Bitcoin to $20K? It All Depends on US Dollar Performance This Week
Bitcoin wobbled into the start of this week’s trading session, moving between losses and gains on its neutral weekly outlook.
The benchmark cryptocurrency was trading at $19,115.54 as of 10:45 GMT, down 0.27 percent into the European session. For starters, the intraday losses appeared as a part of a profit-taking move by daytraders following Bitcoin’s 7 percent rally during the weekend.
Meanwhile, the cryptocurrency also slipped as investors’ focus shifted to Pfizer-BioNTech’s Covid-19 vaccine approval in the US and the UK. A successful cure for the pandemic raised hopes of a faster-than-expected economic recovery. As a result, the Asian, as well as the European stocks, opened in positive territory. The US stock futures also reported early gains.
But Bitcoin’s losses appeared limited due to a weakening US dollar. The greenback was also trading lower against the basket of foreign currencies, illustrating that the vaccine news did not lift the cash sentiment.
The week ahead presents challenges for the US dollar, with the Federal Reserve scheduled to conclude its December policy meeting on Wednesday, followed by the release of November US retail sales and the December US Market Manufacturing PMI Flash data.
US Dollar Index breaks below technical supports. Source: DXY on TradingView.com
Analysts estimate that statistics would point to a decelerating economy against a haunting coronavirus outlook in the US. Meanwhile, the Fed would most likely keep its rates near zero and its bond-buying program intact, supplemented by unemployment and inflation forecasts.
The worrisome tone would further pressure the US dollar lower.
Bitcoin’s bullish outlook takes a majority of its influence from the prospects of a weaker greenback. As of now, the cryptocurrency looks gravitated towards bears because of the vaccine news. Nevertheless, once the optimism dies down, investors’ focus would return to rising inflation forecasts.
The Fed has committed to shoot the rate upwards of 2 percent.
$20K Target for Bitcoin
More bullish calls for Bitcoin come on hopes of the second coronavirus stimulus bill. Reuters reported that the Democrats and the Republicans initiated a bipartisan effort to introduce a $908 billion relief plan. If escalated, the package would increase the US dollar’s bearish bias, which, in turn, should shift investors to other safe-haven alternatives.
Bitcoin expects to hit $20,000 by mid-week, claims Calm Trader. Source: BTCUSD on TradingView.com
A pseudonymous trader stated that he expects Bitcoin to hit $20,000 given the macroeconomic conditions around it. He increased its spot exposure on the cryptocurrency as its price closed above $19,100, noting that the momentum above the level is “looking good on [lower timeframes].”
“Expecting 3rd test of 20k in today or tomorrow’s US session,” he said, warning others not to use high leverages on his bullish call.