Forex and Crypto News

Bitcoin is over 20,000 and DXY hits a 2-year low

19:17 16 December /2020

Today, during the European trading session, the price of Bitcoin for the first time rose above $20,000 and reached a high of $20,899. This is a new all-time high for Bitcoin. At the time of publication, the price has dropped slightly, but Bitcoin is still trading above $20,000.

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Analysts attribute the rise in the price of Bitcoin to an increase in interest from institutional capital. Large investors are looking for ways to hedge their risks and invest their capital in Bitcoin directly or through intermediaries.

To diversify its investment portfolio, the American company MicroStrategy announced the purchase of another batch of cryptocurrency by selling its senior convertible bills in the amount of $650 million to qualified institutional buyers. This brings MicroStrategy's total investment in Bitcoin to $1 billion.

To smooth over the consequences of the pandemic and support the US economy, the Federal Reserve System has announced a series of adaptive fiscal policies. The Fed set a near-zero rate and began printing new dollars again to buy up government and corporate debt indefinitely. This had a small positive effect, but it also sent the bond market oversold. As a result, short-term bond yields were negative. Simply put, investors who bought short-term Treasury bonds risked losing some of their investments when the bonds matured.

In this case, Bitcoin acted as an alternative hedging asset, the same as gold and silver.

Thus, it can be said that the US government, unknowingly, contributed to the rise in the price of Bitcoin. The release of $2.3 trillion drove the US dollar index down. The dollar index fell to its lowest in two years.

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The Fed will continue to implement measures to stimulate the economy by buying Treasury bonds at the same pace, while keeping rates around zero. This will continue to put pressure on the dollar and further boost the price of Bitcoin.

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12:01 17 December /2018