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Thursday

22 October 2020

Bitcoin price risks even bigger pullback in Q4 after sharp rejections

Bitcoin price risks even bigger pullback in Q4 after sharp rejections


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Bitcoin price risks even bigger pullback in Q4 after sharp rejections.

As Bitcoin (BTC) enters the fourth quarter, the sentiment around the market remains generally cautious and neutral.

Bitcoin might face a larger pullback in the fourth quarter due to several key factors.

Throughout the past three years, every September monthly candle has closed red.

From March through August, favorable financial conditions, a low-interest-rate environment and a multitrillion-dollar stimulus package caused Bitcoin and stocks to rally in tandem.

As a potential area of interest, traders are considering the $9,600 CME gap that forms when Bitcoin price rises or falls below the CME Bitcoin futures market price after it closes for weekends or holidays.

The monthly candle of Bitcoin is expected to close below $11,000, which would confirm a red candle for the month of September.

When that coincides with a monthly candle closure, it could amplify a near-term downtrend.

However, Bitcoin, gold, stocks and risk-on assets are entering the fourth quarter without stimulus and with surging COVID-19 cases, and due to the election in November, Washington has been in a stimulus stalemate.

In a note, strategists at Bank of America cited the lack of clarity on the stimulus as a catalyst for the outflows, stating: "With the biggest fiscal stimulus behind us and without explicit MMT hard for policy to catalyze big upside for stocks and credit next 6 months given starting valuations.”.

Although Bitcoin has increasingly decoupled from stocks and has shown more correlation with gold, it remains generally affected by the broader financial market’s sentiment.

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