraday return of 2.14 percent.

Xi Jinping Vibes

BTC/USD’s bullish move on Monday recalls a short-term uptrend in October 2019, when traders increased their bids for the pair after China’s Prime Minister Xi Jinping endorsed the Blockchain – Bitcoin’s underlying technology – at a public event.
Bitcoin jumped by more than $3,000 after Jinping’s pro-blockchain statements. Source: BTCUSD on

BTC/USD climbed by more than 40 percent – from $7,430 to as much as $10,540 – before later succumbing to a strong sell-off. The pair plummeted by more than 39 percent as the China hype subsided.

An impending correction was a word of caution for many traders as they looked at the size and pace of the Bitcoin rally. A pseudonymous analyst wrote that he would cautiously wait for BTC to hold above $11,660 before opening new bullish positions. And:

„If I lose [the support], I will [then] try to sell at 11.2 thousand.

Ivan Liljeqvist, a market analyst based in Sweden, conducted a survey to understand the consensus behind the next Bitcoin step. The results were mixed: 47.7 percent voted for a correction towards $11,000.

What is the next step for Bitcoin?

In the short term Bitcoin expects to maintain its positive correlation with the U.S. stock market. The direct relationship of the crypto currency to the S&P 500 was erratic, as the chart below shows.

It rises and falls successively, but remains intact in the medium term.
The correlation between Bitcoin and S&P 500 is expected to recover. Source: Skew

The reason for this is that all markets are waiting for the second coronavirus stimulus package. Once the negotiations are concluded – macro analysts expect a conclusion by the presidential elections on November 3 – all riskier assets are likely to surge together.

Bitcoin is also expected to reach a new annual high as the stimulus weakens the US dollar.