Many global events have had a profound impact on geopolitics over the past two months.Therefore, the world will most likely change dramatically in the near future. Moreover, currently a global redistribution of economies and spheres of influence is taking place. Besides, there is every reason to believe that Bitcoin will play a key role in the new world order.
It is better to start discussing this issue with the COVID-19 pandemic that triggered the unprecedented growth of the cryptocurrency and stock market. However, it subsequently resulted in a record 7.5% rise in US inflation. Consequently, the Fed announced its monetary policy tightening and limited access to liquidity. As of April 14, the key interest rate was raised by 25 basis points. However, US inflation surged to unprecedented levels. This exponential growth was affected by Russia's invasion of Ukraine. Moreover, the Fed said it would raise the interest rate more aggressively and quickly.
Initially, a key rate hike would have a negative impact on the stock market, which rose by 200% due to the US GDP growth during the coronavirus crisis. Nevertheless, taking into account the correlation between the stock market and cryptocurrencies, the quantitative easing program will also hurt the cryptocurrency market. However, it is significant that the Fed's policy is mainly aimed at strengthening the US dollar and mortgage and treasury bonds building the foundation of the US currency. Moreover, the world is facing a serious and long-term problem concerning the Russia-Ukraine war and Western sanctions.
The global investment community was shocked by the West decision to freeze all Russian dollar assets. Despite the fact that more than 60% of the states' reserve funds are backed by USD, fiat money has lost its appeal as a safe haven asset. Gold is facing the same problem. The US sanctions prevent Russia from disposing of or selling its foreign exchange reserves.
Therefore, the main cryptocurrency may become a key market asset, which will replace the dollar and gold in the long term. It is evident that analysis of the future regulatory framework for cryptocurrencies will be essential. However, BTC is likely to surpass the major reserve currencies and become a secure financial instrument. Blockchain technology can ensure transaction security and anonymity, while the issuance limit allows the asset to remain in high demand even during a liquidity crisis.
Currently, Bitcoin should establish itself as a safe haven and profitable asset. Large investors continue to accumulate BTC. Therefore, it has already been used as a reserve asset. Nevertheless, investors are faced with a difficult choice: to use Bitcoin as a high-risk instrument losing its value as the monetary policy tightens or use it in a new capacity on a permanent basis.
As of April 14, the BTC/USD pair remains highly correlated with the stock markets and SPX. This suggests that Bitcoin is currently seen as a high-risk asset that will lose popularity as the monetary policy tightens. The daily time frame shows that the price managed to defend the level of $40,000. However, technical indicators point to weak and short-term momentum.
The MACD continues its downward movement in the red zone. It implies that the pair will most likely retest the level of $40,000. Moreover, the stochastic oscillator and the RSI made a local upward move. However, they went flat indicating the dominance of sellers around $42,000-$44,000. Taking this fact into account, the market should accumulate stablecoins and influence the BTC price below $40,000.