Bitcoin bulls charge on tolerable US executive action as global sentiment rebounds

[ArvinIG]

Asia-pacific markets eye rebound after US stocks surge on war risk pullback; Chinese new yuan loans data for February seen falling from record high and BTC/USD looks primed to test the 100-day SMA after breaking 40,000.

Source: Bloomberg

 

Forex Bitcoin BTC/USD United States China Cryptocurrency

 

Thursday’s Asia-Pacific outlook

Bitcoin pushed higher overnight as US stocks rallied after dip buyers moved off the sidelines and hit the buy button. BTC/USD rallied nearly 10% while the benchmark S&P 500 index closed 2.6% higher, its best single-day percentage gain since June 2020. The safe-haven US dollar retreated by more than 1%, and WTI crude prices fell 12% through the New York trading session. Iron ore and other industrial metal prices pulled back but not enough to drag AUD/USD lower.

Asia-Pacific stocks will likely benefit from the risk-on tone. China’s tech-heavy CSI 300 index will look to break a 6-day losing streak. Asian equity markets are thought to be relatively insulated from Western markets regarding Russian sanctions, but the pullback in market sentiment proved too much for prices over the past week. A major risk driver was Ukrainian President Zelensky’s speech overnight when the embattled President renewed his desire to negotiate an end to the war with Russia.

China will report new yuan loans data for February today, with the figure expected to drop to CNY1.45 trillion from January’s record high CNY3.98 trillion, according to a Bloomberg survey. The pullback from January isn’t unusual given seasonal factors that encourage Chinese lenders to front-load loans in January. Today’s data follows inflationary gauges released yesterday that showed factory-gate prices easing from the prior month although still elevated historically.

Elsewhere, bitcoin and other major cryptocurrencies may continue gaining today as traders evaluate US President Joe Biden’s executive order (EO) aimed at regulating the industry. The EO appears much less intrusive than some feared, with it mainly directing federal agencies to evaluate crypto's role in money laundering and terrorist groups. One bright point is that it instructs the Commerce Department to research how cryptocurrencies might help support US competition in the global economy. Overall, it appears the government is taking an approach to coexist with crypto, not stamp it out.

Australia’s March consumer inflation expectations crossed the wires at 4.9% this morning, up from 4.6% in February. Final building permits for January are due out later. Outside of Chinese lending data today, the economic calendar offers little in the way of potentially impactful events. However, the European Central Bank is expected to hold rates steady tonight, and US inflation data will follow later in the evening.

BTC/USD technical forecast

BTC/USD pierced above the 40,000 psychologically level overnight, and prices look primed for an attack on the falling 100-day Simple Moving Average (SMA). A break above that level would open the door to test the high-profile 200-day SMA, with potential intermediate resistance from the 61.8% and 78.6% Fibonacci retracement levels. Alternatively, a pullback will put the 40,000 level back into focus as potential support. The MACD oscillator is on the cusp of crossing above its signal line, a bullish momentum sign.

BTC/USD daily chart

Source: TradingView

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Thomas Westwater | Analyst, DailyFX, New York City
10 March 2022