Bitcoin Regaining Its Bull Run - Exclusive Market Analysis.
2021-02-24 | Big Bob
The price of Bitcoin [
BTC] is regaining back since U.S. bond yields dropped, during Wednesday’s Asian session as remarks by U.S.
Federal Reserve Chairman Jerome Powell squashed fears of an early unwinding of monetary stimulus.
Bitcoin reached a high of $51,413 at 04:15 UTC, having defended the psychological support of $45k earlier on Tuesday,
consistent with CoinMarketCap data. At the reporting time, Bitcoin [BTC, +5.53%] traded near $50,560 USD.
The U.S. 10-year bond yield slipped to 1.33%, extending Tuesday’s drop from 1.39% to 1.34%, consistent with data source TradingView.
The yields came
struggling, possibly assisting bitcoin scale the $50k benchmark, as Powell underscored the U.S. economy’s ongoing weakness in written testimony to Congress earlier on Tuesday. Bond yields are reflective of investors’ expectations of growth/inflation and interest rates.
“The economic recovery remains uneven
and much from complete,
and therefore the path ahead
is very uncertain," Powell
added, noting that several Americans are still out
of jobs .
Powell’s comments contradicted the bond markets’ earlier optimism that the United States economy would grow rapidly this year, putting pressure on the Fed to unwind stimulus (hike rates or
reduce bond purchases)
before expected. The 10-year rose to a 12-month high of 1.39% earlier
in the week, diluting bitcoin’s appeal as an inflation hedge, and further pushing the cryptocurrency lower to $45k from record highs above $58k. The sell-off was accentuated by the United States Treasury Secretary Janet Yellen’s anti-bitcoin comments.
Additionally, a continued decline in bond yields could propel bitcoin toward record highs. “The focus remains on bond yields and stock markets,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant, explained.
Vinokourov added that “buying the dip” remains
the simplest strategy, as institutional demand for the cryptocurrency continues to grow. Payments giant Square
disclosed its new bitcoin investment worth $170 Mln on Tuesday. Elsewhere, the recently launched Canadian bitcoin ETF is witnessing strong inflows, as revealed by Glass node.
Moreover, the
settlement of a long-running legal dispute between Tether Ltd,
the firm behind the stablecoin Tether [
USDT, -0.03%],
and therefore the NY Attorney General’s office has supposedly removed
a possible systemic threat to crypto markets.
Analysts at JPMorgan warned last week that a sudden loss of confidence in tether posed risk to cryptocurrency markets, given the stablecoin is widely
employed to fund cryptocurrency purchases.
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