The ongoing price rally in the Bitcoin market was interrupted on Friday when traders decided to secure their short-term gains against the strengthening US dollar, despite a long-term outlook showing the flagship cryptocurrency in important shape.
The BTC / USD exchange rate fell to an intraday low of $ 46,845 during the European session. This comes from data pulled from Coinbase Pro, a US-based trading platform. Even so, the downward correction came with meager daily volume and showed a weaker bearish bias as more analysts expected Bitcoin to hit $ 50,000 this week.
Bitcoin sees a breakout above $ 50,000. Source: BTCUSD on TradingView.com Bitcoin sees breakout above $ 50,000. Source: BTCUSD on TradingView.com
This is due to a number of bullish catalysts that surfaced this week.
Back-to-back adoption
On Monday, Fortune 500 company Tesla announced it had bought $ 1.5 billion worth of Bitcoin after dumping around 8 to 10 percent of its cash reserves. The move confirmed the cryptocurrency’s most bullish narrative: that of a depreciating US dollar and like it [Bitcoin], a scarce commodity, can protect people from such devaluations.
On Wednesday, Twitter’s CFO Ned Segal toyed with the same idea of adding Bitcoin to the social media giant’s balance sheets. However, he made it clear that the need to buy the cryptocurrency would only arise after the employers and providers of Twitter would ask for it in the form of salaries / payments.
On the same day, MasterCard announced that it would integrate crypto payments with its existing credit / debit card services later this year. On Thursday, the oldest bank in the United States, BNY Mellon, announced that it would offer Bitcoin custodian services through the same platform that its customers use for traditional securities and cash.
“The institutional and corporate demand for the pioneer cryptocurrency as a store of value and a hedge against inflation will keep BTC / USD on track,” Petr Kozyakov, co-founder and CBDO of international fintech company Mercuryo, told NewsBTC in an email statement.
The analyst added that Bitcoin could be above $ 50,000 by the following Monday if optimism persists.
Tailwind for Bitcoin
Further tailwinds to Bitcoin’s bullish setup came from the United States when the House Ways and Means Committee enacted laws that would provide households with benefits of $ 593.5 billion through direct payments and tax credits.
The aid was part of US President Joe Biden’s $ 1.9 trillion stimulus package, the majority of which includes up to $ 1,400 in direct payments. Additional package components will appear as soon as the committee finalizes them by Friday. A full vote on the overall incentive will be held in the week of February 22nd.
Democrats believe the payments are vital to increasing household income, especially as the US unemployment rate continues to rise. In the meantime, the Biden government plans to make monthly tax credit payments a permanent annual feature through new laws.
House Panel Promotes Stimulus: Approves Payments of $ 1,400, Personal Tax Credits, and Loans for Bankruptcy Annuities https://t.co/lAwVu2pdcE
– Zerohedge (@zerohedge) February 12, 2021
Bitcoin bulls see more of an incentive as a guide to additional debt due to an already unprecedented budget deficit in the US. Many agree that the Federal Reserve should monetize more debt, which further increases the value of the US dollar. This could help Bitcoin price continue its bull run through 2021.
“Loose fiscal and monetary policies around the world continue to highlight some use cases of Bitcoin as an inflation hedge and uncorrelated asset,” write Will Nemirovsky and Zev Mintz, analysts at River Financial, in their weekly analysis.
Bitcoin was trading above $ 47,500 at press time.
