Cryptocurrencies rebounded Wednesday, led by gains in the Bitcoin and Ethereum markets, as traders hoped for additional stimulus packages in the United States.
The cost of buying one Bitcoin soared past $ 36,000 while Ethereum’s native token Ether hit a new all-time high at $ 1,574. Other large-cap tokens, including Polkadot’s DOT, Litecoin’s LTC and Chainlink’s LINK, also rose in the 7-9 percent range, adding about $ 19 billion to the overall crypto market valuation.
Bitcoin hits a new week-to-date high of $36,888. Source: BTCUSD on TradingView.com
Bitcoin Bubble concerns easing
Some of the gains in the top crypto assets seemed to contradict the allay of concerns about the stretched valuations of the US stock market. During the coronavirus pandemic, the main winners, including Alphabet and Amazon, reported record sales in their latest earnings reports.
On Wednesday, Spotify Technology and Apollo Global Management will announce their earnings ahead of the opening bell. Qualcomm and Costco Wholesale would report the same after the closing bell.
Bitcoin, also a pandemic winner, tends to be at risk from stock market bubbles. In March, a crash in the global financial market forced traders to do so cover their margin calls by selling all the profitable assets they had to seek security in cash. That continued to the massive 60 percent plunge in just two days.
So it seems that positive stock market sentiment has delivered Bitcoin a bullish backstop. Meanwhile, Ethereum, which remains positively correlated with Bitcoin, expects it to follow the trend of the king’s cryptocurrency to hit further highs.
Ethereum price hits an all-time high. Source: ETHUSD on TradingView.com
Bitcoin traders are also following talks between lawmakers about a new round of stimulus measures for the coronavirus. President Joe Biden’s administration has pledged aid for an aid of $ 1.9 trillion. Meanwhile, Republicans want to limit the stimulus to nearly $ 618 billion.
The Democrats now plan to push their stimulus deal through on their own, given their 50 percent control over the Senate and the expectation that Vice President Kamala Harris’s tiebreaker vote would be in their favor.
“The greater focus is on timing,” said Seema Shah, chief strategist at Principal Global Advisors. “There is a general opinion that the stimulus will be significant; the important question is, is it coming soon enough, because the US economy needs it now. “
As usual, the prospect of additional stimulus is threatening to cause the US dollar to fall despite its latest recovery efforts. That, in turn, could allow cryptocurrencies such as Bitcoin and Ethereum to maintain their medium-term bullish bias.