First mover: seen stimulus (for Bitcoin) as Moderna received't save the ghosts earlier than the third wave

Bitcoin was higher, rising back above $ 16,000 on Monday after falling below the mark over the weekend.

"Should we trade above $ 16,490 again, we expect the bulls to grab the market by the horns and bring prices down to $ 17,000," Matt Blom, director of sales and trading at cryptocurrency finance firm Diginex, told clients in an E. -Mail . “If we stay capped at $ 16,490. then we look for another phase of consolidation. "

In traditional markets, European and Asian stocks rose and US futures indicated greater openness as a preliminary analysis found a Moderna coronavirus vaccine to be 95% effective. Gold rose 0.2% to $ 1,892 an ounce.

Market moves

Advances in vaccine development may not come soon enough to avoid a third wave of the coronavirus that affects consumer spirits during the crucial holiday shopping season – along with confidence in an economic recovery.

This could mean more pain for retailers who were hit by the lockdowns earlier this year, while adding to the need for new billions of dollars in spending packages to help businesses and households. The momentum could support demand for Bitcoin, which is seen as a hedge against inflation by a growing number of investors in both digital and traditional markets.

"All signs indicate that a package will still be required to prop up the US economy," said Simon Peters, analyst for the cryptocurrency-inclusive trading platform eToro. "As Bitcoin continues to cement its status as an effective inflation hedge and enormous amounts of liquidity are pumped into Main Street USA, this could be another catalyst to finally push the world's most popular crypto asset above $ 17,500."

Although news of the vaccine development success hit the markets last week, the vaccines are not expected to become widespread for several months. Predictions by White House Coronavirus Advisor Anthony Fauci that cases would increase with the arrival of winter in the northern hemisphere – when people spend more time indoors – seem to be emerging.

According to the Covid Tracking Project, US hospital stays have risen to a record high of about 70,000, with daily deaths currently at around 1,100, the highest since May.

"As the numbers get worse day by day, we expect all measures of consumer sentiment to deteriorate in at least the next few months," wrote Ian Shepherdson, chief economist for the Pantheon, in a report.

A third wave of the coronavirus has brought deaths in the US to levels not seen since May.

Source: Covid Tracking Project

A University of Michigan report late last week showed that U.S. consumer sentiment unexpectedly fell to 77 this month, well below economists' forecast for 82.

The decline was due to falling economic expectations among members of President Donald Trump's Republican Party after Pantheon predicts he had lost his re-election bid.

However, the real damper on consumer confidence could be the recurrence of coronavirus cases around the world. Japan is under increasing pressure to reinstate a state of emergency, and South Korea is warning, according to Reuters, that it is at a "critical crossroads". The states of Michigan and Wisconsin imposed new restrictions on public gatherings on Sunday, including the suspension of indoor restaurant service, the news service reported.

"Significant, and in our opinion underestimated, economic damage resulting from this recent surge is possible without a meaningful tax break package from Congress," brokerage firm Raymond James wrote in a report.

Planned President-elect Joe Biden is expected to speak on Monday to outline a strategy for economic recovery. According to Bloomberg News, the plan is expected to be heavily dependent on a campaign proposal for $ 2 trillion in government spending, including clean energy, infrastructure and employment incentives provisions.

"The US economy is heavily reliant on consumer spending and if the rising Covid-19 cases severely hurt confidence in the holiday season, it could have an impact on the pace of economic recovery," wrote eToro's Peters.

Michigan-vs-Retail

The graph where retail sales are superimposed on consumer confidence shows how closely the measures are being tracked.

Source: Pantheon

Bitcoin clock

Daily chart 20

The Bitcoin daily chart indicators are showing signs of temporary bull fatigue.

Source: TradingView

Bitcoin is on the offensive after recovering for six straight weeks. The cryptocurrency is currently trading above $ 16,200 after seeing demand consistently below $ 16,000 over the weekend.

The long-term uptrend has likely strengthened as the global holdings of negative yielding bonds hit a new record high of $ 17.5 trillion this month. The number has more than doubled in the past eight months.

The sharp rise is the result of far-reaching rate cuts by the US Federal Reserve and other major central banks, as well as massive liquidity-increasing bond purchases in order to contain the economic consequences of the coronavirus pandemic. Analysts believe the massive holdings of negative yielding bonds will fuel demand for inflation-resistant assets like Bitcoin.

"The more central banks are printing money and lowering bond yields to cope with the ongoing stress in the global economy, the more compelling the Bitcoin economy will be," Joel Kruger, strategist at LMAX Digital, told CoinDesk on Telegram.

In the short term, the cryptocurrency could face some selling pressure as the daily chart indicators show signs of bull fatigue. The MACD histogram, an indicator used to measure trend strength and trend changes, has recorded lower highs, which contradicts higher price highs. Such bearish deviations are often followed by price declines.

Immediate support is at $ 15,715 (weekend low) followed by a psychological level of $ 15,000. Meanwhile, the resistance is right at $ 20,000.

Read more: Record highs in negatively indebted debt strengthen the case for Bitcoin

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The deputy governor of the Bank of England said it was not his job to "protect banks' business models from the effects of digital currencies" (Reuters).

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Blockchain voting as a solution to democratic electoral problems is not the solution, says MIT in its latest report on blockchain e-voting (CoinDesk).

Analogues

The latest on economics and traditional finance

SEC chairman Jay Clayton, who led the regulatory pushback against an exchange-traded Bitcoin fund, plans to step down by the end of the year (SEC).

The race to consolidate US banks is on as Pittsburgh-based PNC agrees to buy the US unit of Spanish BBVA for $ 11.6 billion (MarketWatch).

Nigeria's inflation rate soars to 14.2% from 13.7% in the previous month, due to rising food costs caused by border closings, dollar restrictions and bandit attacks (Bloomberg).

The Australian exchange suspended trading 20 minutes after opening on Monday due to market data issues. Trading expected to resume on Tuesday (Reuters)

Korean Air Lines announced Monday that the company will acquire a $ 1.6 billion stake in ailing and indebted Asiana Airlines, creating the 15th largest airline in the world (Reuters).

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