Bitcoin Posts Its Longest Weekly Gain in 9 Months Ahead of the Jackson Hole Symposium

Bitcoin has seen a significant increase in value ahead of the Federal Reserve's annual economic symposium in Jackson Hole, Wyoming, on Friday. According to analysts, the virtual event may bolster cryptocurrency's positive trend.

At press time, Bitcoin was trading at a three-month high of $50,200, having gained for the fifth week in a row in the seven days leading up to Aug. 22. This is the longest weekly winning streak since November.

“With institutions missing out on bitcoin in the last two weeks and now slowly returning to work for September start, this will trigger renewed inflows into the cryptocurrency and also equity,” Laurent Kssis, managing director of exchange-traded products at 21Shares.

Every year, the Federal Reserve Bank of Kansas City organizes the Jackson Hole Economic Symposium, which attracts notable central bankers, finance ministers, academics, and financial market players. Until a few weeks ago, some speculated that Fed Chairman Jerome Powell would use the event to lay the scene for the central bank's asset-price-inflating stimulus measures to be scaled down sooner rather than later.

As ForexLive's Justin Low pointed out, such hopes have been dampened in recent days due to a resurgence of coronavirus infections in the United States and other areas of the globe. Before announcing a taper, the Fed may want to assess the effect of the virus's return on the economy.

In the second part of 2020, this may resurrect the global macro trade of selling dollars and buying anything denominated in the greenback.

Stack Funds co-founder and COO Matthew Dibb stated, "We anticipate the Fed to stay dovish and provide no surprises." “If this is the case, risk-on will continue to prevail in most markets.”

In the last three months of 2020, Bitcoin almost tripled to $40,000 while the dollar plummeted. In April, the cryptocurrency hit a new high of $64,801, before plummeting in May and June.

Given that it occurred with a rise in the dollar index (DXY), which gauges the greenback's value against various currencies, the recent rebound from July lows around $30,000 seems remarkable.

On Friday, the DXY hit a nine-month high of 93.73, and it was recently at 93.25. According to Marc Chandler, chief market analyst at Bannockburn Global Forex, the rise was driven in part by the minutes of the June Fed meeting, which confirmed that the central bank may begin tapering later this year.

As a result, the minutes seem to have stolen some of Jackson Hole's thunder. As a result, even a hawkish remark from Powell later this week may not have a major impact on risk sentiment.

Other crypto-specific variables also point to a continuation of the uptrend. Patrick Heusser, head of trading at Crypto Finance, stated, "The tranquility of the $50,000 break encourages me to believe it may be sustained with small setbacks."

According to Glassnode, the perpetual funding rate – or the average cost of maintaining long positions in the futures market – is still below 0.010 percent, indicating that the market is still quiet. This is considerably lower than the 0.10 percent highs seen during the first-quarter bull run, indicating little or no speculative froth in the market.

“This rise seems to be spot-driven, based on financing and the options market,” Dibb added. “We anticipate this psychological barrier to be broken in the next weeks, resulting in a rotation back to bitcoin, with the next goal of $60,000.”

According to data analytics company IntoTheBlock, the cryptocurrency's rebound from July lows has been supported by strong hands.

However, since short-term technical indicators indicate to overbought circumstances, a small correction cannot be ruled out. Alternative cryptocurrencies like as solana and cardano, which have recently outperformed bitcoin, may suffer as a result.

“Recently, the market has witnessed moderate bitcoin inflows but significant exchange-traded product inflows in all other currencies, including Solana, Polkadot, Cardano, and, of course, ether,” Kssis added. “The success is linked to bitcoin's ascent, which may see a reset around $50,000 and a brief drop before expected institutional inflows in September.”

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