First Mover: Bitcoin Drops, Stocks Rally Ahead of Biden’s Budget Announcement
  Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets May 28, 2021 Sponsored by  (Price data as of May 28 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.
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The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
Market Moves by Omkar Godbole  Bitcoin Drops, Stocks Rally Ahead of Biden's Budget Announcement Bitcoin is nursing losses on Friday despite hopes of more inflation-boosting U.S. stimulus to come. On Friday, President Joe Biden is set to release his first full budget, seeking $6 trillion in federal spending for the fiscal year 2022 and $8.2 trillion by 2021, The New York Times reports.
The proposal shows the Biden administration remains undeterred by recent inflation fears and is unlikely to close the liquidity tap anytime soon, having already pumped trillions of dollars into the system to counter the economic effects of the coronavirus pandemic since March 2020.
That's potentially a bullish development for bitcoin, which is widely touted as digital gold. However, the leading cryptocurrency is changing hands near $35,800 at press time, representing a 7% drop on the day. The decline comes a day after buyers failed to establish a foothold above the $40,000 mark.
However, the prospect of more liquidity is pushing stocks higher. The pan-European Stoxx 600 index is trading 0.43% higher at new record highs above 445 points, according to Investing.com. Futures tied to the S&P 500 are also hinting at a positive start to trading on Friday with a 0.5% gain.  Bitcoin prices, May 27 - 28, 2021 (CoinDesk) Fears that the Federal Reserve may raise the interest rate to counter inflation could be keeping the cryptocurrency under pressure. That's because rate hikes dilute the appeal of the store-of-value assets like bitcoin.
According to Bloomberg, rates traders have boosted bets that the Fed will raise borrowing costs next year, much earlier than policymakers have indicated.
The rate hike fears may amplify, if the core personal consumption expenditure (core PCE) – the Fed's preferred measure of inflation – blows past expectations. That could lead to a deeper drop in bitcoin. The April data is scheduled for release at 12:30 UTC today.
However, analysts expect the cryptocurrency to see range play in the short term. "From a technical point of view, BTC is in a consolidation phase. We expect that there will be choppy trade between $30,000–40,000 for the next two weeks," Matthew Dibb, co-founder and COO of Stack Funds, said.
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Technician's Take by Damanick Dantes Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected Bitcoin (BTC) failed to sustain moves above $40,000 resistance on Thursday as the broader uptrend weakens. The cryptocurrency was trading around $36,000 at the time of writing and upside appears limited into the weekend.
A bearish trend reversal is on watch after months of slowing momentum, consolidation, and a downside break below $50,000 and $40,000. Bitcoin is down about 37% month-to-date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.
 Daily bitcoin chart shows support resistance levels with oversold RSI (Source: TradingView)
Despite signs of a broader trend reversal, there are still short-term opportunities for active traders. "BTC can be very volatile, especially compared to assets in traditional markets," wrote Justin Chuh, senior trader at Wave Financial in an email to CoinDesk.
"No one is borrowing to short spot BTC, we sill have an upward sloping forward curve, and downside protection remains relatively light," said Chuh, who added that support will need to hold above $30,000, or otherwise bitcoin would be down on the year.
Read the original story here: Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected
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