Bitcoin's rally following Powell's clarifications!

Argentina | Bitcoin | Powell's | 25th September 2021 | Virtual Wire


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After an intense week in the world of cryptocurrencies, where there were price drops and price rises, the market is relaxing after the fall in global values.

It all started on Monday, when Bitcoin lost about 10% of its value in the early hours of the day, trading at US$42,634 at the end of the day. Meanwhile, crypto was in red numbers, with Etherium (ETH) down to 12.36%; Cardano (ADA) down 6.92%; Binance coin (BNB) down 10.10%; among others. The event followed investor fears of spreading restructuring risk in the Chinese real estate market, which is strongly linked to Evergrande.

As reported by the New York Times last weekend, before all this uncertainty, the fall of the cryptocurrency happens as doubts intensify regarding the regulation of the so-called "stable coins" so that the Financial Stability Oversight Council could call them "systemic risk" and would end in a strict restriction for both them and their operators.

In fact, Bitcoin was already pointing to restructuring after reaching this price level that had been lost when it fell to US$39,800 on September 21. Currently, there are a number of factors that could be driving a rebound. This happens because, in most cases, when the value of Bitcoin falls or rises, so do the rest of the currencies, since it is the most important in investment matters.

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In Argentina, the economic scenario was very affected for financial assets, especially in a context characterised by the political crisis that has been going on for two weeks now, as a consequence of the change of cabinet of President Alberto Fernandez. In addition, a negative trading session for the markets due to the plunge in stocks.

The S&P Merval panel of the Buenos Aires Stock Exchange fell a resounding 6.2% to 73,635 points, while abroad, Argentine shares and ADRs traded in dollars lost up to 13%, with a red led by Central Puerto (-13.4%) and by the banks Francés (-12.3%), Macro (-12.1%), Supervielle (-12%) and Grupo Financiero Galicia (-10.5%).

The Buenos Aires stock market fell 6.2% and global bonds dropped 3.3%. The country risk jumped to 1,577 points, the highest in a month. New York stock markets lost 2% due to the collapse of the Chinese real estate giant. It seems that, as the days went by, the waters began to calm down and the currency stabilised.

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After Fed Chairman Jerome Powell's words on the start of tapering and Evergrande's announcement of an agreement to pay off its debts, the market relaxed. Powell explained that the Fed wants to continue with the current level of bond purchases and that tapering would not take place until November and until mid-2022. He also noted that the hikes would not take effect until next year.

While Bitcoin rebounded 3.33% in the last 24 hours, of the main cryptocurrencies, nine are

up, with Solana leading the way at 11.26%. With these values, it is estimated that the minimum could have been reached. Although it seems that the storm has passed, experts in the field are calling for caution, as what happened with the sales this week is still not completely closed, being so visible in the returns of seven-day tokens, which are still in the red.

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This was echoed by analyst Craig Erlam, who explained that Bitcoin "does not have a very good near-term outlook" as long as its value is below US$44,000 and said: "The cryptocurrency broke sharply below this price on Tuesday, where it had found strong support in recent weeks. The move triggered a rapid fall towards $40,000 before recovering some of those losses."

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