Bitcoin was off to an impressive jump this Thursday as a renewed buying sentiment took its price above $9,000.
The benchmark cryptocurrency established an intraday high just shy of $9,100 following the European opening bell. The sessional gains appeared as traditional markets failed to comfort investors against the rising Coronavirus epidemic in the US and the other leading economies.
Futures linked to the US stock market, for instance, fell sharply by 1 percent, suggesting that equities could open in a negative area after the New York opening bell today. The downside sentiment groomed after the benchmark US indices surged overnight, showing a clear case of intraday profit-taking.
Global stocks extend rally on stimulus hopes (rate cuts, spending packages) following 2nd biggest point gain of Dow in history, but virus risks block way. California declares emergency over coronavirus as death toll rises in US. Bonds gain w/US 10y at 1%. Gold $1638, Bitcoin $9k. pic.twitter.com/65LVSfESFl
— Holger Zschaepitz (@Schuldensuehner) March 5, 2020
Meanwhile, gold also failed to extend its strong bullish move led by the Federal Reserve’s surprise rate cut on Tuesday. The yellow metal consolidated sideways throughout the Asian and early European sessions, leaving stressed equity traders without a strong safe-haven for the day.
A Big Week for Bitcoin
Bitcoin, which was rather mum to the Fed’s dovish announcement, offered to hold the load as stocks, gold, and even US bond yields suffered. The cryptocurrency jumped by circa $157 in just one hour, right ahead of the European market open, on a promise to serve as an interim hedge against the Coronavirus pandemic.
BTC/USD rises to $9,100 on safe-haven vows | Source: TradingView.com, Coinbase
The gains pretty much followed big news coming from South Korea. The Coronavirus-hit country today legitimized the trading of bitcoin and other cryptocurrencies, leading enthusiasts to call it a “landmark” move. Interestingly, South Korea’s approval of bitcoin came only a day after India’s reversal on its two-year-long crypto trading ban.
“Germany, India, South Korea… Regulations are here and more are coming,” said Eric Dadoun, a prominent startup investor. “The new era of digital assets will be structured and above board. No more blatant manipulation, fraud, exchanges trading against customers, etc. Should have been obvious to everyone watching.”
A combination of optimistic market catalysts further helped to improve bitcoin’s short-term sentiment. As prominent trader Anondran noted, the cryptocurrency could swell further ahead of its supply rate cut in May 2020 now that it is gaining legitimacy across the world.
“2020 Halving is totally contrasting with Positive regulatory news from India, South Korea and more to come,” he said.
Supply Shock against Free Money
It is likely that bitcoin prices would continue to go higher against the rising storm in the global financial market. Central Banks around the world have slashed interest rates to safeguard their economy from Coronavirus. There could be more countries that want to launch similar stimulus programs.
Lower interest rates put pressure on the local currency and bonds which, in turn, increases the appetite for non-yielding assets like gold and bitcoin. Anthony Pompliano, co-founder & partner at Morgan Creek Digital, said in a note that all the rate cuts and money printing exercises are taking place within months of the Bitcoin halving.
“Cut rates. Print money. Watch [the] Bitcoin’s supply-shock occur,” he added.