In the past 24-hour period, the Bitcoin price has been trading around the $13,000 level as traders wait to find out if House Speaker Nancy Pelosi and the Trump administration mange to reach agreement on a COVID-19 stimulus bill.
On Wednesday (October 21), the Bitcoin price surged past $13,000 for the first time in over 15 months thanks mostly to an announcement from PayPal that it is launching support for cryptocurrencies.
PayPal’s press release came out at 12:00 UTC (or 08:00 ET) on October 21; this was the time when Bitcoin trading around $12,289. 10 hours later, the Bitcoin price reached a high of $13,219.
Since then, as a result of short-selling by some trader and profit-taking by some BTC holders, the Bitcoin price has retraced slightly.
According to a report published by Bloomberg yesterday, “price charts followed by technical analysts suggest the largest cryptocurrency may be due for a pause in the wake of the exuberance triggered by the announcement that PayPal Holdings Inc. will let customers use cryptocurrencies.” This report goes on to say that the Relative Strength Index (RSI) indicator is at “level reached before last downturn.”
And here is what prominent Dutch crypto analyst/trader Michaël van de Poppe thinks about Bitcoin’s latest price action:
Bitcoin is currently (as of 08:03 UTC on October 23) trading at $12,874, up 0.47% in the past 24-hour period.
Although PayPal’s announcement is highly important as far mainstream awareness/adoption of cryptocurrencies is concerned and bullish for Bitcoin in the medium to long term, for Bitcoin to continue its price rally toward $20,000 (which is the level the Bitcoin price nearly reached in December 2017) and beyond, it seems that we need two things:
- More announcements by major companies that they are going to support crypto (like PayPal) or that they have bought a significant amount of BTC and that they are going to use Bitcoin as a treasury reserve asset (like MicroStrategy and Square).
- Further monetary and/or fiscal stimulus in the U.S. and elsewhere to fight the economic impact of COVID-19 since many investors believe that such measures will lead to high inflation down the lane and crypto investors seem happy to accept the Bitcoin as an inflation hedge narrative.
With the regard to the former, Weiss Crypto Ratings believes that we could soon have what it calls “institutional FOMO.”
And with regard to the latter, it seems clear that whoever wins the U.S. presidential election next month will have to inject more money into the U.S. economy — in the form of fiscal stimulus packages — to stop it from going into a depression since it looks like it will be a while before COVID-19 is brought under control. Of course, if Biden wins (as the polls currently predict) and Democrats have full control of Congress, a Biden administration is likely to go ahead with even larger relief packages than we have seen till now.
As for the current stimulus talks in Washington between the Democrats and the White House, according to a report by CNBC, Pelosi acknowledged yesterday (October 22) that further progress had been made and that the two sides are “just about there” on reaching agreement on a fiscal stimulus bill.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.