|
Getting your Trinity Audio player ready...
|
A looming Bitcoin death cross, a typically bearish technical indicator, might be a false alarm this time around. The cryptocurrency market is showing signs of resilience amid a broader risk-on sentiment triggered by the Bank of Japan’s (BOJ) unexpected dovish stance.
The death cross, formed when the 50-day Simple Moving Average (SMA) crosses below the 200-day SMA, is often interpreted as a bearish signal. However, its predictive power has been questioned in recent times.
Bitcoin’s price has been under pressure following a recent sell-off in risk assets, primarily driven by the unwinding of the yen carry trade. This high-risk, high-reward strategy involves borrowing cheap yen to invest in higher-yielding assets. The BOJ’s surprise decision to maintain ultra-loose monetary policy has dampened the incentive for unwinding these positions, thereby reducing downward pressure on risk assets like Bitcoin.
“The BOJ struck the ‘Yen put,’ and the Nikkei will be driving the Nasdaq and S&P to their pre-selloff levels,” said pseudonymous market observer Global Macro. This suggests a potential rebound in broader financial markets, which could positively impact Bitcoin.
While the technical indicators might be pointing downwards, the fundamental backdrop appears to be improving. A less hawkish global monetary policy environment and the potential for renewed risk appetite could provide a solid foundation for Bitcoin’s price recovery.
However, it’s essential to approach the market with caution. The cryptocurrency market remains highly volatile, and unforeseen events could quickly change the dynamics. Investors should conduct thorough research and consider consulting with financial advisors before making investment decisions.
Also Read: Crypto Crash – Bitcoin Plunges 17% As Japan’s Economy Shakes Global Markets
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
