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Stocks, Bitcoin Rally on Prospects for US Senate Stimulus Bill
Financial markets rebounded Tuesday after prospects for a stimulus package out of the U.S. Senate improved. Most cryptocurrencies are gaining, too.
Updated Sep 14, 2021, 8:22 a.m. Published Mar 24, 2020, 8:38 p.m.
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Financial markets rebounded Tuesday after prospects for a stimulus package out of the U.S. Senate improved.
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The upswing started with Japan’s Nikkei 225, which closed its trading day at 5:00 UTC up 7 percent. European stocks were bullish as well, with the FTSE 100 index gaining over 8 percent.
As for U.S. markets, the S&P 500 index rallied 9 percent. It’s a respite from Monday when the American markets officially wiped away all gains since 2016. The Federal Reserve’s announced easy money policy of using lower rates and quantitative easing (QE) to boost the coronavirus-plagued economy wasn’t able to staunch the bleeding in the equity markets.
However, judging by the way U.S. markets closed, the promise of fiscal stimulus from the Senate — once agreement is reached between Republicans and Democrats — is helping the market stop the bleeding more than the Fed's monetary policy.
Bullishness extended to large parts of the crypto markets. Bitcoin is up 6 percent as of 20:00 UTC. Notable gainers in crypto over the past 24 hours as of 20:00 UTC include monero , up 10 percent; NEO (NEO), in the green 6 percent; and bitcoin cash (BCH), up 4 percent.
“As central banks take on more risk with unlimited QE, the 'credibility risk' rises accordingly. This credibility risk is positive for alternative currencies such as bitcoin and gold,” said Denis Vinokourov of London-based digital asset firm Bequant.
Indeed, gold is also up today, with the yellow metal shining in the green, with gains of 4 percent as of 20:00 UTC.
Cryptocurrency traders have been pointing to retail purchasers, those casual buyers of crypto, to help digital assets continue recovery from a bloodbath that occurred March 12. That’s when bitcoin prices plunged as low as $3,850 on exchanges including Coinbase.
“We’re seeing a ton more retail buying at these levels, which is great,” said Ryan Salame, head of over-the-counter trading for Alameda Research.
“Over-the-counter demand in both gold and bitcoin is strong. However, deals are harder to do with travel restrictions and all,” noted Sweden-based crypto trader Henrik Kugelberg.
As BTC traded in a $6,400-$6,800 range Tuesday, a fundamental event for crypto approaches regardless of coronavirus-related lockdowns. The bitcoin halving, expected in mid-May, will reduce miner reward. In the two previous times this has occurred — 2012 and 2016 — bitcoin prices eventually went up.
However, it’s important to note that while prices did dramatically rise after previous halving events, it took some time to happen.
The upcoming halving means reward in new bitcoin generated will be slashed to 6.25 BTC from 12.5 BTC for miners. Some suggest bitcoin’s prices will continue to rise as more retail investors become informed of when and how the halving happens.
“This action is expected to remain intact, especially as the market heads into the block reward halving event,” noted Bequant’s Vinokourov.
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Bithumb admits to ‘serious flaws’ that left internal systems vulnerable to potential sabotage
The South Korean crypto exchange’s CEO Le Jae-won said the lack of proper controls led to the erroneous transfer of bitcoin worth more than $40 billion to customers. Most has been recovered.
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- Bithumb admitted that serious internal system flaws led it to mistakenly transfer about $40 billion in bitcoin to customers instead of a planned payout of roughly $428.
- The error briefly caused bitcoin prices on Bithumb to plunge 17 percent, prompted a probe by South Korea's Financial Supervisory Service and exposed gaps in the exchange's asset-matching and account-segregation controls.
- While Bithumb has recovered most of the coins, 1,786 bitcoins sold before accounts were frozen remain missing, intensifying lawmakers' concerns about weak oversight in one of the world's busiest crypto markets.
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