Bitcoin and SPX Bear Squeeze? US Fed to Add $300 billion to Unlimited QE this Week

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Traders are currently net short on the stock markets as the global economy is heading into a recession. Nevertheless, the US government and international agencies have been desperately keeping the worst at bay, at the moment. Moreover, Bitcoin’s recent correlation with the stock markets echoes with similar sentiments as the price faces resistances from the $7250 mark.

The US Federal Reserve is expected to roll-out another round of ‘BRR’ money printing early this week. A $450 dollar agreement between the Fed and the Government will include $300 billion to replenish the emergency fund, called the Paycheck Protection Program. US Treasury Secretary, Steven Mnuchin, notes in the public address on Sunday

We’ve made very good progress, and I’m very hopeful we could come to an agreement tonight or early tomorrow morning

While we are only into the 4th month of 2020, the revival of GDP growth is expected to begin as early as Q3. According to the IMF data shared by a financial and crypto analyst, Mati Greenspan, the growth is expected to outperform 2019. He tweeted,

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IMF GDP Growth Projection (Source: Tweet)

Traders to get Squeezed?

Reportedly, traders are net-short on the traditional markets as the lockdown extends. Lisa Abramowicz, a contributor to Bloomberg notes,

Short positions on the SPDR S&P 500 Trust, the biggest exchange-traded fund tracking the broad index, rose to $68.1 billion last week, the highest level in data going back to January 2016.

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S&P 500/USD Weekly Chart (TradingView)

The bearish sentiments are consistent in the crypto markets as well, despite the halving and safe-haven argument. The funding rate on BitMEX has been primarily negative since the crash in March, indicating a strong bearish inclination. However, the price has recovered with a near 100% surge from lows.

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Bitcoin Futures Quotes on CME

The CME quotes for the month of May and June are also trading slightly lower than April contracts. Hence, the futures market which primarily held contango positions in February now seems uncertain with a bearish inclination.

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BTC Futures 1-Hour Chart CME (TradingView)

On Sunday, Bitcoin price spiked (2.95%) at the CME opening, but the price still failed to fill the bearish gap recorded last week at $7265. Moreover, the stock markets, on the other hand, opened at par with the price on Friday.

For Bitcoin [BTC], a break above $8200 is expected to begin a flurry of buyers (both spot and futures) who have been waiting on the sidelines. Nevertheless, a majority of those traders are waiting for a pullback to $5650 (200-Day Weekly Moving Average) as well.

Do you think the markets will react as the traders expect or uptrend is logical as well? Please share your views with us.