Bitcoin (BTC) seems likely to reach the resistance point of $7,000 after the US Federal Reserve has initiated an open-ended asset-buying program.
Over the past 24 hours, Bitcoin has rebounded, buoyed by the Coronavirus-related quantitative easing operation of the US Federal Reserve. Having reached and exceeded Monday’s $6,000 level, the flagship cryptocurrency continued its upward movement on Tuesday and is now trading at $6,650, a 7.26 percent higher.
The Fed launched an open-ended asset-buying plan Monday to counteract the impact of the pandemic on the economy. The central bank said it would purchase $125 billion in bonds each day, making for a huge $2.5 trillion buyback exercise every month. It also revealed $300 billion in emergency lending programs. The Federal Reserve noted that it would continue to buy assets “in the amounts required to support the smooth functioning of the market”. The news did not impress stock investors but immediately pushed BTC from $5,800 to over $6,500, contributing to a continuation of the recovery rally from recent lows below $4,000. Technical indicators and analysts are now pointing to a further increase in the upward trend, with Bitcoin set at $7,000 to test resistance.
On the back of the Fed assistance program, Gold rallied too. BTC has been likened to “digital gold” over the past few years. It has been seen by some as a safe haven asset to invest in when markets are under pressure. But the cryptocurrency has seemed to be behaving more like a volatile asset in the recent crisis.
After the coronavirus pandemic ripped through countries, the overall mood of the investor was low. The cryptocurrencies have also taken on a beating, suffering a violent sell-off earlier this month. In the past 24 hours, the crypto-market capitalization increased by $14 billion to hit $184.5 billion.