Of course the stock market rose while Jerome Powell delivered his speech yesterday. A big part of his job is making sure investors are happy. What wasn’t expected though was the impact his words may have had on bitcoin.
In this graph, the purple rectangle is the precise time of the speech. The Nasdaq (blue line) was the best performing stock index at that time. Within a few hours of the speech, we can see that bitcoin had an even bigger rise.
Did bitcoin rise because Chairman Powell was laying the groundwork to introduce fresh liquidity into the system?
Somehow I don’t think so. But it is fun to track.
- More and more and more stimulus
- Bitcoin Interest
- Russia Getting Closer
Chairman Powell did a fairly good job of keeping things boring at last night’s meeting. In many ways, he’s keeping his options open here.
The US economy is doing pretty well overall, but as we’ve seen there are some serious warning signs ahead. Powell is doing his best to explain that he’s happy to react to any sudden downturn in the economy with additional stimulus but that that doesn’t necessarily have to happen.
Still, markets are taking this as a very dovish tone. Volatility is now at the lowest point it’s been since early May and we’re seeing huge gains across all assets.
Gold, Oil, Stocks, and Bonds are all up since the speech.
What this shows is that ever since the bitcoin futures were launched in December 2017, CME has been seeing steadily increasing activity and demand for this product.
Open interest represents the number of contracts that are open on a specific asset on a given day. This is a bit different than volume because volume only shows the amount traded, while open interest includes all of the positions currently being held.
According to Investopedia, a rise in open interest that corresponds with a price increase is generally taken as a bullish sign. On Monday, the Bitcoin futures on the CME hit a record high open interest.
After facing calls for a halt from US lawmakers it seems that Libra coin will soon come in for closer scruitiny.
A hearing in Congress is now set for July 16th. Personally, I’m looking forward to seeing Facebook execs try and explain blockchain technology to the elderly Senate Banking Committee. This can only be good for the industry.
Meanwhile in Russia, lawmakers have now stated that the crypto regulation bill they’ve been working on could possibly be signed by July 4th. It’s interesting to see this news coincide with this tidbit…
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