Bitcoin Proves Its Value Amid Rate Cuts, Trade Wars
Bitcoin’s price remained elevated on Sunday, as the largest cryptocurrency overcame a modest market slump that pulled most of the majors into negative territory. Bitcoin continues to inch closer to $11,000 despite much lower than normal volumes that usually accompany weekend trading.
The bitcoin price peaked at $10,913.20 on Bitstamp, its highest level in two-and-a-half weeks. At the time of writing, the BTC/USD exchange rate was up 0.5% at $10,875. The price is up more than $1,000 from last weekend.
Based on the daily chart, bitcoin faces immediate support at the 30-day exponential moving average (EMA), a level that held up very well since the bull market began in February.
Bitcoin was holding up better than most of its peers on Sunday. Litecoin slumped as much as 9% ahead of the high-profile halving event; Ethereum, bitcoin cash and Binance Coin were all down over the 24-hour trading cycle.
With a capitalization of $192.5 billion, bitcoin now accounts for 66.5% of the overall cryptocurrency market.
Trade volumes have levelled off sharply in the latter half of the weekend. Spot volumes on verified exchanges fell to $760.8 million on Sunday, according to Bitwise. That’s down sharply from $1.2 billion on Saturday.
Monetary Easing, Trade Wars
Bitcoin’s sustained rally over the past week came as the Federal Reserve slashed interest rates for the first time in over a decade, a move designed to backstop the economy against global economic headwinds. A reduction in interest rates usually increases the money supply by making credit more easily available. In other words, it produces higher inflation, which policymakers are betting on.
Read about bitcoin in Hacked.com’s Week-in-Review.
Whereas the Fed is trying to produce higher inflation, bitcoin’s inflationary rate is going to be cut in half in roughly ten months. For bitcoin investors, this makes their favorite virtual currency the best hedge against central-bank money printing.
New research from Binance, the world’s largest cryptocurrency exchange by volume, reveals that President Trump’s escalating tariff war with China was also responsible for bitcoin’s recent rally. According to the report, bitcoin has risen in lockstep with other “safe haven assets,” such as gold and U.S. government debt.
“Will the tarde war continue to be a catalyst for bitcoin’s price growth?” Binance tweeted Friday.
The tweet also included the following chart, which shows the performance of safe-haven assets following Trump’s tariff escalation targeting $300 billion worth of Chinese goods:
Trump’s tweetstorm promising additional tariffs rocked the U.S. stock market and stoked the S&P 500’s worst weekly selloff this year. By Friday’s close, the large-cap index had fallen for five consecutive days.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Chart via TradingView.