Bitcoin has the potential to hit $ 56,000 in the upcoming sessions, said independent market analyst Josh Rager.
The founder of Blockroot.com said in a tweet posted Tuesday that BTC / USD could continue to rise for two reasons. First, President Joe Biden’s recent approval of US President Joe Biden’s $ 1.9 trillion stimulus package in the Senate could help the ongoing Bitcoin recovery rally continue to grow. Second, the positive correlation of the cryptocurrency with the US stock market could act as a bullish tailwind.
“Some say this is the beginning of a major correction,” said Rager. “For sure, [it] could be. But I want the price to go up at least to retest $ 56,000 first. But with a $ 1.9 million stimulus in the works and higher stocks, I’m having a hard time making Bitcoin too bearish right now. “
According to Josh Rager, Bitcoin plans to retest its record high of over $ 58,000. Source: BTCUSD on TradingView.com
A bullish recipe
The statements were based on Bitcoin’s performance over the past year. Since March 2020, Bitcoin and all of the indices on Wall Street have rallied almost in sync with each other when the Federal Reserve launched its unlimited bond purchase program and cut its key rates to near zero. Meanwhile, the US government launched two stimulus programs totaling $ 3.1 trillion.
Traders and investors flocked to Bitcoin and similar riskier assets due to the lack of attractive returns on US Treasuries. In the meantime, a massive capital injection reduced the US dollar’s purchasing power. The US dollar index fell more than 12 percent, hurting savers and institutions with cash-based balance sheets.
As of March 2021, the catalysts have not changed significantly. The Fed buys $ 120 billion in government bonds and corporate mortgage-backed securities every month. Interest rates are still near zero. Approval of the $ 1.9 trillion aid is likely to put long-term pressure on the US dollar.
Bitcoin surged back above $ 54,000 on Tuesday for the first time in two weeks. The upward move in the cryptocurrency coincided with the recovery in US equity markets. Investors bounced back from run-down technology stocks on the buy-the-dip mentality, pushing the Nasdaq Composite Index up 3.2 percent.
Meanwhile, the U.S. benchmark index S&P 500 rose 1.8 percent while the blue-chip Dow Jones flirted with record highs after adding 250 points to its index.
But…
… The recovery step is associated with market risks. Recently, the winners of the pandemic, including Bitcoin, have faced heavy downward pressure from the sell-off of government bonds. Investors poured out of the Treasury markets after anticipating a faster-than-expected economic recovery in the US. You have invested capital in assets that have depreciated the most during the pandemic.
Fears remained that rising US bond yields would force the Fed to raise interest rates. While central bank chairman Jerome Powell made it clear in a speech last week that he will not pursue Hawk politics, bitcoin and the stock market traded cautiously higher.
“The fact that Bitcoin appears to be keeping up with the rise in interest rates is definitely a good sign,” said Nick, the author of the Ecoinometrics newsletter. “This means that adoption remains the main driver for this cycle.
“If you believe that Bitcoin has to grow 10 times more to reach its natural market size (physical gold). Then you are not concerned about the temporarily rising yield situation, ”he added.
