- Veteran trader Peter Brandt predicts trouble for Bitcoin (BTC) if it cannot rally in the face of U.S. government measures.
- On chain indicators reveal the potential challenges Bitcoin faces to enter a rally.
U.S. President Donald Trump approved a historic $2 trillion stimulus package. The measure was implemented to alleviate the crisis caused by the spread of the COVID-19 pandemic. Part of the $2 trillion will possibly be used to send a direct subsidy to U.S. citizens, if an act of Congress is passed that contemplates the issuance of a digital dollar. Another part will be used to buy bonds, mortgages backed by securities, among others.
Is Bitcoin (BTC) up to the challenge?
The traditional market reacted positively to the announcement, the Dow Jones index registered one of its most significant rises in decades with 11.37% gains at that time. However, after its approval the markets remain in the red. On the current situation, veteran trader Peter Brandt was critical. Brandt said the following:
The U.S. Congress is in a time capsule sent from the 1930s Price action late Friday was: Notes — we’re headed to negative rates Gold — look out above Stocks — pathetic
Brandt then said that the current situation is “the perfect storm” for Bitcoin. The veteran trader believes that if Bitcoin cannot rise in the critial time right now the entire crypto market will be in trouble. Brandt’s opinion is consistent with that of analysts who believe that the U.S. government’s measures are negative for Bitcoin, such as Alex Krüger.
At the time of publication, Bitcoin trades at $6,110 with a 2.54% loss in the last 24 hours. In the weekly chart, BTC shows a 0.78% loss and has remained relatively stable in the $6,000 range since March 21 of this year.
However, in a publication from IntoTheBlock’s CTO, Jesus Rodriguez, reveals that Bitcoin’s on chain metrics are pessimistic. According to data collected by IntoTheBlock, the demand for Bitcoin (BTC) is declining. Looking at Volume Futures, Rodriguez says:
Even though the price of Bitcoin hasn’t moved much over the last week, the Futures Volume for Bitcoin is currently at its 7-day low with only $653m.
The above is shown in the following graph. According to IntoTheBlock, the $653 million in volume futures represents a 90% decrease from March 12. At that time, daily futures volume reached $6.39 billion.
Another indicator looking negative is the Open Interest. This indicator represents the total amount of investors’ outstanding positions for financial derivatives that have open contracts. Rodriguez says:
The number of open positions has continued to fall exponentially from $1.76b on February 26, to $149m on March 26, representing an 85% decline and the lowest point in the past month.
The graph below shows that situation. OKEx represents 54% of the total Open Interest with $54 million, according to IntoTheBlock, while BitMex has a third of this amount with $27.69 million.
Despite these facts, there are analysts who are more optimistic about Bitcoin and say that the stimulus package will have a positive impact. Creek Morgan Digital co-founder Anthony Pompliano said it is too early to see a reaction or price movement by Bitcoin. Pompliano also said it will take a little over a year before the impact can be seen.
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