Bitcoin prices rose to record levels Thursday as US lawmakers moved closer to a deal that would dispatch at least $908 million to aid cash-crunched American households and businesses.
The flagship cryptocurrency touched $23,776 on the US-based digital assets platform Coinbase, the best level in its 11-year lifetime. Traders started flocking into the Bitcoin market from as early as Wednesday morning that saw its dollar-based value breaching the psychological price ceiling of $20,000.
Fed, Congress, Bitcoin
Bids for Bitcoin kept growing higher after the Federal Reserve presented its dovish policy around 1430 EST. The US central bank said that it would keep purchasing the government and corporate bonds at the same pace while keeping its benchmark lending rates near zero.
Traders perceived the Fed’s statement as bullish for Bitcoin, believing that investors with exposure in the bond market now face the prospects of earning lower yields. Therefore, they may end up moving their capital into riskier assets that promise better returns. The narrative helped to push the Bitcoin prices higher on Wednesday throughout Thursday.
Meanwhile, Bitcoin’s demand also received a further boost from the US Congress.
The Congressional leaders on Wednesday inched closer towards finalizing the long-delayed coronavirus stimulus package. Investors broadly believe that more aid from the government could pressure the US dollar lower. Its benchmark index fell 1.09 percent on a week-to-date timeframe, hitting its worst level since April 2018.
Bitcoin bulls present the cryptocurrency as anti-fiat, mainly because it comes with a definite supply cap of 21 million, unlike the government’s money printer. The narrative also helped BTC/USD to move towards a new record high.
The rally also rode on the shoulders of Ruffer Investment, a UK-based investment firm that purchased $744 million in BTC, roughly 2.3 percent of their total assets under management. The firm stated that they gained exposure to Bitcoin because it acts as a hedge against “some of the risks” they see in “a fragile monetary system and distorted financial markets.”
“The market cap of Bitcoin should exceed the market cap of any single company in the world, especially if institutions start adding it to their balance sheets,” noted Vinny Lingham, a prominent market analyst.