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A recent massive sell-off in the Bitcoin (BTC) market pushed its prices below the key psychological support of $ 30,000.
While the cryptocurrency’s decline prompted many analysts, including Vijay Nayyar of Luno Exchange and Jehan Chu of Kinetic Capital, to predict further depressive movement below $ 25,000, Anthony Pompliano offered a contrasting bullish outlook.
The founder of Morgan Creek Digital Assets pitted risk markets against fears of the rapidly spreading Delta variant of COVID-19. He noted that governments, by and large, would introduce “more aggressive monetary stimulus” programs if the new strain of coronavirus spread across its Alpha version.
“History is not necessarily a predictor of the future, but it’s hard to imagine a scenario where if we had a second wave of lockdowns we wouldn’t also get more aggressive monetary stimulus efforts,” Pompliano wrote in a newsletter.
“If that were to happen, we would probably see all assets continue to grow more and more.”
In saying this, Pompliano envisioned that the road to more dollar liquidity would unfold in seven successive stages, as shown in the snapshot below:
Risk on FOMO expected
Pompliano’s statements emerged as the Bitcoin market synchronized with other risky assets around the world on July 2.
For example, the three Wall Street indices – the S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average – recorded their biggest declines in weeks. Additionally, gold fell to $ 1,795.12 an ounce, but then rallied to $ 1,812.145 an ounce.
Meanwhile, US government bonds have rallied alongside the dollar, showing investors are heading to safe havens amid the turmoil in global markets.
Behind the rout, world media reported, was a growing list of concerns about the economic recovery. The Delta variant of COVID-19 has spread quickly, reigniting dialogue in several countries over whether authorities should reimpose the lockdown and curb economic activity.
“The hope was that [COVID-19] vaccines would provide us with the end of the game, “Mohammed Kazmi, portfolio manager at Union Bancaire Privée, told the Financial Times.” Now investors are watching the UK and there is a bit of fear in it. concerns reopening so aggressively when the cases are still so numerous. high. “
Kazmi added that the markets are now pulling back from hopes of a V-shaped recovery and feeling uncertain about the future of their economies.
Related: The stock-flow model may be invalidated because the price of Bitcoin loses $ 30,000
Pompliano’s comments also emerged as the Federal Reserve flirted with the idea of raising lending rates close to zero by the end of 2023 to curb rising inflation.
In addition, several central bank officials have also favored the idea of cutting their aggressive asset purchase program by $ 120 billion per month, although Fed Chairman Jerome Powell clarified that the Fed intended to carry out the quantitative easing policy until the US economy fully recovered.
James Wo, Founder and CEO of the global blockchain and digital assets investment firm Digital Finance Group also noted that while the Bitcoin industry has seen downward volatility during this current market cycle, the fundamentals that drove up the value of its market and others throughout 2020 remain unaffected. He added:
“Any combination of narratives that brought digital assets to this discounted price can be ticked off of FUD’s listings that would ultimately have affected the price of the entire market.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.
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