Bitcoin appeared to end its first official week with a strong result as its price hit another record high this Friday.
The benchmark cryptocurrency surged above $ 41,000 for the first time since its inception and hit an all-time high of $ 41,499 before correcting lower. The gains came shortly after European stocks reported gains in early trades, suggesting traders were moving towards bullish risk sentiment.
Since November, the continent’s Stoxx 600 benchmark has risen 0.3 percent as it stayed on track to end its best week. The MSCI index, which tracks developed market stocks, rose 0.3 percent, also on its way to marking its best week since 2018.
EUR / USD was down 0.30 percent. Around the same time, Bitcoin’s market cap hit an unprecedented level of $ 749 billion – almost near Tesla’s valuation.
Bitcoin basics
Gains in riskier assets were seen after the Democrats won important seats in Georgia’s Senate runoff this week. The victories put the blue political party in control of both congress houses. For investors, it means an increase in fiscal stimulus measures to help Americans through the economic fallout from the coronavirus pandemic.
“This is probably the best news for business since vaccines were approved,” said Adam Kurpiel, head of interest rate strategy at Société Générale, in a note.
Meanwhile, investors also rated the lower political uncertainty after President Donald Trump agreed to “properly” transfer powers to his successor Joe Biden. Mr. Biden will take the oath as the 46th US President on January 20.
Bitcoin analysts have predicted that Mr Biden’s administration’s larger stimulus measure could usher in inflation alongside economic growth. They predicted the cryptocurrency as an anti-inflation set that would rise higher as the U.S. dollar lost its purchasing power over time.
“Now that Trump has admitted, we can expect Covid lockdowns in the US to be far worse than in Europe in recent days,” said independent market analyst Elixium. “The Biden [administration] I will try very srs to get places like texas & florida in full lockdown. Bullish for Bitcoin, Bearish for USD. “
Correction call
As retailers raised their bids on Bitcoin against supportive fundamentals, the technical data appears to be in a massive correction. The cryptocurrency has hit its most overbought levels on all of its longer-term charts, an inevitable neutralization spearheaded by bear-induced sell-offs.
Bitcoin is entering overheated areas and risking sell-off attempts by bears. Source: BTCUSD on TradingView.com
Should a correction occur, BTC / USD would test USD 40,000 as interim support and keep an eye on USD 36,000 as the primary downside target.
