Bitcoin Bulls Eye 10k Amid Global Risk-Off Sentiment

The move took place as fears mount over the economic fallout from the coronavirus outbreak in China.

Chatter over Bitcoin’s status as an emerging safe haven has increased this year. The price of the world’s largest cryptocurrency by market cap rallied along with gold and the Japanese yen as news of the Wuhan coronavirus dominated headlines. In early January, Bitcoin jumped after news broke that Iranian Major-General Qassem Soleimani was killed in a U.S. air strike.

Gold also soared as Middle East tensions boiled in the aftermath of the assassination. Additionally, the price of Bitcoin rose as stocks sold off on flaring concerns over the US/China trade war in August of 2019.

Bitcoin enthusiasts now look forward to the third ‘halving’ event expected to take place in May of 2020. Only 21 million Bitcoins can be mined, the last of which will be mined in 2140. The rate at which they are created is cut in half every four years. Historically, the halving events have been followed by major rallies in price. A debate rages over whether the halving expected in May will trigger another bull run, or if the event is already priced in. Bitcoin reached a record high of almost $20,000 in December of 2017.

Looking at the daily chart, we can see price is now trading above the 200-period moving average, suggesting that the bulls have the upper hand for this timeframe. Potential trendline support lies below and the market eyes the mega-psychological level of 10k overhead.

Investors now look to the conclusion of the all important FOMC meeting later today. The CME Fedwatch Tool currently shows an 87% probability that the federal funds target range will be kept steady at 1.50-1.75%.

By Dan Blystone, Chief Market Strategist at Scandinavian Capital Markets