A rising Bitcoin price typically leaves the rest of the cryptocurrency market in a similar upside bias. But Wednesday is not that day.
Bitcoin surged by an impressive 1.44 percent, hitting $10,935 as of 1252 GMT, even as its top rivals faltered. Traders shifted a massive capital from their mid and large-cap crypto tokens into the Bitcoin market, pushing the cryptocurrency’s market share from 60.89 percent to 60.47 percent.
As a result, Ethereum fell 1.49 percent against Bitcoin, while XRP, Polkadot, Chainlink, and BNB too plunged in the range of 2-6 percent.
Bitcoin also appeared stronger as traders awaited the outcome of the Federal Open Market Committee’s September meeting at 1800 GMT. Observers expect the US central bank to keep its benchmark interest rates between 0 and 0.25 percent as it commits to target inflation above 2 percent.
The macro drop so far has proved to be bullish for Bitcoin. The cryptocurrency’s 200 percent jump earlier this year originated from the Federal Reserve’s near-zero interest rates and infinite bond-buying policy. The decisions lifted appeal for riskier and safe-haven assets altogether, barring the US dollar, which fell due to oversupply.
The factors still remain. With no definite news on a successful coronavirus vaccine, a US presidential election, rising unemployment, and slower economic recovery, Americans expect more monetary aid from their central bank and White House.
That would mean another injection of trillions of dollars into the US economy. It would further mean a prolonged period of higher inflation targeting and lower interest rates.
Bitcoin is posing itself as a hedge against these scenarios for years. And now, people are taking the cryptocurrency seriously because of its underlying scarcity and ability to behave as store-of-value when required.
MicroStrategy, a Nasdaq-listed software development firm, bought $425 million worth of Bitcoin in two separate purchases. The company admitted that it is attempting to move away from cash that may not return any yields in the long-term.
Billionaire investor Paul Tudor Jones also made a similar call to protect his $22-billion portfolio from fiat-led inflation. He allocated 1-3 percent of his total profile to Bitcoin Futures.
Strong fundamentals leave the Bitcoin market under a technically bullish spell. Some cryptocurrency trader sees the cryptocurrency hitting the $12,00-price target all over again. At the same, many anticipate an extended push towards $14,000, a level BTC/USD last tested in 2019.
A weekly outlook released by CryptoQuant earlier this Wednesday showed why a $14,000 Bitcoin is possible.
To the downside, a plunge below $10,400 risks sending BTC/USD back towards $10,000.