Dramatic turn for the UK – What is next for Bitcoin and Gold?

Coronavirus crisis has taken a dramatic turn in the UK because there is a fear of a leadership crisis as the British Prime Minister is on oxygen. Boris Johnson, the prime minister, is in intensive care. He was hospitalized on Sunday after spending nearly 10 days in quarantine. Johnson is struggling to shake-off COVID-19, and his government is in a panic mode to contain the current crisis. However, when it comes to markets, traders have decided not to overreact to the current leadership situation because Sterling is still holding on to its ground against the dollar. Similarly, the UK’FTSE100 index futures are also trading mildly higher today. But, expect a massive sell-off in Sterling if Boris Johnson’s situation deteriorates further for the last thing the country needs is losing its leader.

Overall, the virus situation seems like it is under control as China has reported no new cases for the first time since the pandemic. Similarly, European countries such as Italy, France, Germany, and Spain have also reported a lower number of new cases. On the fiscal front, the Japanese government has announced a larger than expected stimulus package. The announced package is for $988 billion (108 trillion yen), and it is geared for small households and businesses.  

Over in Asia, markets finished the day mostly in positive territory. The Nikkei index jumped 1.10%, the Shanghai index gained 1.70% while the HSI index scored gains of 0.51%. Speaking of gains, it was the performance of the US indices which surprised many investors because the S&P500 and the Dow Jones indices surged over 7%. When it comes to the volatility, it has eased off further, it dropped below the critical level of 50 and closed at 45.24. This doesn’t mean we are out of the woods because as long as the VIX index stays above the 30-mark, the bulls are likely to remain on their toes.

Bitcoin

As for the crypto king, Bitcoin, investors are wondering what to make out of the current bounce and if the recent sell-off has put the bottom in place. The technical answer for this is at the weekly price chart. The price has jumped above the 200-week SMA, and it has won the battle with the 100-week SMA. Now, the bulls can relax because, as long as the price stays above these averages, the 10K price target comes into play.

Gold

In the commodity space, the precious metal remains in demand as investors continue to pour money in gold ETFs. The price is firmly above the 1600-mark, and it has also crossed the $1,650 level. The trend for the gold price is strongly skewed to the upside, and I continue to maintain my view that the price is likely to cross the 1700 mark with a few weeks. This is because the global economy is going to remain out of shape for a long period, and this means higher volatility. Traders do not like uncertainty, they need to hedge their positions. There is nothing better to hedge your position than gold, especially in times of loose monetary policy.