First Mover: Bitcoin Market Goes Into ‘Backwardation’ Despite Fed’s Trillions

Bitcoin is searching for a direction.

After a wild couple months in crypto markets that saw a ferocious sell-off as the coronavirus spread, followed by a 30 percent price rebound as governments and central banks announced trillions of dollars of emergency financing, the oldest and largest cryptocurrency has settled into a range between $6,700 and $7,400.

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Bitcoin price chart
Source: TradingView

For bitcoin (BTC) holders, it’s a buzzkill.

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Earlier this year, before the extent of coronavirus-related economic damage become clear, bulls had pegged their hopes on May’s halving, a once-every-four-years reduction in the pace of new supplies of the cryptocurrency. The reduced supply and continuing demand from investors was supposed to drive up the price. The German bank BayernLB predicted in 2019 that the halving could drive bitcoin to $90,000 or higher.

But the hopes of a halving-fueled price run-up faded somewhat after last week’s halvings of two bitcoin offshoots – bitcoin cash (BCH) and bitcoin sv (BSV) – proved to be market duds.

Mati Greenspan, founder of research firm Quantum Economics, wrote Monday in a note to clients that “in the long term, fewer new coins will likely translate into a higher price per coin.”

“I’m not convinced that the halving event will have any immediate effect on the price,” Greenspan wrote. “It might, but then again, it might not.”

Nor is bitcoin getting much follow-through from the recent rally, which was fueled by investor bets that the cryptocurrency can serve as a hedge against inflation and rampant monetary stimulus. The money hydrant is certainly open: The U.S. Federal…

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