Bitcoin joined the list of riskier currencies that benefited from the US dollar’s decline to its three-week low on Tuesday.
The greenback slipped 0.28 percent to 90.228 as of 0730 UTC, its lowest level since January 27, in an extended downside move that saw its plunging 1.5 percent in the previous eight sessions. According to MUFG strategists, a positive outlook for the global economy, led by sharp gains in crude oil and impressive roll-out of COVID-19 vaccines pressured the dollar lower.
Bitcoin Crossed $50K?
An erratic inverse correlation between the dollar and Bitcoin helped the latter pare its losses from the previous session. The benchmark cryptocurrency climbed by more than 4 percent to achieve a new record high at $49,872 on Tuesday, prompting analysts to predict a breakout move above $50,000, a level they attempted to hit four times in February but to no avail.
Nonetheless, some exchanges reported Bitcoin reaching the $50,000-milestone on their platforms. In an email statement to CoinChapter, Konstantin Anissimov, Executive Director at CEX.IO, confirmed the bullish move.
“For a few months now, we expected Bitcoin to hit $50,000 by the end of Q1. The coin managed to do it already, indicating that its price is moving faster than predicted by analyzing its stock-to-flow,” the analyst added.
“This could indicate that other milestones — such as our prediction that BTC could hit $80,000 by the end of Q2 — might also come sooner than expected.”
More Corporates to Adopt BTC
The weakness in the dollar provided tailwinds to Bitcoin’s bullish calls. More recently, corporate houses, including carmaker Tesla and software firm MicroStrategy, invested billions of dollars into the cryptocurrency against their cash reserves.
That solidified Bitcoin’s position as a future store-of-value for the private sector in the US, with many anticipating that companies like Twitter and Apple would make a similar crypto investment.
“You’ll see more companies [add bitcoin to their balance sheets] because they don’t know how else to mitigate risk. So, it’s part of the distortion of financial markets that we see more generally,” Mohamed A El Erian, the chief economic adviser at Allianz, told CNBC on Monday.
The statements took cues from the Federal Reserve’s commitment to continue its quantitative easing policies to boost the labor market at the expense of the dollar. Meanwhile, the US President Joe Biden’s plans to pass a $1.9 trillion stimulus package in Congress further stresses the greenback.
That has left Bitcoin with a part of least resistance to the upside.