BTC bouyant as equities also float


This morning, we see a resurgence of Bitcoin prices up above the $9000 level that the coin has sustained for months, as we reported last week.

Today Omkar Godbole at Coindesk notes Bitcoin’s slight dip below $9K on Sunday, noting that it was something of a soft fall and pointing out that more sustained lows could have led to more downward pressure.

Instead, Bitcoin popped back up to post moderate gains today.

“Meanwhile, major European equity indices are up at least 1.5% each, following a 4% rise in mainland Chinese stocks seen during the Asian trading hours,” Godbole writes. “Futures tied to the S&P 500 are also up over 1%, according to data source”

In addition to showing how a selling trend ran out of steam, Godbole’s report also points to some troubling aspects of how Bitcoin correlates with stocks.

“Equities are flashing green despite a worrying increase in coronavirus cases in the U.S. and other parts of the world,” Godbole writes. “According to CNBC, investors are cheering the progress of potential coronavirus drugs. On Friday, the European Commission moved to grant conditional approval for U.S.-based Gilead’s antiviral drug remedesivir to be used in the European Union.”

Why troubling, then?

Because despite those glowing reports on Gilead, many investors who read between the lines see trouble coming.

For some investors who have been focused on the U.S. central bank’s response to unprecedented economic pressure, the tell is in what Godbole reports private bankers saying to the Fed:

“If the additional stimulus is not delivered, then the money market curve inversion could worsen, eventually becoming a more problematic signal for equity and risky markets going forward,” Godbole quotes J. P. Morgan analysts as saying. To translate into the words of the immortal Jeff Lebowski: “I’m, I’m saying, she needs money, man. And of course they’re going to say that they didn’t get it, because… she wants more, man! She’s got to feed the monkey, I mean uh… hasn’t that ever occurred to you, man? Sir?”

If the central bank is really willing to give the private sector a blank check in order to prevent any index or market downturns, does that actually save the economy or break it even further?

This is, in a sense, the million-dollar question (or, rather, trillion-dollar question) that investors are trying to solve, looking into the crystal ball to see what markets will look like years from now. We know intuitively that the Fed can’t keep bailing everyone out – eventually the bill is going to come due. Many of those who understand the nature of Bitcoin believe that the dollar’s fall will be the coin’s gain – and are turning to hodlers.