Bitcoin Weekly Outlook: What awaits BTC after the all-time high at $61,700?
Bitcoin fell more than 0.5 percent on Monday after a rebound in US Treasury yields and the US dollar index manipulated traders‘ short-term appetite for the cryptocurrency.
The BTC/USD spot rate fell 0.6 percent to $58,617.32 per unit at 0643 GMT. The pair’s decline appeared to be an extension of a sell-off that began after it hit an all-time high of $61,788 during the weekend session, almost double its opening price of the year.
Some traders decided to take profits, sending the bitcoin price down to as low as $58,400 on Monday.
It seems a reversal in the US dollar index of Bitcoin Profit and US yields has taken the shine off Bitcoin. The ticker DXY rose 0.16 percent during the day to 91.84, while the yield on the 10-year US Treasury bond rose to its 12-month high of 1.646 percent. Earlier this year, it stood at 0.918 per cent.
Neil Jones, head of foreign exchange sales at Mizuho, told Reuters, „He believes the dollar’s positive outlook is temporary, given the depreciation risks stemming from the US government’s massive stimulus packages and the Federal Reserve’s expansionary tactics to support the US economy through quantitative easing.
„It looks quite optimistic in the United States in terms of introducing more stimulus, and that of course feeds into the economic recovery in the States at a time when the fiscal stimulus is extremely high and the monetary stimulus is extremely high,“ Mizuho said.
„My personal view is that the dollar is not on a trajectory for a higher fundamental trend,“ he added.
Riskier assets like bitcoin have emerged as winners against dovish policies.
Speculators see them as a safe haven to sidestep inflation risks that could arise from the Fed’s ultra-low borrowing rates and $120 billion monthly asset purchases, alongside the US government’s recent $1.9 trillion stimulus package that is expected to push US debt above $29 trillion.
Many companies with larger cash reserves have already started buying bitcoin to diversify their balance sheets. These include Tesla, MicroStrategy, Square, Meitu, Seetee AS, and many others. Together, these companies hold nearly 6.5 per cent of the total active Bitcoin supply.
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Speculators expect the trend to continue in the coming sessions, with many estimating that increased participation by traditional companies and financial houses will push the Bitcoin price above $100,000.
Richard Byworth, chief executive officer of Diginex Ltd, a Nasdaq-listed digital asset financial services firm, said the cryptocurrency’s limited supply of 21 million tokens makes it an attractive bet against the ongoing dollar devaluation. In an interview with Bloomberg, he said the BTC/USD exchange rate could easily rise to $175,000 by the end of 2021.