Bitcoin posted modest gains on Thursday as Democratic leaders signaled to reach an agreement with Republicans to pass the second round of COVID-19 stimulus by year’s end.
House Speaker Nanci Pelosi (D-Califonia) said on Wednesday that a new bipartisan $908 billion relief package should serve as the basis of their months of negotiations with White House and GOP leaders.
“Of course, we and others will offer improvements,” Mrs. Pelosi said in a joint statement with Senator Chuck Schumer. “But the need to act is immediate and we believe that with good-faith negotiations we could come to an agreement.”
Stmulus Pump Expected
The BTC/USD exchange rate rose 0.28 percent in the pre-trading New York session, trading at $19,278 as traders eyed an extended upside move towards its recently-established record high just shy of $20,000. A Reuters report indicated that the stimulus hopes lowered the US dollar, leading to Bitcoin’s higher bids.
I know a lot of folks have shared this but goddamn if that isn’t a headline. pic.twitter.com/m4gIhuftub
— Nathaniel Whittemore (@nlw) December 1, 2020
The Federal Reserve and the US government earlier committed to infinite quantitative easing, alongside lower interest rates, and unprecedented levels of monetary and fiscal stimulus to shield the economy from the effects of the COVID-19 pandemic. Their move stressed yields on the short-term debts to fall near zero, while also pressuring the US dollar lower.
As a result, Bitcoin rose by more than 400 percent as investors feared inflation would come back in the coming years. The cryptocurrency offered to become an alternative to gold, an established hedge against that trend.
Bitcoin’s rally stalled midway between August and September 2020 as Republican-majority Senate refused to entertain the House of Democrat’s proposal of a $2.4 trillion bill.
Bitcoin holding key support areas above $18,800-level. Source: BTCUSD on CoinPrice.Watch
Nevertheless, the cryptocurrency emerged on its own after a flurry of mainstream corporations also backed the anti-inflation narrative. Some of them also highlighted Bitcoin as a credible contender to gold’s dominance in the safe-haven market.
Billionaire investors such as Paul Tudor Jones and Stan Druckenmiller admitted that they hold Bitcoin. Meanwhile, Nasdaq-listed firm MicroStrategy replaced its $425 million worth of cash reserves with the cryptocurrency. Global payment service Square also revealed $50 million worth of BTC in its balance sheets.
PayPal, BlackRock, Guggenheim, Visa, and others also spoke about Bitcoin’s long-term potential as a payment and a store-of-value asset.
Correction Won’t Hurt Bitcoin Bullish Bias
Bloomberg Intelligence’s Senior Commodity Strategist Mike McGlone said the cryptocurrency would continue its bull run as the US’s fiscal deficit expands and the Fed remains dovish.
“$10,000 is 2021 Bitcoin’s base for more of the same toward $50,000,” the analyst noted Thursday. “A risk-off decline like 1Q’s could return Bitcoin toward $10,000 support in 2021, but we believe the path of least resistance remains higher. The foundation solidified in 2020 for the benchmark.”
BTC/USD was trading at $19,345 at the time of this writing.