Forex and Crypto News

3 reasons supporting Bitcoin

16:34 19 October /2020

Bitcoin returned above $11400 yesterday and continues to trade above that level today. At the time of publication, the pair BTC/USD is trading around $11755. If Bitcoin shows growth, then the US dollar, on the contrary, falls. The inverse correlation between the two assets is seen over and over again. However, the event that is pushing Bitcoin and the dollar in different directions is Jerome Powell's speech at the annual meeting of the International Monetary Fund.

Analysts identify three reasons that push the rates of Bitcoin and the US dollar in different directions:

Adoption of Bitcoin

According to Jerome Powell, the Fed is ready to support Bitcoin due to its ability to make global payment transfers quickly and cheaply. It is Mr.Powell's attitude towards cryptocurrencies that will be essential for the adoption of cryptocurrencies.

Traders could have taken Powell's speech as a signal to open short-term buy deals. Plus, the depreciation of the US dollar contributed to the growth of the Bitcoin exchange rate.

China's growing economy

China reported 4.9% GDP growth in the third quarter. China has benefited from its early containment of the coronavirus pandemic, attracting investors seeking refuge from the growing number of infections in the West.

Analysts believe the Chinese economy will be the only economy to see growth this year.

Stimulating the economy

Approaching elections and stimulating the economy has a positive effect. Investors are confident that as a result of the stimulation, more dollar liquidity will appear on the market. This will increase the risk in the short term.

It also explains why Bitcoin recovered during trading sessions in mid-Europe and up to New York.

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