Bitcoin is down more than 12% with the recovery of the US dollar
Last Updated on January 11, 2021
Bitcoin Market Overview: January 11th 2021
Bitcoin opened lower trading this week, as the prospects for an orderly transfer of power in Washington, higher US Treasury yields, and a recovery in the US dollar weakened the excessive appreciation of the digital currency.
The price of the benchmark digital currency fell as much as 12.67% on Monday, hitting an intraday low at $ 33,333After hitting a high of $ 41,986 on January 8, some analysts claimed that it was a natural price correction in the first place after streaking of gains. To 119% in the previous four weeks, and they also indicated that the price will resume its upward trend again.
This descending decline pushed the market value of Bitcoin to $ 637.7 billion, or 67.79% of the total market value of digital currencies after it reached its highest level ever at $ 758.5 billion at a record price of $ 41900, which is the highest ever.
Dissenting opinions
The choppy decline left Bitcoin analysts speculating on the next price trend. Scott Minerd, who expected its price to reach $ 400,000 in the future, said that the currency’s continued uptrend appears unsustainable in the short term, citing its excessive expansion that could lead to a collapse in its price.
Meanwhile, a crypto expert reminded that a correction of up to 30% -40% was normal after the runaway rally during the 2017 rally, as small investors were buying every dip to raise the bitcoin price, but in 2020 institutional companies and large investors dissolved The store of small investors, which translated into volatile bullish movements with minimal corrections ranging between 15% and 20%, this may indicate a difference in buyers: small investors in 2017 versus institutions today.
The fiscal stimulus is a reason to buy back Bitcoin
In retrospect, investors also started selling bitcoin because the Fed policy is pushing Treasury bills of ten years and 30 years upwards, so it appears that they are securing their profits by selling the digital currency near its record highs to instead put it in bonds to earn a return.
But this does not imply mass currency dumping behavior, as investors warn of the Fed’s commitment to pushing inflation above 2% in the coming years, and at the same time, the opportunity for additional government fiscal stimulus provides them with ample reasons to repurchase Bitcoin as their safety net.
Due to the hypothesis of a financial deficit to invest in bitcoin, the digital currency rose by more than 900% as the US Congress approved two stimulus projects with a total value of $ 3.2 trillion. This reduced the attractiveness of the US dollar and prompted investors to search for safety in high-risk assets, and the biggest benefactor was Cryptocurrencies, especially Bitcoin.
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