Bitcoin (BTC) starts a week below $ 40,000, but with two new important references.
After continuous dumping of RD&D from China over the weekend, Bitcoin adoption was also surprised first from El Salvador and Paraguay.
As the world is about to welcome the first two bitcoin nations in history, there is plenty of room for optimism, but can BTC price dynamics catch up?
Cointelegraph is looking at five things that could change the status quo in BTC / USD in the next few days.
High interest rates are “good”, says Yellen.
A quick look at the broader macroclimate provides an interesting mix of bitcoin traders and scammers.
Inflation is still fresh in the US city, and Finance Minister Janet Yellen said she would support a rate hike.
In a speech to Bloomberg this weekend, Yellen expressed support for President Joe Biden’s latest gigantic spending package and said it should be trusted, even if it leads to inflation.
“If we end up with slightly higher interest rates, it will actually be an added benefit for the public and the Fed’s point of view,” she said in the post.
Higher interest rates tend to make Bitcoin more attractive as a deflationary asset, but they go hand in hand with a stronger US dollar this month – something that has traditionally pushed BTC / USD.
After recovering from the 90s, the US Dollar Index (DXY) is now busy renewing its lost gains, and breaking through the downturn that began in mid-March.
US Dollar Index (DXY), 1-day candlestick chart. Source: TradingView
El Salvador and Paraguay failed to overthrow the Bitcoin bulls
In Bitcoin, the word “El Salvador” is on everyone’s lips.
After the payment gateway Strike began to invade the country in earnest, President Naib Bukele has officially announced that he will send a bill to the parliament for legal tender for Bitcoin.
If successful, El Salvador would be the first country on earth to do so, effectively adopting something like the “Bitcoin Standard”.
Bukele confirmed his plans during a video message at the 2021 Bitcoin conference in Miami last week, where Strike boss Jack Mullers outlined the plans.
However, the markets were unaffected by this revelation – it continued when a Paraguayan congressman took to social media to suggest plans to integrate Bitcoin into the other world economy.
“As I said a long time ago, our country must go hand in hand with the new generation. Carlitos Realla tweeted on Monday.
“This week we are going to start a big innovation project in Paraguay in front of the world! Really for the moon.
He also thanked Reala Bukele for his “example”.
However, as the Cointelegraph reports, using Bitcoin in El Salvador can be expensive. In response, commentators touched on Bukele’s authoritarian leadership, as well as the potential problems that could arise as a result of the economy using the US dollar to do so.
For Kaitlyn Long, founder and CEO of Avanti Bank, there can be great forces at play.
“Bitcoin is entering dictatorships, just like big tech,” she wrote in one of her many tweets about the move.
“Bitcoin does not care why El Salvador’s president wants to give BTC legal bidding – it does not matter.”
Short ribbons in the classic bear sign
Look at the spot price action, and some will be forgiven for not trading bitcoin on Monday.
Despite all the hype of the conference, the BTC / USD pair is in strong range and lacks a series of higher highs and lows that could signal a breakout.
Recent attempts to do so – to prevent a wedge from narrowing as volatility tends to be close to zero – have all stopped.
At the time of writing, Bitcoin was trading at just over $ 36,000.
While financing rates fell in some market areas, there were positive signs, but others are already sounding the alarm.
Short trades on the largest Bitfinex exchange are a concern. As noted by the popular Twitter account Fomocap on Monday, the rally in short positions has historically coincided with high volatility – usually in decline.
“Bitfinex’s sudden movement in shorts always means something. From November 25, the autumn to May 19, the upside, “he warned.
“He’s doing it again.”
Bitfinex shorts vs BTC / USD annotated chart. Source: Fomocap / Twitter
This will reinforce existing fears that Bitcoin has not yet finished its bearish decline. Opinions are divided, according to the Cointelegraph – some expect a return of $ 20,000, while others are convinced that such levels can not be reached forever.
Ethereum sees “parallel” movement towards BTC
Bitcoin pain can still be beneficial for an altcoin.