Bitcoin didn’t die—all over again.
The flagship cryptocurrency climbed to an intraday peak of $40,127 in the early New York session Thursday, up more than 7 percent.
Its upside move followed a massive bearish reversal at the beginning of this week, wherein the price fell from near $42,000 to as low as $31,100 (data from Coinbase). Many anticipated Bitcoin to continue dipping lower on rebounding US dollar and yields sentiment.
Bitcoin wobbles inside a bullish continuation structure. Source: BTCUSD on TradingView.com
Nevertheless, the cryptocurrency ducked downside anticipations as investors’ focus shifted on the US President-elect Joe Biden’s stimulus speech and the Federal Reserve Chairman Jerome Powell’s webcast Princeton University.
Mr. Biden expects to unveil plans for a relief package as data showed a rise in the total number of unemployment claims last week—worst since August. The top Democrat wants to spend “trillions of dollars” on cheques for American individuals, unemployment benefits, and green energy solutions investments.
The US dollar index slipped 0.12 percent ahead of Mr. Biden’s address. Bitcoin, which typically trades inversely to the greenback, recovered—as a result. That is due to a narrative that projects the finitely supplied cryptocurrency as a hedge against an oversupplied US dollar with no supply ceiling.
“The correlation between bitcoin and the USD is now -0.15; it’s the lowest reading in history,” said Mati Greenspan, the founder of Quantum Economics. “The inverse correlation is still tiny but the trend is clear. That’s what happens when Bitcoinflies for six months while the dollar sinks like a stone.”
No Taper Tantrum
More powers to Bitcoin came from Mr. Powell, who once for all ended all the speculations surrounding the rumored “taper tantrum” plans. The Fed chair said that he plans to keep easy-money policies in place for the foreseeable future, citing weak growth in the US jobs industry.
The statements appeared amidst growing expectations that a faster-than-expected rebound in the US economy would prompt the Fed to raise short-term interest rates and limit its bond-buying program. But to Powell, the Fed won’t stop easing unless they achieve inflation above 2 percent and maximum employment.
The yields on short-term US Treasurys fell on the news, leading investors to seek better returns in the riskier markets, including Bitcoin.