Bitcoin rose Monday, putting itself back on track to retest its record high after promising results on a coronavirus vaccine reinforced hopes of an economic rebound next year.
The spot BTC/USD exchange rate climbed 0.95 percent after the benchmark cryptocurrency briefly snapped its six-week winning streak on Sunday. The pair touched an intraday high of $18,777, followed by a small correction lower. Nevertheless, it maintained its overall upside bias for the New York session ahead.
Bitcoin eyes a bullish continuation towards its yearly high near $19,000. Source: BTCUSD on TradingView.com
The University of Oxford and AstraZeneca said their experimental vaccine was up to 90 percent effective against coronavirus without any serious side-effects. Their announcement added to optimism among investors that the launch of an effective drug could curb the pandemic by the next year while allowing the beaten financial assets to retain their losses.
It was visible in the pre-session trading moves in the US stock market. Futures linked to the S&P 500 rose climbed 0.5 percent, pointing to a profitable New York session ahead. Nasdaq-100 and Dow Jones rose 0.4 percent and 0.6 percent, respectively.
Meanwhile, focus on risk-on assets kept the US dollar under pressure. The greenback fell 0.36 percent on Monday against the basket of leading foreign currencies. Its weakness, in turn, allowed Bitcoin to recover higher for the session.
The cryptocurrency had surged similarly after Pfizer and Moderna announced their vaccine results, iterating that its traders didn’t see the coronavirus cure as a threat.
#Bitcoin has decoupled from Gold. While the yellow metal has dropped after Moderna vaccine news, digital Gold (Bitcoin) continues to move higher. pic.twitter.com/PDUrowBpTb
— Holger Zschaepitz (@Schuldensuehner) November 16, 2020
Bitcoin vs. Gold
Unfortunately, Bitcoin’s closest rival, gold, was heading lower on fears of positive vaccine results. That proved that certain catalysts in the cryptocurrency market are successfully offsetting the risk-off risks. So it seems, it could be Bitcoin’s booming adoption and market outlook among mainstream institutions.
For instance, crypto asset management firm Pantera Capital wrote in its report that PayPal bought 70 percent of the total Bitcoin mining supply in recent weeks. Coupled with Square’s CashApp, both firms purchased more BTC than the miners minted, leading to a supply deficit in both retail and institutional markets.
“That is THE story in Bitcoin right now,” Pantera added. “When other, larger financial institutions follow their lead, the supply scarcity will become even more imbalanced. The only way supply and demand equilibrate is at a higher price.”
Many investors, including Stan Druckenmiller and Paul Tudor Jones, remain convinced about Bitcoin’s long-term growth amid the Federal Reserve’s pro-inflation policies. Mr. Druckenmiller particularly called the cryptocurrency a better hedge than gold, stating he believes it would rally better than the precious metal.
Speculation, so it appears, seems to be the only reason why Bitcoin remains unfazed by the vaccine news.