It would be an understatement to say bitcoin has been a big disappointment for traders and investors over the past few months.

Ever since the coronavirus ravaged financial markets in March and sent the Federal Reserve scrambling to pump trillions of dollars of emergency liquidity into global financial markets, cryptocurrency analysts have speculated a resulting surge in inflation would eventually push up bitcoin prices. The community even celebrated a meme, “Money printer go Brrr,” satirizing the U.S. central bank’s efforts.

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Yet, since late April, bitcoin prices have barely increased – hovering around $9,000, which is up from around $7,600 at the start of 2020, but still well off the year’s high of $10,500 reached in February. At a time when the largest cryptocurrency was supposed to shine, it’s been pushed out of the limelight by rallies in tech stocks and gold, not to mention price zooms in a cadre of lesser-known digital tokens including Chainlink‘s LINK , Cardano‘s ADA and Aave’s LEND.

Bitcoin investors, though, are undaunted. They still see the cryptocurrency as a hedge against everything from inflation to turmoil in the global financial system to widespread bankruptcies, which by themselves could prompt new rounds of stimulus and money printing. The bet is the apocalyptic economic scenario remains entirely possible during the remainder of this already-tumultuous year.

“Capitalism is either breaking or is already broken, and investors know it even if they are still playing the game,” the cryptocurrency investment fund Arca wrote Monday in a weekly update. “We believe Bitcoin will remain the best insurance policy against currency collapse and a complete unwind of the financial system as we know it.”

Last week, the Fed’s balance sheet shrank by $88 billion, the most in 11 years, falling below $7 trillion as foreign central banks repaid emergency dollar loans known as “liquidity swaps.”   

Theoretically, such a decrease might be seen as bearish for bitcoin: The U.S. central bank’s money printer was essentially working in reverse as market funding strains eased. That might imply lower inflation in the future.

“This is part of the Fed’s success story in stabilizing markets,” Bloomberg News trumpeted in an email. Cryptocurrency analysts were more focused on developments in the fast-growing arena of “decentralized finance” than they were about bitcoin.

Even Federal Reserve officials acknowledge that further stimulus might be needed with coronavirus cases rising across the southern and western U.S., threatening the prospect of a quick economic recovery. 

Bank of America predicted in a report last week the Fed’s balance sheet will climb by the end this year to about $7.6 trillion, which would be a new record.

But Marc Cabana, an interest-rates strategist for the bank, said in a phone interview the “risks to our forecast are to the high side” because it’s not unlikely the U.S. central bank would pump in a fresh round of emergency liquidity if traditional financial markets took a turn for the worse. 

“The U.S. appears to have the virus under control in no way, shape or form,” Cabana said. “If market conditions deteriorate, they would respond. If it was another very acute and rapid deterioration in liquidity conditions, it can be quite fast.”

In the U.S., extra unemployment checks of $600 are set to expire at the end of July, and lawmakers are debating a fresh round of stimulus. According to Reuters, U.S. House of Representatives Speaker Nancy Pelosi says the Trump administration’s call to limit the next relief package to $1 trillion “doesn’t come anywhere near” meeting the need. 

“Anything less than a further $1 trillion to $1.5 trillion would be a damp squib,” Ian Shepherdson, of the economic forecasting firm Pantheon, wrote on Sunday. 

Corporate bankruptcies are mounting, with the two-century-old clothier Brooks Brothers succumbing last week. Big banks such as JPMorgan Chase are preparing to report second-quarter results this week that analysts say will likely be marred by billions of dollars of loan-loss reserves.  

The U.S. government’s budget deficit totaled $864 billion in June, nearly as much as in the entire fiscal 2019, the Treasury Department said Monday. 

Economists at Deutsche Bank who have predicted the U.S. deficit could total $4.5 trillion for all of fiscal 2020, say they expect the Federal Reserve’s balance sheet to expand to $8.3 trillion by the end of this year. 

“It seems inconceivable to me that the Fed and other central bank balance sheets will do anything other than explode over the next decade and perhaps beyond,” Jim Reid, strategist at the German bank, wrote Monday in emailed comments. 

Mike Novogratz, CEO of the digital-currency firm Galaxy Digital, told Bloomberg Television last week the buoyant U.S. stock market is “unhinged from reality ” and that he’s been investing in gold and bitcoin. 

Meanwhile, the cryptocurrency-data site Glassnode, in an email on Monday, highlighted an arcane analytical metric known as the “stablecoin supply ratio” that is supposedly bullish for bitcoin. There are signs bitcoin is becoming more broadly distributed among a larger group of investors. And a key measure of the Bitcoin blockchain’s security rose Monday to a record level, a sign of ongoing investment by network operators.

Notoriously volatile bitcoin prices haven’t moved by more than 1% for five straight days. Christine Sandler, head of sales and marketing for digital assets at the money-management giant Fidelity Investments, told First Mover last week that greater price stability could induce more big institutional investors to consider an allocation to bitcoin.    

“Perhaps this tamping of volatility will lead the thundering herd to crypto,” Sandler said. 

For bitcoin investors, even the doldrums can seem bullish. 

Tweet of the day

Bitcoin watch

BTC: Price: $9,181 (BPI) | 24-Hr High: $9,340 | 24-Hr Low: $9,155

Trend: Bitcoin’s restricted trading environment continues, with its 30-day volatility falling to 23.5%, the lowest level since March 2019. 

Some believe the cryptocurrency is on the brink of embarking on a new bull market cycle in the month(s) ahead as prices are holding above the 50-week moving average (MA). 

Indeed, the bulls have maintained a strong foothold above the 50-week MA over the past eight weeks. In addition, signs of seller exhaustion near $9,000 have emerged on the weekly chart over the past two weeks. As such, a move higher cannot be ruled out. 

Major resistance is seen near $9,930, which is the upper end of a pennant pattern defined by trendlines connecting the December 2017 and June 2019 highs and March 2017 and February 2019 lows. 

A weekly close (Sunday, UTC) above that level would imply a bullish breakout from the 2.5-year-long pennant pattern and open the doors for a stronger rally toward $13,880 (June 2019 high). Analysts at cryptocurrency exchange Kraken think $10,500 is the level to beat for the bulls. That’s a logical target because a move above $10,500 would invalidate a bearish lower high on the weekly chart created in February. 

Meanwhile, on the lower side, $8,900 – the low of a doji candle created in the first week of July – is key support. If breached, the 50-week MA support at $8,598 would be exposed. 

At press time, bitcoin is changing hands near $9,180, representing a 0.36% decline on the day.