Bitcoin didn’t die – again.
The flagship cryptocurrency surged early Thursday in New York to an intraday high of $ 40,127, up more than 7 percent.
The upside movement followed a massive bearish reversal earlier this week that saw the price drop from nearly $ 42,000 to just $ 31,100 (data from Coinbase). Many expected that Bitcoin would continue to decline due to the recovery in the US dollar and sentiment towards returns.
Bitcoin wobbles in a bullish continuation structure. Source: BTCUSD on TradingView.com
Bitcoin wobbles inside a bullish continuation structure. Source: BTCUSD on TradingView.com
Even so, the cryptocurrency dampened expectations as investor focus shifted to the economic speech by US President-elect Joe Biden and the Princeton University webcast by Federal Reserve Chairman Jerome Powell.
Mr Biden expects to announce plans for an aid package as data showed a surge in total unemployment claims over the past week – the worst since August. Top Democrat plans 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 ahead of Mr. Biden’s address. As a result, Bitcoin, which usually trades in reverse to the greenback, rebounded. This is due to a narrative that projects the finally deployed cryptocurrency as a hedge against an oversupplied US dollar with no upper supply limit.
“The correlation between Bitcoin and the USD is now -0.15. It’s the lowest reading in history, ”said Mati Greenspan, founder of Quantum Economics. “The inverse correlation is still tiny, but the trend is clear. This is what happens when Bitcoin flies for six months while the dollar is sinking like a rock. ”
No conical tantrum
Further powers for Bitcoin came from Mr. Powell, who put an end to all speculation about the alleged plans for “Taper Tantrum” once and for all. The Fed chairman said he plans to maintain an easy money policy for the foreseeable future, citing weak growth in the US employment industry.
The statements came amid growing expectations that a faster-than-expected recovery in the US economy would cause the Fed to raise short-term interest rates and cap its bond purchase program. For Powell, however, the Fed will not stop easing unless it hits inflation above 2 percent and maximum employment.
Short-term US Treasury bond yields fell in the news, leading investors to seek better returns in the riskier markets, including Bitcoin.