Bitcoin was moving in positive territory ahead of the opening bell in New York, tracking gains in U.S. stock futures as investors pinned hopes on Washington’s economic relief package.
The benchmark cryptocurrency rose 1.48 percent from its intraday low in Asia of $ 19,051. The surge resulted in a surge to $ 19,333, increasing the prospect of re-examining the weekly resistance area above $ 19,500 in the US session to attempt an expanded move toward $ 20,000.
Bitcoin is trading inside an Ascending Triangle channel pattern. Source: BTCUSD on TradingView.com
The movements were in line with those in the US equity derivatives market. For example, futures linked to the S&P 500 rose 0.6 percent in the pre-trading US session, suggesting the benchmark index could open higher after four straight days. Similarly, the Nasdaq futures rose 0.4 percent.
A bipartisan group in the U.S. Senate called on Congressional lawmakers Monday to pass a $ 748 billion stimulus package to tackle American households amid new lockdowns and rising COVID-19 infections. Investors expected Congress to pass an interim package before Christmas.
“It’s very tight,” Hani Redha, portfolio manager at PineBridge Investments, told the Wall Street Journal. “There’s a good chance we’ll get something else in the lame duck session that would obviously be a great bridge to spring.”
The prospect of the second COVID-19 relief bill reduced the strength of the US dollar against the foreign currency basket. As of 0725 EST, the US dollar index fell 0.15 percent, positioning anti-fiat assets like stocks, gold and bitcoin for a fruitful meeting in New York on Tuesday.
US Dollar Index remains pressured by the Fed's dovish policies. Source: DXY on TradingView.com
More tailwinds for Bitcoin could come from the Federal Reserve’s two-day meeting on Wednesday. The market expects Fed Chairman Jerome Powell to maintain his existing expansion policy of ultra-low interest rates and unlimited bond purchases given the uncertain economic outlook in the US.
In addition, Mr. Powell has already admitted that his office would aim for inflation above 2 percent in the years to come unless jobless claims return to normal. This increases the attractiveness of assets like Bitcoin that act as a hedge against lower yielding bonds.
Technical outlook for Bitcoin
Technically, Bitcoin is looking for a significant breakout above the $ 19,500 to 19,600 resistance area. Such a move opens up the potential to expand the upside to $ 20,000. Otherwise, there is a risk that the price will be corrected lower to test the verifiable support trend line as shown in the graph above.
This could cause the price to drop to $ 18,200.