Bitcoin takes off in the slipstream of the US stimulus package
Investors have been increasingly concerned about rising US government bond yields in recent weeks, causing Bitcoin (BTC) and some US stocks to fall sharply – but that has now changed.
On Tuesday, the bitcoin price climbed for the fifth day in a row. At the same time, shares of US technology companies such as Netflix, Apple and Amazon saw price declines of up to five percent.
At the time of going to press, the BTC price is at 53,932 US dollars, giving it a market capitalisation of Bitcoin Superstar over one trillion US dollars.
Within the last 24 hours, Bitcoin rose by 7.23 percent and on a weekly basis, the digital gold even grew by almost 9.2 percent.
US Senate gives green light for gigantic economic stimulus package
Since the US Senate gave the green light to the US government’s 1.9 trillion US dollar economic stimulus package on 7 March, the BTC price has only known one direction. Every US American is to receive a cheque worth 1,400 US dollars to strengthen the country’s purchasing power.
Worries among some investors that the Federal Reserve was scaling back its loose monetary policy appear to have disappeared.
In addition, US President Joe Biden expressed optimism, saying that the Senate’s approval represented a major step forward in delivering a much-needed stimulus package to Americans:
Today I can say that we have taken another giant step forward in delivering on that promise. Aid is on the way.
The approval of the aid package for the US is arguably also boosting the bitcoin price. After the first aid package of two trillion US dollars was approved in April 2020, it resulted in a massive rally in the US stock market and also in Bitcoin and other cryptocurrencies.
Many investors therefore expect the second stimulus package to have a similar effect on the BTC price. According to Peter Brandt, an experienced trader, the combination of a depreciating US dollar and a new stimulus package could therefore lead to a further increase in the Bitcoin price against the US dollar.
On-chain data paint bullish picture for Bitcoin
Another bullish signal comes from the on-chain data. Data from Glassnode shows that bitcoin holdings on crypto exchanges have reached their lowest level since November 2018.
Many market analysts interpret this as a bullish sign, as few traders are planning to exit their bitcoin positions. For this reason, they are withdrawing their BTC from crypto exchanges and holding it in their own wallets, which are meant for holding the cryptocurrency for the long term. Therefore, the selling pressure on the bitcoin price decreases and a major market correction becomes less likely in the near future.