Market Wrap: Bitcoin Stuck in High $9K Range as Stocks Soar on Powell Comments

Bitcoin treaded water in the high $9,000 range Monday as stocks rallied and traders wondered when the cryptocurrency would break the five-digit barrier again.

Stocks, meanwhile, got a boost a day after Federal Reserve Chair Jerome Powell talked about continued stimulus efforts for the U.S. economy during a television interview Sunday.

At $9,673 as of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading down less than a percent over 24 hours. The largest cryptocurrency by market capitalization was close to its 10-day and 50-day moving averages, a technical indicator signaling the price is likely to remain flat in the near term. 

While bitcoin hit $9,958 in early trading on exchanges like Coinbase, it dropped as low as $9,436 and has climbed as high as $9,700 since 16:00 UTC (12 p.m. ET). 

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Bitcoin trading on Coinbase since May 16
Source: TradingView

Bitcoin briefly topped $10,000 on May 7 but has not reached such heights since. However, traders are eagerly awaiting a return to five digits because would signal positive momentum, said Josh Rager, a crypto trader and founder of learning platform Blackroots. 

“Bitcoin performed well starting in late April, right before halving, so you can’t expect it to keep running up without some proper sideways action,” Rager said, referring to the much-anticipated, once-in-four-years reduction in regular issuance that took place May 11. “I think if bitcoin can get a close on the daily or weekly above $10,500 that it would be very bullish.” 

As bitcoin ambled along, the big boost to the stock markets took center stage Monday. The exuberance, irrational or otherwise, seems to have come thanks to Fed Chair Powell, who said the U.S. will continue to take unprecedented action to thwart the economic damage from the coronavirus pandemic. 

“The good news is that we have policies that can go some way toward minimizing those effects,” said Powell during a television interview with “60 Minutes.” “And that’s by keeping people and businesses out of insolvency just for maybe three or six more months while the health authorities do what they can do.”

“We can buy time with that. And so I think that kind of support may be appropriate,” Powell added.

Read more: Bitcoin’s 2020 Rally Sends Message to Capitalists

Stocks also got a boost from optimism about a coronavirus vaccine from Nasdaq-traded biotechnology company Moderna. While Asia’s Nikkei 225 was flat in early trading, up less than 1%, the FTSE Eurotop index of largest companies was up an ebullient 4%. The S&P 500 in the U.S. climbed 3%, bouncing back from the past week’s poor performance, its worst since late March. 

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The S&P 500 index of U.S. stocks the past six months
Source: Google Finance

Unlike in March, when bitcoin performance appeared to be correlated with stocks, a very strong day for equities doesn’t seem to be helping the digital asset, and getting past that $10,000 psychological barrier might be tough. 

Constain Kogan, a partner at crypto fund BitBull Capital  said that “$9,800 seems the top for the moment. So we might see a bottom of this consolidating trend, which is around $9,250-$9,300.”

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Coinbase volume the past six months
Source: Skew

However, Henrik Kugelberg, a Sweden-based over-the-counter crypto trader, predicted bitcoin’s lackluster performance won’t last. “I’d say the pressure has been building since the start of the year,” he told CoinDesk. 

Kugelberg invoked the scarcity thesis, the concept of a limit to the amount of bitcoin produced, as a reason to remain bullish.

Read more: Bitcoin Battles for $10K as Gold Prints Over 7-Year High

 “A $10,000 level is not at all a goal to me, not even $15,000,” he said. “There’s no asset like this, imagine we found out no more gold mines can be found and that we have mined all the gold there is?”

Other markets

Digital assets on CoinDesk’s big board are mixed on Monday. Ether (ETH), the second-largest cryptocurrency by market capitalization, gained 2.6% in 24 hours as of 20:30 UTC (4:30 p.m. ET). 

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Ether trading on Coinbase since May 16
Source: TradingView

Cryptocurrency winners include cardano (ADA) gaining 5.3%, bitcoin sv (BSV) in the green 4.3% and tron (TRX) up 2%. Losers in 24-hour trading include decred (DCR) slipping 1.5% and stellar (XLM) down 1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Monday.

In commodities, gold suffered a sell off Monday, as the yellow metal slipped less than a percent to $1,731 at the close of New York Trading. 

Read more: Andreessen Horowitz Forecasts Fourth Crypto Bull Cycle

Oil is making some big gains Monday, up by 9%. “The pandemic resumption plan by the US and Europe has led investors to anticipate that global crude oil demand will increase in the second quarter, boosting crude oil prices,” said Nemo Qin, senior analyst for multi-asset brokerage eToro. 

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Contracts-for-difference on oil since May 14
Source: TradingView

U.S. Treasury bonds all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, in the green 17%.

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Source: Coindesk

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