- Bitcoin soared by nearly 600 points on Wednesday after Chairman of the Federal Reserve Jerome Powell said additional fiscal stimulus is good for the economy.
- While rising, the cryptocurrency benchmark broke its intraday correlation with U.S. stocks, which closed lower.
- A top crypto analyst said that a global crash could drive Bitcoin even higher.
Bitcoin’s price rose Wednesday after Fed Chairman Powell’s defeatist remarks about the US economy helped the perceived hedging asset.
The cryptocurrency benchmark has gained 6.79 percent, or $598, to the token’s worth at $9,420. Its futures in the CME increased 6.61 percent to $9,430.
Since Powell cautioned of an extremely unpredictable road to economic recovery, Bitcoin looked ready to start seeking against over $9,500. The Fed chair said he would avoid driving loan rates below zero but called for additional stimulus measures to help the economy that has been struck by Coronavirus.
An extra stimulus is worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery, he went on to claim.
The statements also came a day after House Democrats released a $3 trillion stimulus bill to help the U.S. economy. The plan would increase the economic stimulus package to $6 trillion if not vetoed by Republicans in the Senate.
Bitcoin Aims For Profit
Bitcoin traders have constantly hunted for hints from the duration and scope of the fiscal stimulus underway. The trailing rose higher following the complete recovery of the cryptocurrency from its March lows below $4,000, right after the U.S. Congress approved a 3 trillion dollar relief fund for pandemic-affected companies and individuals.
Scott Melker, a prominent crypto trader, remembered that after March’s sell-off, traders keeping large amounts of bitcoin tokens (aka “whales”) sat atop “a metric ton of cash.” Since the U.S. fiscal stimulus announcement, they used the money to drive up the bitcoin rates.
The comments indicated a fractal repetition for Bitcoin – now that Powell wants to use the Fed’s strength to do what it can until the crisis has passed and the economic recovery is well underway. Traders expect Bitcoin to offer sustained profits as it benefits from increased fiat liquidity on the global market.
Wall Street Indices Bleak
Also, the demands for the upside of Bitcoin grow stronger following its sudden split from U.S. equities. Since the global market sell-off in March 2020, the cryptocurrency and the S&P 500 have moved in different directions since Thursday, after sustaining their correlation.
The U.S. benchmark index opened lower on Wednesday, after an early morning speech by Powell. Nevertheless, the bleak business outlook of the Fed has exacerbated losses all over the Wall Street indices. The S&P 500 closed 50.12 points down to 2820.00 – or 1.7 percent. The Dow Jones and Nasdaq Composite, meanwhile, slipped 2.2 percent and 1.5 percent, respectively.
The correlation-break breathed life into the Bitcoin’s safe-haven narrative, with Mr. Melker pointing out that the cryptocurrency never tailored the stock market anyway. They’re not correlated now, and they weren’t correlated before.