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Rejection just below $7,000 and a failed breakout out on the hourly chart has weakened the immediate bullish case for bitcoin (BTC).

A move below $6,250 would confirm a rising channel breakdown on the four-hour chart and shift risk in favor of a drop to support near $5,700.

The U.S. fiscal stimulus does bode well for bitcoin in the long run, according to analysts. More immediately, the cryptocurrency remains at the mercy of sentiment in the traditional markets.

Bitcoin is struggling to maintain its recent upbeat mood on Wednesday despite the rapidly increasing scope of fiscal stimulus efforts in the U.S. and across the globe.

The top cryptocurrency by market value is currently trading near $6,635, representing a 1 percent drop on the day, after facing rejection at $6,981, according to CoinDesk’s Bitcoin Price Index. Prices had rallied from $5,700 to $6,700 in the previous two days.

The pullback from $7,000 has reversed gains seen early Wednesday after White House adviser Eric Ueland informed markets the U.S. Senate and the Trump administration reached agreement on a massive fiscal stimulus package aimed at stemming the economic fallout from the coronavirus outbreak.

The package is expected to be worth $2 trillion and will be put to vote in the Senate on Wednesday. The U.S. Federal Reserve is already running a zero interest rate policy and announced an open-ended asset purchase program, or quantitative easing, earlier this week.

With the announcement, the value of total global stimulus efforts has increased to $8 trillion or 9 percent of the world’s gross domestic product (GDP), according to Social Capital CEO Chamath Palihapitiya.

A majority of analysts expect the unprecedented stimulus to bode well for bitcoin in the long run.

The cryptocurrency may find bids sooner, too, as the latest stimulus plan will send direct payments and benefits to jobless individuals, according to the New York Times.

“The U.S. government’s cash payments will flow directly into people’s pockets. Naturally, some people will buy bitcoin, but far fewer people than others are predicting,” Chris Thomas, head of digital assets at Swissquote Bank, told CoinDesk.

Thomas added that fresh money has already entered the market over the last 10 days and fiscal stimulus is unlikely to have a great impact on bitcoin in the short term. An indicator called the “hodler net position change,” tracked by data firm Glassnode, does suggest that investors accumulated coins at under $5,000 earlier this month.

That demand zone, however, could come into play again if the coronavirus continues to spread across the globe, leading to a global liquidity squeeze similar to the one seen earlier this month, he said.

At press time, the equity markets across Europe are flashing green, while futures tied to the S&P 500 are reporting a 1 percent gain. suggesting scope for bitcoin to revisit $7,000.

Technical charts, however, are painting a bearish picture at press time.

Daily chart

The long upper wick attached to Wednesday’s candle indicates rejection near $7,000.

The failure to cross the psychological hurdle has weakened the immediate bullish case put forward by Monday’s bullish engulfing candle.

Meanwhile, the failed symmetrical triangle breakout on the hourly chart is a powerful bearish signal and indicates scope for deeper losses.

4-hour chart

Bitcoin is trapped in an ascending channel, as seen on the 4-hour chart.

A break below the lower end of the channel, currently at $6,250, would imply an end of the corrective bounce from recent lows under $4,000 and could yield a re-test of support at $5,686 (March 23 low).

So, $6,250 is the level to defend for the bulls.