Bitcoin slipped heading into the European session Thursday as traders booked profits from its recent price rally.
The benchmark cryptocurrency briefly crossed over $38,000, a wave high it breached last Friday after gaining open endorsement from Tesla founder Elon Musk. The move upside also appeared as a broader recovery trend that saw the Bitcoin price surging from $32,200 on January 31 to as high as $38,769 as of Thursday.
Bitcoin trades lower after briefly closing above $38,000. Source: BTCUSD on TradingView.com
Bitcoin trades lower after briefly closing above $38,000. Source: BTCUSD on TradingView.com
It provided traders ample opportunities to secure their short-term gains, therefore pushing the prices lower.
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Dollar Firm
Bitcoin’s intraday losses coincided with similar gains across the gold and silver markets, led by a firmer US dollar and better-than-expected Treasury yields.
The US dollar index continued to its recovery path on Thursday as traders assessed the prospects of a strengthening US economic recovery. It weighed negatively on gold, whose prices fell three days in a row. But for Bitcoin, which was rallying almost in line with the dollar, the move appeared more like a bias-neutralizing downside correction.
Pablo Piovano, an analyst at FXStreet, confirmed that the dollar might continue heading upward as “the vaccine rollout continues to favor better growth prospects vs. overseas economies.” In turn, that could push the Treasury yields higher, as well, giving investors to hold government bonds than pick riskier assets.
US dollar recovers to its one-month high on Thursday. Source: DXY on TradingView.com
US dollar recovers to its one-month high on Thursday. Source: DXY on TradingView.com
Meanwhile, Bitcoin bulls anticipate that the US’s next stimulus package would provide tailwinds to the cryptocurrency’s ongoing rally. The BTC/USD exchange rate almost surged by 1,000 percent against the backdrop of more than $3 trillion stimulus aid and the Federal Reserve’s ultra-dovish policies.
Most of these fundamentals are still in place, with the US central bank confirming keeping interest rates lower until 2023 while ignoring to taper its $120 billion monthly bond-buying programs. Atop that, US President Joe Biden plans to roll out the third stimulus package worth $1.9 trillion.
Bitcoin Technical Analysis
The technical signals show that Bitcoin is flirting with the idea of moving lower towards its 20-period moving average (in green), as shown in the chart below. The wave holds the history of serving as minor support to Bitcoin’s short-term uptrends.
Bitcoin eyes a pullback towards the green wave for support. Source: BTCUSD on TradingView.com
Bitcoin eyes a pullback towards the green wave for support. Source: BTCUSD on TradingView.com
Nevertheless, an extended pullback moves risks putting Bitcoin en route to its 50-period MA (blue), another reprieve for the bulls, and the confluence of the previous wave low in the $33,000-34,000 area.
Meanwhile, a high-volume close above $38,000 could send the BTC/USD rate pursuing $40,000, subject to the breakout target set by the previous Falling Wedge pattern (blacked area).
Bitcoin prices climbed for the second day on Tuesday, spurred by increased optimism over the second stimulus package in the United States and a firmer US dollar.
Positive risk-on momentum throughout the Asian and the early European session briefly pushed the flagship cryptocurrency to a new week-to-date high of $35,469. It later corrected lower by more than 1 percent due to profit-taking sentiment. But, it maintained support above its 4H-200 simple moving average to eye another leg upward.
Bitcoin bounces towards its channel resistance trendline. Source: BTCUSD on TradingView.com
Bitcoin bounces towards its channel resistance trendline. Source: BTCUSD on TradingView.com
Dollar Firm on Stimulus Negotiations
The jump coincided with similar upside moves across the US stock futures, Asian, and the European stock market. Investors raised their bids for risk-on markets after assessing an ongoing negotiation between US President Joe Biden and a group of moderate Republican senators over the former’s proposal to pass a $1.9 trillion stimulus package.
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Nevertheless, the GOP released a separate $618 billion stimulus plan on Monday—almost a third of what Mr. Biden intends to release—that left investors hoping for at least a relief package in the coming weeks/months. That reduced their intraday demand for the US dollar, aiding a typically inversely correlated asset like Bitcoin.
The US dollar index, which measures the greenback against a basket of top foreign currencies, fell by a modest 0.06 percent. Still firm!
US dollar index tests key resistance range for a potential pullback move. Source: DXY on TradingView.com
US dollar index tests key resistance range for a potential pullback move. Source: DXY on TradingView.com
Meanwhile, technical chartists expected the index to rise further, based on its latest attempts to break above a medium-term resistance area, as shown in the chart above. Bitcoin Analyst Cheds said a stronger dollar would push the Bitcoin prices further lower from its recently-established record high near $42,000.
“The US Dollar Index is testing the upper part of its consolidation range ($91 area),” he tweeted on Monday. “A bull break here would be negative forBTCin the short term.”
Bitcoin Bullish, Nonetheless
Bitcoin’s latest upside move also came in the wake of Elon Musk’s open support for the cryptocurrency. The Tesla and SpaceX founder said on Monday that Bitcoin is “on the verge of getting broad acceptance by conventional finance people,” adding that he should have bought it eight years ago.
The statements coincided with massive Bitcoin outflows out of the Coinbase Pro wallets to its custodian addresses. Ki-Young Ju, the CEO of blockchain analytics platform CryptoQuant, noted that the said Bitcoin transfers represent over-the-counter (OTC) deals. Excerpts from his Monday tweet:
“Looking at the TX, it went to custody wallets that only have in-going transactions. It’s likely to be OTC deals from institutional investors. I believe this is the strongest bullish signal.”
Coinbase Pro Bitcoin Outflow. Source: CryptoQuant
Coinbase Pro Bitcoin Outflow. Source: CryptoQuant
Bitcoin was trading for $35,249 at this press time.
Institutional money continues to flow, price volatility is subsiding, and the Federal Reserve has no plans to taper its economic relief spending—here are three reasons why the Bitcoin price will continue rising this year.
Bitcoin Hedge and Economic Relief Spending
At the conclusion of its FOMC meeting on Wednesday, the United States Federal Reserve voted to keep its key overnight interest rate near zero. The Fed also plans to keep buying $80 billion of U.S. Treasury bonds and $40 billion of agency mortgage-backed securities every month.
The Fed has effectively voted to keep interest rates near zero and doubled down on its commitment to buying massive quantities of bonds each month—continuing the same economic conditions that have aided in the parabolic price rise of Bitcoin.
This news bodes well for Bitcoin’s growing status as a new form of digital gold and a hedge against inflation drew in huge institutional investment throughout 2020, which in turn triggered a retail frenzy at the start of January. The Bitcoin price rose from a low of around $4000 on ‘Black Thursday’ in March 2020, to a new all-time- high of $42,500 in January 2021.
In a note to clients that were obtained by Bloomberg News earlier today, Ray Dalio, the famed founder of Bridgewater Associates called Bitcoin’s store-of-value characteristics an “amazing accomplishment” and one of the few “alternative gold-like assets at this time of rising need for them.”
Dalio had previously been critical of Bitcoin as a store of value and often due to its excessive price volatility, but it appears the founder of the world’s largest hedge fund, with assets under management of roughly $160 billion has changed his tune dramatically.
The man in charge of the firm trusted by institutional investors and other high-net-worth individuals to produce steady returns regardless of the market environment said to Bloomberg:
“To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a store/hold of wealth is an amazing accomplishment.”
Like other hedge fund managers, Dalio has been critical of Bitcoin in the past. In November 2020, he criticized BTC for its excess volatility, claiming that it could never be an effective medium of exchange or store of value.
Institutional Investment Continues with MicroStrategy
Bitcoin’s dramatic rise last year was mainly attributed to big-time institutional investors such as MassMutual, Grayscale, Square, and MicroStrategy backing the cryptocurrency. With the increased institutional adoption of Bitcoin, the digital asset added over $300 billion to its ever-growing market cap in 2020.
Institutional investment looks set to continue, only today Michael Saylor CEO of MicroStrategy announced it will continue to build on its impressive trove of 70,784 Bitcoins. While most of that was purchased with excess cash, Saylor raised $650 million late last year in a debt offering to buy yet more Bitcoin.
Saylor said in MicroStrategy’s quarterly filling:
“Going forward, we continue to plan to hold our bitcoin and invest additional excess cash flows in bitcoin. Additionally, we will explore various approaches to acquire additional bitcoin as part of our overall corporate strategy.”
Additionally, as previously reported, MassMutual’s $100 million Bitcoin investment in December 2020 could be a signal that an additional $600 billion of institutional investment could be flowing into the BTC cryptocurrency’s marketcap in the near future according to JPMorgan Chase & Co.
According to Bloomberg on Dec. 14, 2020, JPMorgan’s Nikolaos Panigirtzoglou said MassMutual’s $100 million BTC purchase suggests adoption of Bitcoin is spreading from family offices and wealthy investors to insurance firms and pension funds.
Panigirtzoglou predicts that more institutions are going to follow MassMutual’s, the JPMorgan strategist said:
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
The JPMorgan strategist said that insurance firms and pension funds are unlikely to ever make high allocations, but even a small shift toward the cryptocurrency could be significant—with only 1% of pension funds and insurance companies in the US, euro area, UK, and Japan assets needed to accrue an additional $600 billion for Bitcoin’s marketcap.
Bitcoin Price Volatility Subsiding
Despite the increased mainstream investment into Bitcoin, the Bitcoin price has remained volatile, since hitting a record-high of $42,500 earlier this month. Following the ATH, BTC sank by nearly 30% in the following weeks. But has since recovered to the $33,000 level. Will Bitcoin forever be vulnerable to such violent price movements?
On Jan 12, Jeff Currie, the global head of commodities research for major US financial institution Goldman Sachs said that Bitcoin had started to mature but argued that long-term stability of Bitcoin’s value will depend on greater institutional adoption and smart investors.
Eric Peters, the founder, and CEO of One River Asset Management also concurred with this theory, as he told Bloomberg yesterday that Bitcoin’s path to maturity should help stabilize its price.
Peters argues that Bitcoin’s volatile price swings could become less of a concern as institutional buyers with stronger hands continue to push the asset higher.
One River Asset Management has accumulated over $600 million worth of BTC. The asset manager aims to hold $1 billion worth of Bitcoin and Ether (ETH) by June.
He told CNBC:
“There are all kinds of reflexive dynamics in these assets that ironically will lead to less volatility the higher they go […] As the prices are going higher, you are drawing in new types of investors with stronger hands.”
In the short term, despite reports of the surging institutional demand for Bitcoin, Guggenheim’s Scott Minerd says these investors are not enough to keep the BTC price firmly above the $30,000 level.
In an interview with Bloomberg on Jan. 28, Minerd explained that while institutions are interested in Bitcoin, there just are not enough interested yet. He said:
“Right now, the reality of the institutional demand that would support a US$35,000 price or even a US$30,000 price is just not there […] I don’t think the investor base is big enough and deep enough right now to support this kind of valuation.”
Despite his seemingly bearish short-term outlook, Minerd still called BTC a viable asset in the long run. The Bitcoin price is trading at $32,850 at the time of writing, and the above three reasons could be an indication that BTC has a long way to rise in 2021.
Is President-elect Joe Biden long on Bitcoin and cryptocurrency?
President-elect Joe Biden has named a former blockchain professor from MIT, Gary Gensler, to head up the United States Securities and Exchange Commission (SEC) to replace Jay Clayton only a week after a new dollar depreciating plan for $1.9 Trillion in economic stimulus.
Gary Gensler Next SEC Chair
President-elect Biden’s transition team to takeover financial policy of the United States includes former Commodity Futures Trading Commission (CFTC) Gary Gensler who will assume the SEC chair position vacated by Jay Clayton.
Along with his extensive experience in regulating financial markets, Gensler also has a long history in public policy and finance. Gensler is a senior advisor to the MIT Digital Currency Initiative and lectures on blockchain technology at MIT sloan.
The announcement is truly exciting for cryptocurrency advocates as the SEC are desperately in need of a more refined and a balanced approach to crypto regulations in the US—and Gensler has publicly stated that the nascent industry needs public policy to succeed.
“I think @JoeBiden is Long BTC and ALTS. Why else would he print so much money and appoint a blockchain professor for MIT as the new chair of the SEC?”
Stimulus and Bitcoin
President-elect Joe Biden also unveiled the details of a $1.9 trillion coronavirus rescue package last Thursday, with several stimulus measures to fight against the COVID-19 pandemic.
With the new US President Joe Biden coming into office, he appears set to continue flooding the market with trillions of dollars of unbacked freshly printed fiat currency, which is exciting news for the Bitcoin bulls.
The new stimulus plan will almost certainly include a provision to increase the amount of the second round of direct payments (that is, stimulus checks) from $600 to $2,000, and there will be more money for vaccine distribution, schools, rental assistance, small business aid, and tax credits.
$1.9 Trillion is a gigantic number, as even all of the circulating Bitcoin added up it is just $711 Billion, which is more than 2.5 times that of Bitcoin’s market capitalization.
From the chart above, we can easily observe that when the M1 Money Stock supply increases, Bitcoin Price also follows. If history repeats itself this time, we may see another surge in Bitcoin price after Biden’s administration plan comes into effect.
The Bitcoin price is $37,427 at the time of writing showing an increase of 3.8% in the last 24 hours.
Is President-elect Joe Biden long on Bitcoin and cryptocurrency?
President-elect Joe Biden has named a former blockchain professor from MIT, Gary Gensler, to head up the United States Securities and Exchange Commission (SEC) to replace Jay Clayton only a week after a new dollar depreciating plan for $1.9 Trillion in economic stimulus.
Gary Gensler Next SEC Chair
President-elect Biden’s transition team to takeover financial policy of the United States includes former Commodity Futures Trading Commission (CFTC) Gary Gensler who will assume the SEC chair position vacated by Jay Clayton.
Along with his extensive experience in regulating financial markets, Gensler also has a long history in public policy and finance. Gensler is a senior advisor to the MIT Digital Currency Initiative and lectures on blockchain technology at MIT sloan.
The announcement is truly exciting for cryptocurrency advocates as the SEC are desperately in need of a more refined and a balanced approach to crypto regulations in the US—and Gensler has publicly stated that the nascent industry needs public policy to succeed.
“I think @JoeBiden is Long BTC and ALTS. Why else would he print so much money and appoint a blockchain professor for MIT as the new chair of the SEC?”
Stimulus and Bitcoin
President-elect Joe Biden also unveiled the details of a $1.9 trillion coronavirus rescue package on Thursday, with several stimulus measures to fight against the COVID-19 pandemic.
With the new U.S. president Joe Biden coming into office, he appears set to continue flooding the market with trillions of dollars of unbacked printed fiat currency, which is that exciting news for the Bitcoin bulls.
The new stimulus plan will almost certainly include a provision to increase the amount of the second round of direct payments (that is, stimulus checks) from $600 to $2,000, and there will be more money for vaccine distribution, schools, rental assistance, small business aid and tax credits.
$1.9 Trillion is a gigantic number, as even all of the circulating Bitcoin added up it is just $711 Billion, which is more than 2.5 times that of Bitcoin’s market capitalization.
From the chart above, we can easily observe that when the M1 Money Stock supply increases, Bitcoin Price also follows. If history repeats itself this time, we may see another surge in Bitcoin price after Biden’s administration plan comes into effect.
The Bitcoin price is $37,427 at the time of writing showing an increase of 3.8% in the last 24 hours.
The Bitcoin price has more than doubled in less than a month with easy monetary conditions and trillions of dollars in fiscal stimulus leading many investors to view the token as a new inflation hedge.
The Trump administration reported in early October 2020, that the deficit for the budget year that ended on Sept. 30, 2020, was three times the size of 2019’s deficit of $984 billion. It was also $2 trillion higher than the administration had estimated in February before the coronavirus pandemic hit.
The Trump administration’s final accounting of the 2020 budget year shows that revenues fell by 1.2% to $3.42 trillion, while government spending surged 47.3% to $6.55 trillion. That spending reflects all of the relief programs Congress passed in the spring to shore up the economy as millions of Americans were losing their jobs.
With the recent approval of another $900 billion dollars in United States federal stimulus packages—which may increase further in the very short term as President-elect Joe Biden pushes for an increase on direct payments from $600 to $2000 per US citizen—Bitcoin billionaire Tyler Winklevoss again made the case for Bitcoin over the US dollar, alluding to the crypto’s scarcity and limitless federal money printing.
“23.6% of all U.S. dollars were created last year. Cash is trash. #Bitcoin is your only protection from the rampant inflation that is at our doorstep.”
Despite the Bitcoin price facing an extreme correction earlier today, plunging 15% from $41,000 to lows of $34,000 in the last 12 hours, Bitcoin billionaire Tyler Winklevoss once again re-affirmed that “cash is trash.”
While Bitcoin may at first seem completely disconnected from the coronavirus pandemic, the economic disruption of the virus out has played a critical role in supporting the cryptocurrency’s price movement. Governments around the world passed several trillion dollars worth of fiscal stimulus to buoy markets against the pandemic’s economic damage.
The influx of fresh currency from the Federal Reserve and easy monetary conditions has boosted the case for Bitcoin as a hedge against inflation according to JPMorgan analyst Nikolaos Panigirtzoglou back in November. A limited supply of 21 million tokens and insulation from policy decisions saw the token serve as an alternative to gold and other hedge assets.
Bitcoin billionaire and founder of Gemini digital asset exchange Tyler Winklevoss firmly believes that Bitcoin (BTC) is headed towards a markup of $500,000 in price and that it will inevitably be the preferred safe-haven asset on the market, rather than gold.
While the stimulus money printing has served to float to the stock markets, Winklevoss made the case for Bitcoin’s $500K price tag back in August 2020 and argued that the Fed’s approach to QE was not based in reality and would lead to high inflation in the near future. Citing the repercussions of the FED action against 2008 global financial crisis, Winklevoss said:
“Every time the Fed tried to rein in QE pre-COVID, markets recoiled viscerally and became combative. And if stock market gains are your measure of success, you will choose not to upset the apple cart, even if it’s wildly untethered to reality. You will naturally avoid a painful intervention and rehabilitation and continue to kick the can down the road as long as you can.”
Over the last six months, an increasing number of institutional giants have been buying into Bitcoin—searching for hard assets with scarcity to invest in, something that will not go up in terms of supply. Institutional interest in Bitcoin really began to heat up in the second half of 2020 as companies such as MicroStrategy, Square, and mainstream insurance giant MassMutual made staggering investments into Bitcoin.
On a recent episode of CNBC’s Mad Money, legendary investor Jim Cramer added to the Bitcoin hedge narrative, he said:
“People don’t believe in fiat currency anymore,[…]People believe that the United States is printing money … But Bitcoin is not printing bitcoin. So that’s more valuable in the same way that gold is hard to find. And gold is growing, we find, about 1% more than we had the year before, that’s all … so it has to do with scarcity.”
Cramer also emphasized that Bitcoin has total scarcity there is only some scarcity in Gold and zero scarcity to US dollars. He said:
“There’s total scarcity of bitcoin. When you have something that’s totally scarce in an era where people fear inflation and don’t believe in government bonds and they don’t believe in governments in general, then this Bitcoin suddenly has allure.”
The Mad Money host further added: “the more people who give it [Bitcoin] a higher price … the more likely it is that there will be more people come in.”
At the time of writing the Bitcoin price continues to consolidate just above the $35,000 price level.
The Bitcoin price plunged by over 16 percent on Monday, intraday low of $27,678 where buyer’s kicked in and the BTC price bounced to recover above the $30,000 level. Here’s two reasons we expect Bitcoin to reclaim $34,000 by the end of the week.
The quick recovery to around $32,800 is a major reminder of why the ongoing Bitcoin price rally is completely different from the one that lead to a complete price implosion of December 2017. Bitcoin has been on an explosive surge from $3,858 in March to $34,810 in January 2021—following the whale crypto sell-off yesterday, a fresh wave of buyer immediately absorbed the selling pressure which is a good indication that BTC is set to continue climbing in 2021.
While selling pressure from BTC whales appears to have caused the short-term price crash, there are still three reasons why Bitcoin should continue to test new all-time highs after this period of consolidation.
Institutional Money For Bitcoin
The institutional adoption narrative of Bitcoin has been a prevailing one, particularly towards the latter half of 2020 as firms like MicroStrategy led the charge to make Bitcoin is reserve hedge asset eventually purchasing over $1 billion in Bitcoin for its treasury.
Institutions have been flocking to Bitcoin and in the last 24 hours alone two more mainstream financial firms have confirmed their exposure to the BTC market. Singapore-based investment fund Three Arrows Capital has reported a significantly increased position in Grayscale Investments’ Grayscale Bitcoin Trust (GBTC), and now holds 38,888,888 shares. At the time of writing, that position is valued at just over $1.3 billion.
Meanwhile, New York Based investment firm SkyBridge Capital, a leading global alternative investment firm has also just announced the launch of the SkyBridge Bitcoin Fund LP, which provides mass-affluent investors with an institutional-grade vehicle to gain exposure to Bitcoin. Additionally, on behalf of its flagship funds, SkyBridge initiated a position, valued at approximately $310 million at the time of this release, in funds investing in Bitcoin during November and December 2020. Fidelity will serve as custodian, and Ernst & Young will audit the fund.
In the press release announcement on Jan 4, SkyBridge founder and managing partner Anthony Scaramucci said:
“We believe Bitcoin is in its early innings as an exciting new asset class […] With the institutional quality custody solutions available today, we believe the time is right to allocate capital and provide our clients access to the digital assets space.”
Despite growing retail demand for digital currency, Wall Street firms have largely avoided the market due to concerns around security. With the launch of the SkyBridge Bitcoin Fund LP, investors will have access to institutional-quality custody and operation, without forcing investors to directly hold Bitcoin.
“Bitcoin is leading a digital monetary revolution around the world,” said Brett Messing, SkyBridge President and Chief Operating Officer. Messing added:
“We believe the onus has shifted from ‘why are you investing in Bitcoin?’ to ‘how are you not investing in Bitcoin?'”
Dollar Decline and FOMC Minutes
Bitcoin now trades inversely to the US dollar as the greenback continues to lose purchasing power on the back of excessive stimulus relief money-printing.
At the end of 2020, the dollar closed almost 7 percent lower against a basket of major foreign currencies, meanwhile Bitcoin climbed by more than 300 percent.
Source: DXY on TradingView.com
The bearish outlook for the dollar—which opened in negative territory in 2021—is causing a surge in investment in alternative and emerging market currencies.
Bitcoin has served as a hedge against lower bond yields and a devaluating US dollar. The cryptocurrency seems likely to continue to fulfill its “anti-inflation” narrative as analysts anticipate a further decline in the greenback.
Bitcoin’s ability to maintain its bullish narrative could depend on the Federal Reserve’s forward guidance.
The United States central bank is set to release the minutes from its December meeting on January 6. Federal Reserve Chairman Jerome Powell has already revealed that the FED will continue funneling cash into financial markets to avoid a deeper economic recession.
The Fed measures reportedly include buying $80 billion a month in Treasuries as well as purchasing $40 billion a month in agency-backed securities until the labor market reaches maximum employment.
The Fed’s guidance should likely spur Bitcoin bulls to reclaim a BTC price over $34,000 by the end of the week.
Much like other leaders in the crypto industry, Kraken CEO and co-founder Jesse Powell believes that Bitcoin is a major game-changer and will continue to be one.
Bitcoin as digital gold
Bitcoin’s narrative has changed over the years. With the increased institutional adoption that has backed Bitcoin this year, BTC has slowly made its way into mainstream investments. One of the most revolutionary moves of 2020 may be corporations like MicroStrategy, Square, and Grayscale that have chosen to invest in Bitcoin, as traditionally, it has been associated with high risk due to its volatility.
Perspectives on Bitcoin have greatly shifted in 2020. In an interview with Bloomberg, Kraken CEO Jesse Powell explained why. He said that with the rise in inflation and the depreciation of the US dollar this year, triggered by stimulus printing, many investors have flocked to other stores of value to secure their assets. This has been what has ignited Bitcoin and tech stocks’ bullish momentum on the market. Powell explained:
“Holding the dollar seems like a risky process compared to something like Bitcoin, which is finite, predictable, and an even better store of value than gold.”
Powell associated this with the fact that investors no longer trusted national currencies and the dollar as a store of value, rather than the fact that the stock market and Bitcoin were correlated – on the contrary. Powell attributed the growth of Bitcoin and tech stocks this year to investors seeing them as better stores of value than the dollar.
Why tech stocks and Bitcoin have gone up this year
Both Bitcoin and tech have been widely popular among investors in 2020 for wealth protection, as the Federal Reserve’s plans to mass print money for stimulus relief has resulted in the dollar shooting down in value. Powell said:
“Historically Bitcoin has been uncorrelated to the rest of the stock market. I think what we are seeing now is just that both financial assets are on fire and reacting to the money printing that is happening.”
The Federal Reserve’s decision to continue mass printing money to alleviate the economic wreck caused by COVID-19 has benefitted the cryptocurrency industry as a whole. Currently, a consensus seems to have been established in the White House that the budget for the stimulus relief package will be $900 billion, with $600 direct payments to each eligible citizen. As long as the United States continues to roll out stimulus packages for coronavirus relief, investors will continue to gravitate towards Bitcoin and stocks as a safeguard against inflation.
Powell also disclosed that although Bitcoin has received incredible support this year and will continue to do so, the safe-haven asset will likely continue to undergo volatility until there is an even bigger increase of institutional adoption in the years to come. Only then will Bitcoin’s volatility go down. For now, the world is just warming up to cryptocurrencies and beginning to see the potential behind its technology.
Sen. Bernie Sanders has publicly threatened to filibuster the Senate’s vote to override Trump’s defense bill veto until they allow a vote on upgrading the $600 direct stimulus payments to $2000. While the move will no doubt garner the support of working-class Americans, more money printing equals more problems for the dollar and more push for Bitcoin.
United States President Donald Trump signed the $900 billion pandemic relief bill on Sunday night, guaranteeing $600 direct payments for working-class Americans and an added pile of debt for the Federal Reserve. Trump who originally rejected the stimulus relief package citing the low direct payment amount has found support in an unlikely ally—Democrat and ex-presidential hopeful Bernie Sanders.
As reported by Politico on Dec. 28, Sen. Bernie Sanders will filibuster an override of President Donald Trump’s defense bill veto unless the Senate holds a vote on providing $2,000 direct payments to Americans.
Sanders also shared the news himself on Twitter just hours ago. The Senator said:
“This week on the Senate floor Mitch McConnell wants to vote to override Trump’s veto of the $740 billion defense funding bill and then head home for the New Year. I’m going to object until we get a vote on legislation to provide a $2,000 direct payment to the working class.”
Senate majority leader, Mitch McConnell has given no indication how the payment-hike bill will be handled. In a rare twist, both Trump and Democrats support the $2,000 payments, while most Republican senators have been opposed. At least 13 Republicans would need to cross the aisle for the bill to pass.
Bitcoin and Stimulus
Following President Trump signing off on the stimulus legislation on Sunday, markets began the new week on a positive note, with slight gains seen on S&P 500 futures.
Bitcoin also immediately began to climb from its daily low of $26,450 to around $27,339. The price of traditional safe-haven asset gold also spiked and is set to make its biggest one-year gain in the last ten years.
While the potential vote on the direct payments being upgraded from $600 to $2000 will likely be welcomed by the American public and provide a further boost to the markets, stimulus efforts, and seemingly unlimited restraints on money printing to pay for them continue to put crippling pressure on the US dollar for the long-term.
The Bitcoin price could see an added surge as institutional and retail investors look to store their wealth in safe haven assets. Bitcoin has enjoyed closer comparisons to gold as store of value this year and institutions are betting that Bitcoin’s scarcity in its supply of 21 million tokens can be an effective hedge against the loss of purchasing power in the world’s most dominant fiat currency.
Back in the spring, as part of the first round of coronavirus stimulus measures, people received direct payment checks for around $1,200. That stimulus money, if it had been used to buy the Bitcoin, would now be worth almost $5,000. And according to Coinbase data, many Americans took the leap to Bitcoin to store their wealth at the time.
Anthony Pompliano, Founder of Morgan Creek Digital and Bitcoin advocate told Forbes:
“It is not surprising that people would want to take U.S. dollars and convert them into sound money […] The U.S. dollars that are being used to pay the stimulus checks is guaranteed to lose it’s purchasing power over time, while bitcoin’s structure is built in a way to protect and increase purchasing power over time.”
The Bitcoin price has climbed over 250% during the last 12 months, helped on by support from payments giant PayPal and institutional investors like Microstrategy and MassMutual Insurance warming up to the cryptocurrency safe haven potential.
A jump in direct payments from $600 to $2000 would likely provide more opportunity for Main Street to invest in Bitcoin, while the current bill has been criticized for mainly providing further support for Wall Street.
Can the $2000 Direct Payment Happen?
Sen. Bernie Sanders is attempting to stall the Senate until a vote on the direct payments increase to $2000 is allowed, but how likely is this plan to succeed?
According to the Congressional Research Service, although veto overrides can be filibustered it is a rare procedural move because the veto override already requires 67 votes and the filibuster is simply a delay tactic.
Sanders remains hopeful that Senate majority leader McConnell will allow a vote on the stimulus check increase on Wednesday. Sanders argued:
“The American people are desperate, and the Senate has got to do its job before leaving town[…]It would be unconscionable, especially after the House did the right thing, for the Senate to simply leave Washington without voting on this.”
The potential vote also appears to be creating a rare rift in the GOP as Republican Sen. Marco Rubio also endorse the $2000 amount with added support from other House Republicans despite many conservatives oppose that level of spending and the additional debt to the Treasury.
It still remains unclear whether there are enough votes in the Senate supporting the $2,000 checks, which would require at least 12 Republicans to cross the political divide and vote with the chamber’s 48 Democratic Caucus members.
United States President Donald Trump signed the $900 billion pandemic relief bill on Sunday night, effectively adding to the mountain of Federal Reserve debt which could be a further catalyst for the Bitcoin (BTC) price to continue its sensational rally.
Bitcoin’s weekend price rally saw the cryptocurrency surge to a new all-time high of $28,387 before a slight correction which saw BTC close the week nearly 12 percent higher. As Bitcoin now moves sideways under the $27,000 resistance and begins to show signs of fatigue, the President signing off on the new $900 billion dollar stimulus could reignite its upward momentum.
While President Trump had originally rejected the bill—objecting to the size of direct payments to Americans and demanding an increase from $600 to $2,000 per adult—he has since changed his mind and saved Wall Street from a catastrophic week. The President has continued to push for a vote on an increase to $2000 but it appears unlikely Republicans in the GOP will approve.
In a statement, President Trump said:
“I am signing this bill to restore unemployment benefits, stop evictions, provide rental assistance, add money for PPP, return our airline workers [back] to work, add substantially more money for vaccine distribution, and much more”
Trump Approves Stimulus – Bitcoin Rising
Following the President signing off on the stimulus legislation, markets have begun the new week on a positive note, with slight gains seen on S&P 500 futures.
After signing the $900 billion stimulus bill, President Trump tweeted:
“Good news on Covid Relief Bill. Information to follow!”
On the President’s tweet, Bitcoin immediately began to climb from its daily low of $26,450 to around $27,339. The price of traditional safe-haven asset gold has also spiked and is set to make its biggest one-year gain in the last ten years.
As stimulus efforts continue to put crippling pressure on the US dollar, the Bitcoin price could see an added surge as institutional and retail investors look to store their wealth in safe haven assets. Bitcoin has enjoyed closer comparisons to gold as store of value this year, and institutions are betting that Bitcoin’s scarcity in its supply of 21 million tokens can be an effective hedge against the loss of purchasing power in the world’s most dominant fiat currency.
Matt Hougan, the chief investment officer of Bitwise Asset Management, told Bloomberg his bullish outlook for Bitcoin on the back of the stimulus bill:
“What’s happening now—and it’s happening faster than anyone could ever imagine—is that Bitcoin is moving from a fringe esoteric asset to the mainstream […]f it’s going mainstream, there is just so much money on the sidelines that is going to have to come in and establish a position that leaves me very bullish for 2021.”
Stimulus Could Boost Retail Investment
After the Black Thursday market crash in March 2020, the Bitcoin price plunged to around $4,000 falling with the traditional markets.
As the Federal Reserve’s money printer sprang into action, sending out $1200 in stimulus checks, Bitcoin (BTC) began to rise, US citizens were reportedly turning to the cryptocurrency in a mix of lost faith in their government’s monetary policy and in an effort to hold on to their wealth as the US dollar weakened.
Overall the new stimulus bill will cost exactly $908 billion and will mean more money printing by a state that is already trillions of dollars in debt. The faster the government prints the more inflation will spiral out of control, which puts a very high price on the meager $600 dollars.
Following the first round of stimulus after Black Thursday, Brian Armstrong, the CEO of US-based crypto exchange Coinbase, soon revealed data showing that a spate of $1,200 deposits similar to the stimulus checks being offered to Americans by the government were skyrocketing at the leading US crypto exchange.
While this round will only provide a $600 dollar direct payment—if the stimulus check spending of US citizens in the first round of government-funded economic emergency relief this year is anything to go by, there appears to be a high possibility that many stimulus recipients will opt to invest in Bitcoin and provide a further boost to the crypto’s bullish price momentum.
