Bitcoin refreshed its all-time high during Tuesday’s early Asian session as traders assessed the prospects of Joe Biden’s final foray into his ambitious $ 1.9 trillion stimulus package.
The Financial Times reported late Monday that the US president would make official trips outside of Washington to showcase his expansive aid proposal to the public. He wants to put the Congress under pressure to complete negotiations on the stimulus package – especially since the Republicans on Capitol Hill fear that the package would drive up national debt.
But polls show that the U.S. public supports receiving direct payments (some of which include an benefit of $ 1,400 for individuals and additional assistance for the unemployed and parents) – and that’s why Democrats believe mounting public pressure is pushing some Republicans to do so would support Biden’s proposal.
Allianz economist sees Bitcoin boom
The news has worked as a headwind to the bearish bias that was renewed in the Bitcoin market ( massive investment planned! ) Earlier this week . On Monday, the benchmark cryptocurrency fell as much as 5.79 percent amid increasing profit-taking among day traders.
The day before it had risen exponentially, hitting a new record high of $ 49,700 (data from Coinbase).
But on Tuesday, the bids for the BTC / USD rate climbed to $ 49,872.
Bitcoin is seeing an extended rebound towards $ 50,000. Source: BTCUSD on TradingView.com
Mohamed A. El Erian, Allianz’s senior economic advisor, viewed the ongoing rally as a “rational bubble” fueled by inflation fears among retail and institutional investors alike.
He cited a spate of recent business investments in Bitcoin, including Tesla’s $ 1.5 billion capital injection that has the credibility of inflating the price bubble even higher.
„In addition to massive central bank liquidity injections, there is now massive fiscal injection prospect at the top,“ Erian told CNBC. „Basically, investors feel safe to ride on what appears to be a massive wave of liquidity.“
“You will see more companies [adding bitcoin to their balance sheets] because you don’t know how else to mitigate the risk. So it’s part of the distortion in financial markets that we’re seeing broadly, ”said the analyst.
Many cryptocurrency analysts now agree that Bitcoin would hit a record high of over $ 50,000 this week, although after several attempts it failed to close above that target.
Ki-Young Ju, chief executive officer at CryptoQuant – a South Korea-based blockchain analytics company, noticed an increase in stablecoins reserves across all exchanges. He noted that traders would use the sedentary dollar-pegged token offering to buy bitcoin – and other cryptocurrencies.
„This $ 50k battle is about Coinbase whales (USD) vs. Stablecoin whales (USDT),“ the analyst said. “Negative Coinbase bonus, but plenty of stablecoins in exchange. Negative premium should be cooled in order to continue to rise. „