Bitcoin rally stalled after hitting a new record on Tuesday, suggesting that its supersonic rally in the previous session could cut some of its gains.
Bitcoin corrects lower after hitting $48,200. Source: BTCUSD on TradingView.com
The benchmark cryptocurrency hit its most robust one-day performance in more than three years as its price rose from $ 38,871 to $ 46,750 on Monday. The euphoria continued in the following day’s Asian session, with BTC / USD hits another all-time high of USD 48,200.
Nonetheless, sellers took control at the top, causing a small drop as the market entered the European session. On the other hand, analysts remain confident that Bitcoin will rise towards USD 50,000 in the coming sessions.
$ 50,000 incoming for #Bitcoin
– Michaël van de Poppe (@CryptoMichNL) February 9, 2021
A regular Bitcoin Bull
The core of their bullish analogy remains the US dollar. Initially, the world’s largest electric car manufacturer Tesla revealed that it owns $ 1.5 billion worth of Bitcoin as an “alternative reserve” to his dollar-based treasury, showing that his boss Elon Musk thinks the dollar is too risky to hold onto.
Again, the bearish bias for the dollar stems from the prospect of a very accommodative policy from the Federal Reserve and US President Joe Biden’s ithe intention to pass a stimulus package of $ 1.9 trillion. A disappointing labor report released Friday further fueled the potential of expansive government support, pushing real interest rates and the dollar down during the last weekly session.
“While Bitcoin may continue to play out the reach in the short term, it is possible that the” digital gold story “will pick up again in the second quarter if new stimulus is passed and the Fed continues to keep interest rates low through 2023,” wrote Ty Young, research analyst with US-based cryptocurrency analysis / data aggregation company, Messari.
US dollar index breaks bearish on its ascending channel, raising prospects of a negative breakout. Source: DXY on TradingView.com
He nonetheless warned of a faster-than-expected US economic recovery, led by optimistic vaccination coverage, that could weigh on Bitcoin as the government curtails stimulus measures, returning investors’ attention to the US dollar and government bonds.
“Over the past year, Bitcoin has solidified itself as a macro asset, leading to new institutional players getting involved. The effects of this could mean that crypto markets are trading more in traditional markets, ”Young further noted, adding that it could allow more hedge funds to offer bitcoin-enabled services.