Bitcoin and commodities plummet! What is the impact of the $900 billion bailout and the UK epidemic?

Bitcoin broke through $24,000 per coin last Sunday, setting a new record high. However, yesterday afternoon, Bitcoin plunged and once fell below $23,000 per coin. Coincidentally, the three major U.S. stock indexes opened lower last night and closed with mixed gains and losses. The Dow Jones Industrial Average closed up 0.12%, the Nasdaq fell 0.10%, and the S&P 500 fell 0.39%. It is worth noting that the Dow fell more than 400 points during the session. Gold, silver, and crude oil all fell in the afternoon today, while the U.S. dollar index has rebounded for three consecutive days. As of press time, Bitcoin was at $22,773 per coin, a 24-hour drop of 1.9%.

U.S. relief plan may lead to lower inflation than expected

Previously, the upcoming economic stimulus plan of the United States was regarded as one of the focuses in the context of the global central bank's massive money release. Bitcoin investors also paid close attention to the economic stimulus plan, which was regarded as a positive for Bitcoin: the larger the water, the more valuable Bitcoin is. Yesterday, the U.S. Congress reached an agreement on a $900 billion bailout plan, which also includes $1.4 trillion for the government fiscal fund for 2021. The plan is second only to the $2.3 trillion rescue bill in March this year and is the second largest economic stimulus plan in U.S. history. According to U.S. media reports, the new round of economic stimulus plans will directly provide most Americans with relief checks, federal unemployment benefits, and support for schools, vaccine distribution and small businesses. Economists say the plan should help the U.S. economy avoid a double-dip recession in 2020. However, the performance of U.S. stocks after the opening showed that the market was cautious, gold rose for a short time, and risk aversion was strong. In addition, a mutant virus appeared in the UK, and London will be urgently closed on Christmas Eve, making it difficult for the U.S. Congress's economic stimulus plan to drive market sentiment for a while. Unexpected events in the UK market caused the pound to continue to suffer setbacks, pushing the US dollar to strengthen. The Bloomberg Dollar Spot Index has recorded its largest increase since March. Previously, Babbitt had written an article to warn of the impact that the subsequent strengthening of the US dollar may have on the price of Bitcoin.

On the other hand, the number of confirmed cases in Europe and the United States continues to rise, but Biden's vaccination in front of the camera has rekindled market hope. The current market is mainly on the sidelines. It should be noted that the current market is worried that there is no actual inflation recovery or that inflation may be lower than expected. Today's decline in commodity prices is one of the manifestations of this worry. Standard Chartered's global chief strategist Robertson said this week that global inflation has not yet been seen.

JPMorgan says Bitcoin will see a pullback

Last week, the U.S. Treasury Department announced new rules for digital currency wallets, requiring exchanges to submit and store any transaction records over $10,000 in a given reporting period, or they can keep all records over $30,000. The move will increase the amount of personal data that exchanges must hold or report to the Treasury, but many analysts last week expressed the view that the rule will not affect the Bitcoin bull market. On Monday, the day when the U.S. Congress passed the bailout plan, a JPMorgan research report said that Bitcoin may experience a pullback in the future. JPMorgan strategist Nicholas Panigirtsgro said that because of the recent series of rebounds, Bitcoin's price has been pushed above the fundamental level, Bitcoin is inevitably facing overbought. "While it is difficult for Bitcoin to avoid overbought, Grayscale's capital flows are so large that buyers and sellers cannot close their positions to make any transactions, forming a continued negative price dynamic. A sharp slowdown in capital flows will increase the risk of a Bitcoin pullback, similar to the one in the second half of 2019." The research report concluded that Bitcoin may experience a pullback in the future based on the assumption that Grayscale's capital inflows are slowing down.