Key Bitcoin Takeaways
Bitcoin formed a bearish cross earlier this week as it underwent a major sell-off.
But the cryptocurrency counterbalanced fears of a further downside correction after the Federal Reserve’s policy update.
The US central bank announced that it would keep near-zero interest rates steady.
Earlier this week, a death cross formed on the Bitcoin charts, threatening to extend the benchmark cryptocurrency’s decline as it corrected lower after setting up a record high above $61,000 last week.
But a policy update from Federal Reserve late Wednesday reversed Bitcoin’s interim bearish bias. About 18 of the US central bank governors said they expect to hold its short-term interest rates near zero through 2023. Meanwhile, seven anticipated that they would hike lending rates in 2022 or 2023, up from five in December.
Bitcoin Retests $60,000
Since April last year, the Fed had been buying $120 billion worth of government debts and mortgage-backed securities every month. Their policy has resulted in negative bond yields. Meanwhile, benchmark rates between 0 and 0.25 percent have made the US dollar borrowing cheaper, pushing the greenback lower by roughly 12 percent against a basket of top foreign currencies.
For investors, holding cash and bonds promises minimal returns. That has forced them to take risks in alternative markets, including Bitcoin, whose value recently exploded upward by 1,500 percent from its mid-March nadir of $3,858. Bitcoin’s appeal lies in its 21 million supply cap, making it a digital equivalent to gold, a traditionally scarce safe-haven asset.
Therefore, the cryptocurrency typically benefits from a lower-yielding bond market and …
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