Bitcoin was attempting to hold $8,000 as support on Thursday after it slipped briefly below the said level yesterday.
The benchmark cryptocurrency surged by 0.83 percent, or $66.14, to trade at $8,059.68. The move uphill came after a depressive price action on Wednesday that took the bitcoin price below the $8,000 support level. At its intraday lowest, the cryptocurrency was trading at $7,908.86.
Weak US Economic Data
The bitcoin’s loss and subsequent mild recovery came amidst the release of vital US economic data on Wednesday morning. The retail sales report showed a drop of 0.3 percent, marking the first contraction in months. It raised concerns over the deteriorating health of the US economy, which could prompt the Federal Reserve to announce fresh rate cuts at its next meeting.
The weaker-than-expected economic data pushed the US stocks lower on Wednesday. The benchmark S&P 500 index plunged by 0.2 percent at the close. The sentiment towards risk-on assets spread into the Asian markets today. Japan’s Topix was down 0.3 percent while Australia’s S&P ASX 200 plunged by 0.2 percent. Meanwhile, in China, the CSI 300 of Shanghai- and Shenzhen-listed stocks were up by 0.1 percent.
Brexit Deal Reached
Bitcoin held on to its gains also as UK Prime Minister Boris Johnson announced that they had reached a Brexit deal with the European Union. The politician confirmed in a tweet:
“We’ve got a great new deal that takes back control — now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment.”
We’ve got a great new deal that takes back control — now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment #GetBrexitDone #TakeBackControl
— Boris Johnson (@BorisJohnson) October 17, 2019
The new propelled pound to register its best month in months. The sterling surged about 0.70 percent against the dollar after the London market open. Meanwhile, the FTSE 100 index jumped by 0.60 on the Brexit news.
In Europe, demand for risk-on assets climbed as well. The benchmark Stoxx 600 surged o.70 percent.
Meanwhile, a Brexit deal expects to spell trouble on Bitcoin, which investors long perceived as a safe-haven asset should the UK-EU negotiations go south. Bitcoin rival Gold is already dropping on the news, down about 0.27 percent now.
As NewsBTC noted earlier, Bitcoin’s rate against the pound was forming an interim negative correlation with the pound’s performance against the US dollar. Excerpts:
“Bitcoin’s gains in the GBP markets are coinciding with the GBP’s losses against the US dollar – or vice versa, at least in the last seven days. The most visible correlation is GBP/USD’s gains on October 11 and 12, wherein the pair surged by as much as 4.20 percent. On the same days, bitcoin dropped by up to 7.62 percent against the pound.”
Meanwhile, speculators believe bitcoin could rise after Fed cut benchmark rates. Lately, the cryptocurrency has reacted mildly to rate cut events. On September 18, for instance, bitcoin was unfazed by the central bank’s announcement of pushing lending rates down to 1-3/4 to 2 percent. The cryptocurrency dropped by more than 6 percent a day after the FOMC statement.