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Hours after the European Central Bank (ECB) statement and optimistic job data from the U.S., Bitcoin (BTC) price rallied from $12,920 to $13,600.
According to Cointelegraph, it took just four hours for BTC to record a 5% rally in the price, increasing from $12,920 to $13,600. Coincidentally, the rally comes after positive developments from ECB and optimistic job data from the United States.
Factors Favoring the Bitcoin (BTC) Price Rally
As the U.S. and Europe registered a sharp increase in the number of COVID-19 cases, the U.S. stock market continued to decline steeply. However, despite those negative macro factors, BTC continued to rally throughout the past week.
Rise in institutional demand is noticeably strengthening the perception that people regard Bitcoin as a safe-haven asset. Bitcoin’s price outlook usually improves in the short-term when risk-on assets like stocks rally. However, when risk-on assets, such as stocks, decline, indirect pressure is usually placed on BTC.
Several events precipitated risk-on assets to increase on October 29. One was the U.S. job data showing the best weekly performance since the coronavirus pandemic began. The other was ECB’s announcement that a new stimulus package could be implemented in December.
Another stimulus package launched in Europe would do the following: massively increase the risk-on assets appetite in Europe and pressure the U.S. to deliver the necessary stimulus deal. Donald Trump, the U.S. President, earlier on declared that a stimulus package would take effect after the conclusion of the election. Now, the election is 5 days away, setting the U.S. up for a December stimulus deal.
The Governing Council of ECB has been carefully assessing the pandemic dynamics, exchange rate developments, and vaccine rollout prospects. ECB aims to explore all possibilities that guarantee the sustainability of the economy, thereby not only benefiting stocks and gold but also Bitcoin, as evidenced by its price.
ECB president Christine Lagarde hinted that a second stimulus deal is around the corner since they were prompt in addressing COVID-19 first wave.
“We have done that in the past: We have responded very promptly, very appropriately, very heavily, some would say, to the first wave that hit the euro area economies. We have done it for the first wave; we will do it again for the second wave,” she said.
Large Whale Cluster Protect the $13,000 Key Support Area
Technical analysts suggested that BTC risks dropping to lower than $12,700 the time when the Bitcoin’s price had fallen below $13,000. Fortunately, whale clusters have been key in ensuring the $13,000 level remains a strong support area. The futures market also seems to indicate the strong defense of the area as buyer demand appears to overwhelm selling pressure.
However, over the last several days, the Bitcoin futures market has registered a negative funding rate, implying that the most derivatives market is acting against BTC. The good thing is that Bitcoin demand on the spot market continues defending BTC against further sliding since it is seemingly offsetting the selling pressure.
Later today, Bitcoin’s price suddenly dropped 4% from the day’s peak due to intensified stock market uncertainty — specifically, U.S. stock market indices have suffered a 5% to 6% decline since October 12.