Bitcoin traded lower on Wednesday as the US delayed its plans to introduce fresh tariffs on some Chinese goods, registering yet another instance wherein the cryptocurrency shows correlation with macroeconomic events.
The bitcoin-to-dollar exchange rate established an intraday low of $10,574.08, according to data fetched by CoinStats’ cryptocurrency portfolio management app. That brought the pair’s week-to-date returns to 9.35 percent in the negative territory.
Elsewhere in the mainstream markets, the S&P 500 broke its two-day losing streak while recognized safe-haven assets such as Gold, Japanese Yen, US Treasuries slipped. Bitcoin, a so-called haven asset itself, moved in tandem with its established peers.
US President Donald Trump earlier announced that he would impose an additional 10 percent tariffs on $300 billion worth of Chinese imports, which would become effective from September 1. Nevertheless, US trade representative Robert Lighthizer they would delay tariffs on specific items, such as mobile phones, video game consoles, and laptops until December 15.
The amnesty calmed investors’ nerves on Wall Street, as well as in the Asian market, which too rose higher on Wednesday. It appears capital started moving out of the bitcoin market as investors anticipated a favorable outcome from the US-China trade talks.
What’s Next for Bitcoin?
The intraday recovery in the mainstream markets does not mean investors do not anticipate a recession. A survey conducted by Bank of America Merrill Lynch found that 34 percent of fund managers see an economic meltdown happening in the future.
A recession is projected as a perfect opportunity for bitcoin to attract investors as a haven asset. Fundamentals aside, the cryptocurrency is also looking bullish from a technical point of view.
The bitcoin-to-dollar rate on BitStamp is forming a bull pennant, confirmed by at least two lower highs and higher lows. Traders appear to play the range as of now, i.e., they open a Short Position towards the Pennant Support on a pullback from its Resistance and a Long Position towards the Pennant Resistance on a bounce back from Support.
There is also a breakout scenario shaping up. A break above the Pennant Resistance could allow traders to put a Long towards the interim target area of $12,325-13,200. Similarly, a similar break below the Pennant Support paves way for a Short towards the $9,096-9,614 range.
Intraday-wise, CoinStats Insights shows traders are looking for buying opportunities as bitcoin price slides. At the time of this writing, 53.42 percent of CoinStats users are looking to Long their bitcoin trades.