Bitcoin soars as upcoming halving and institutional support rise
The euro rose today as traders received some positive data from Europe. Data from Eurostat showed that industrial production rose by 0.2% in November. This was lower than the consensus estimates of 0.3%. It was nonetheless higher than the 0.9% contraction that happened in October. On a YoY basis, industrial production fell by 1.5%, which was better than the previous decline of 2.6%. The improvement happened in most countries but was led by Germany, where production rose by 0.9%. Other bright spots in the region were Spain, France, and Italy. On the negative side, data from Germany showed that the economy grew by 0.6% in 2019. This was the worst growth rate since 2013.
The sterling wobbled today as the market received relatively weak inflation data. Data from the Office of National Statistics (ONS) showed that consumer prices rose by a YoY rate of 1.3%. This was slightly below the previous rate of 1.5%. It was unchanged from the previous month. The core CPI, which excludes volatile food and energy prices was also unchanged from November. It fell from 1.7% to 1.4% on a YoY basis. This was the lowest pace of growth in three years and is below the BOE target of 2.0%. The data implies that there is a likelihood that the BOE will cut interest rates. According to the Financial Times, market participants see a 62% chance of a rate cut. This is up by 4% from the previous month.
The price of Bitcoin continued the rally started on December 19. The digital currency is now up by more than 12% this year, making it one of the best-performing assets. This is also its best start of the year since 2012. Part of the reason for this rally is that there is overall optimism about cryptocurrencies. Another catalyst is the halving that is set to happen this year. Halving will reduce the number of Bitcoin blocks that are awarded to miners. In addition, CME launched options that are tied to Bitcoin futures, which could prompt institutional support.
The EUR/USD pair rose today from an intraday low of 1.1118 to a high of 1.1155. This price is a few pips below the 50% Fibonacci Retracement level of 1.1160. The price is above the 14-day and 28-day exponential moving averages while the RSI has been rising. It is also above the important support shown in white below. The likely scenario is where the pair continues to rise and test the 50% Fibonacci level.
The BTC/USD pair has been on a strong upward trend since December last year. The pair has managed to move from a low of 6383.82 in December to today’s high of 8902. This is a 28% increase in less than a month. The price is above the 14-day and 28-day exponential moving averages on the four-hour chart. It is also slightly above the overbought level of 70 while the momentum indicator has been rising. The pair may continue to rise as more institutional investors pile in.
The USD/CHF pair continued the downward trend that was started on January 10, when the pair was trading at 0.9762. The pair reached a low of 0.9645, which is along the important support shown in yellow below. The pair is also below the 14-day and 28-day exponential moving averages. The RSI has moved to the oversold level. The pair may pause at the current level as bulls and bears battle out the next price action. Volume-supported moves below the current level may see a sustained downward breakout.