A red line has been crossed yesterday, as the US Treasury announced its intention to distribute so-called ‘helicopter money’, among other liquidity-injecting measures. This is money distributed directly to American citizens from the government, and was made to try and spur confidence in traditional markets and help stabilize the American economy. Other countries have announced similar measures.

Bitcoin (BTC) has not seemed to react to this too much, despite its now obvious correlation to traditional markets. On the low timeframes, strength is building for what may be a general relief rally.

Strength is buildingBTC chart by TradingView

We see on the 4-hour that the leading crypto is rangebound, after having tested the highs and lows surrounding $5,200. The RSI is building up its bullish divergence, and another bounce off this trend line might see a pop. The histogram, however, is expanding bearish a little at time of writing.

After the face-melting selling that went on last week and over the weekend, the likelihood of a short term relief rally is fairly high. We need to see a solid break above $5,700 for this to transpire.

And if it does? If we look at the daily chart, we see that resistance will start coming in heavy at $6,500, where previous support was located. If that breaks, we could see a push up to the next major resistance at $7,500.

resistance in case of ralliesBTC chart by TradingView

We see the histogram here looking like it wants to contract bullish, and we may see a clear acceleration by the end of the day.

Governments’ reactions seem likely to stabilize any more short term market routs, as indeed they are designed to do. But the notion of a more general uptrend forming after this collapse – for traditional markets or for Bitcoin – seems precarious. Given how massacred the global economy will likely become in the coming months after so many closures, the notion that Bitcoin will develop a longer timeframe uptrend does not seem very likely.

On the other hand, some posit that all the free money about to be unleashed into the system will spur yet another rally in (often overpriced) assets – Bitcoin among them. Simply put, we don’t know. But what we do know is that: Bitcoin has never been through an economic crisis.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

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