The price of a single Bitcoin [almost] reached $ 16,000 as traders valued a combination of supportive macro catalysts.
One of these was the November meeting of the Federal Open Market Committee (FOMC). On Thursday, Federal Reserve Chairman Jerome Powell reiterated that the escalating coronavirus pandemic poses extreme risks to the US economy. He also expressed concern about the depletion of US household savings following the unwinding of previous stimulus-reducing measures.
Mr. Powell has pledged to continue supporting the economy by keeping benchmark interest rates close to zero for at least three years. Meanwhile, it also proposed to make upward adjustments in the Fed’s asset purchase program. The bank currently buys $ 120 billion worth of Treasury and mortgage-backed securities.
The statements emphasized the US dollar. On Thursday, the greenback fell 0.94% as talks of higher central bank spending threatened to damage its purchasing power. Its decline has prompted investors to seek opportunities elsewhere, with Bitcoin emerging as an ideal candidate thanks to its steady uptrend from the previous two weeks.
The cryptocurrency jumped up to 18% following PayPal’s foray into the cryptocurrency industry on October 21. Subsequently, the uncertainty of the US presidential election followed by the prospects of a Joe Biden victory over Donald Trump helped to further extend his bull run (read here).
As previously mentioned, the Democratic candidate has promised his constituents that he will increase public spending to help them in the economy hit by the pandemic. Therefore, investors predict that Biden, as the next president of the United States, will unveil a nice stimulus package – with a base of at least $ 2 trillion.
Fed wants stimulus
Powell also stressed the need for a broader tax relief to mitigate the impact of the coronavirus on Americans, adding that it would further help avoid bankruptcies and long-term damage to the job market.
“We will have a stronger recovery if we can get at least a little more fiscal support, when it is appropriate and at the size that Congress sees fit,” the Fed chairman added.
Overall, the new dollar liquidity in the US economy would limit its appeal as a safe haven, as was the case after the March 2020 stimulus package. This somehow explains why Bitcoin grew immediately after the FOMC meeting was held. interrupted.
‘I expect Bitcoin will return to historical highs by January 2021 “, She said market analyst Parabolic Thies. “The madness of a bull run follows from then on.”
Meanwhile, he warned that the cryptocurrency would risk correcting itself by at least 30 percent during its current bull run.