- Federal Reserve’s open-ended easing program is a long-run positive for bitcoin’s price, according to analysts.
- With stocks flashing green and technical indicators pointing to a strengthening of upward momentum, bitcoin looks set to test resistance at $7,000.
- Monday’s low of $5,686 is the level to beat for the bears.
Bitcoin is marching northwards as the Federal Reserve’s extraordinary economic measures boosts risk appetite in the traditional markets.
The top cryptocurrency by market value rose as high as $6,863 early Tuesday, having jumped from $5,700 to $,6600 on Monday, according to CoinDesk’s Bitcoin Price Index.
A major part of Monday’s double-digit price rise came after the U.S. Federal Reserve (Fed) announced it would expand asset purchases by as much as needed (that is, with no upper limit) to help the economy absorb shocks arising from the coronavirus pandemic.
Good for bitcoin?
There’s now a general consensus in the analyst community that the unconventional policies adopted by the Fed and other central banks could bode well for bitcoin.
“We foresee increasing capital deployment into bitcoin as a result of a ‘lack of confidence’ across central banks and governments during this volatile period,” Lennard Neo, head of research at Stack, provider of cryptocurrency trackers and index funds.
Central banks from New Zealand to Canada have reduced rates to zero and announced bond purchases over the last two weeks to counter the coronavirus-led economic slowdown. The likes of the Bank of Japan and the European Central Bank have instigated negative interest rate policies.
With central banks running out of steam to battle the virus jitters, there’s scope for bitcoin to fulfill a non-correlated and decentralized value proposition, according to Neo.
Some observers are also of the opinion that the ongoing crisis will strengthen…