Bitcoin didn’t die – all over again.
The flagship cryptocurrency climbed to an intraday peak of $ 40,127 in the early session in New York Thursday, up more than 7 percent.
The upward movement followed a massive bearish reversal early this week, with the price dropping from nearly $ 42,000 to as low as $ 31,100 (Coinbase data). Many expected Bitcoin to fall further due to the strengthening US dollar and the interest rate presentation.
Bitcoin wobbles inside a bullish continuation structure. Source: BTCUSD on TradingView.com
Nonetheless, the cryptocurrency dodged downward expectations as investors’ focus shifted to US President-elect Joe Biden’s stimulus speech and Federal Reserve Chairman Jerome Powell’s webcast at Princeton University.
Mr Biden expects to reveal plans for an aid package as data last week showed an increase in the total number of jobless claims – the worst since August. The top Democrat wants to spend “trillions of dollars” on checks for American individuals, unemployment benefits and investments in green energy solutions.
The US dollar index fell 0.12 percent higher than Mr. Biden’s address. Bitcoin, which is usually traded vice versa against the dollar, restored – as a result. That’s because of a story that projects the finite-delivered cryptocurrency as a hedge against an oversupply of US dollars with no supply cap.
“The correlation between bitcoin and the USD is now -0.15; it is the lowest value in history, ” said Mati Greenspan, the founder of Quantum Economics. “The reverse correlation is still small, but the trend is clear. That’s what happens when Bitcoinflies for six months while the dollar sinks like a stone. “
No conical tantrum
More powers for Bitcoin came from Mr. Powell, who once and for all put an end to all speculation surrounding rumors about the plans for “taper tantrum”. The Fed Chairman said that he plans to pursue an easy money policy in the near future, citing weak growth in the US job industry.
The statements came amid growing expectations that a faster-than-expected recovery in the US economy would prompt the Fed to hike short-term interest rates and curtail its bond buying program. But for Powell, the Fed will not stop easing unless they achieve something inflation above 2 percent and maximum employment.
Short-dated US Treasurys yields fell on the news, prompting investors to seek better returns in the riskier markets, including Bitcoin.