- Bitcoin closed above $9,700 in hopes to wipe out its pre-halving crash amidst growing risk-off demand.
- The cryptocurrency broke its short-term correlation with the S&P 500 after the Federal Reserve gave a grim economic outlook.
- Instead, the BTC/USD exchange rate surged alongside its safe-haven rival Gold.
The top cryptocurrency jumped 4.28 percent to $9,705 ahead of London opening bell. Its move uphill came as a part of a more extensive upside correction from its May lows near $8,100, fuelled further on Wednesday by the Federal Reserve Chairman Jerome Powell’s speech.
Bitcoin brought about $10 billion to its market capitalization as Mr. Powell painted a grim economic outlook caused by the Coronavirus pandemic. The Fed chair said economies are underperforming that could amount to another stimulus atop an existing $3 trillion financial aid.
Traders took the news as a signal for a short-term upside in the Bitcoin market. The cryptocurrency rose by about $500 on Wednesday, giving no signs of easing heading into the current session.S&P 500
On the other hand, Wall Street indices reacted negatively to Mr. Powell’s speech, with the by 1.7 percent to 2,820 points. The U.S. benchmark index had formed a positive correlation with Bitcoin after plunging in sync in March 2020. Mati Greenspan, a veteran analyst and the founder of Quantum Economics, the two markets could resume their correlation anytime. He noted that bitcoin decoupled itself from other markets as it prepared to undergo a major technical upgrade on May 11. The “halvening” changed the cryptocurrency’s dynamics for the near-term.“Since that event, the orange coin is up 8 percent, while the U.S. stock market is down 4 percent,” he said.
Michaël van de Poppe gave a different outlook. The prominent crypto trader tweeted Thursday that the correlation between Bitcoin and the S&P 500 grew under the influence of a global market crash. But now, the cryptocurrency was tailing risk-off assets, such as Gold and Silver, more than it tailed the U.S. stock market.
“We’re back in a market where every significant dip of 25-40% is a very good opportunity to step into the game,” Mr. Poppe said.Gold’s spot price had jumped 0.8 percent after Powell’s speech Wednesday. The yellow metal eased but maintained profits above $1,700 Thursday as the Fed chair downplayed the possibility of negative interest rates.
A $10,000 Bitcoin
The supportive fundamentals improved Bitcoin’s technical outlook for the near-term. The cryptocurrency’s jump above $9,500 created a solid floor to attempt a rally towards $10,000.
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