Bitcoin’s bull rally is expected to resume in the near future despite the fact that the cryptocurrency opened lower this week with a chance of orderly transition of power of the US President Donald Trump and a spike in US Treasury yields which hammered the overextended rally of the cryptocurrency. But, with no further ado, let’s get into today’s Bitcoin news.
The BTC/USD exchange rate crashed by 12.67% on Monday, recording an intraday low of $33,333 while some analysts claimed that it was a natural price correction after Bitcoin’s gains of 119 percent over the past four weeks. They noted that Bitcoin’s bull rally is expected to resume again.
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Vijay Boypati who is the author of the “Bullish Case for Bitcoin” reminded of a correction of 30-40 percent after the wild upside rally happened in 2017. Retailers bought every dip to push the price higher but in 2020, the institutional players joined and started volatile bullish moves with small corrections. Mr. Boypati said:
“In the current bull market demand seems to appear after corrections between 15-20 percent. This is probably indicative of a difference in buyers: retail (2017) vs institutional (today).”
Looking back on the analysis, traders started dumping BTC because of the Federal Reserve’s policy which was pushing 10-year Treasury and 30-year Treasury bonds higher. It seems that they are securing their profits by selling the cryptocurrency close to its record high levels to put them there instead of bonds. However, that doesn’t signify a dumping behavior since traders were aware of the FED’s commitment to pushing the inflation rates above 2 percent in the upcoming years. In the meantime, the chance of more government fiscal stimulus provided more reasons to buy BTC as a safety net.
Reports show that the US economy lost jobs for the first time in eight months back in December during the skyrocketing coronavirus infection rates. The President-elect Joe Biden committed that he will prioritize fiscal support by launching unemployment insurance in his first days of the presidency. This would put the US dollar lower and BTC higher. The Fed chairman Jerome Powell expects some more insights about the US economy health after this happens while the market notes he will keep the interest rates on hold through at least 2023. In the meantime, his office will still purchase sovereign bonds which could end up turning the benchmark yield below 1 percent.
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