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Three Reasons Behind Bitcoin’s Heady Ride Above $19,900

Three Reasons Behind Bitcoin’s Heady Ride Above $19,900
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The two most notable reasons behind Bitcoin’s heady ride above $19,900 are the new coronavirus pandemic and the motive force of the trend. The third reason, which added fuel to the fire, was Joe Biden’s victory at the US presidential elections.
Covid-19 and institutional demand
The first wave of Covid-19 wrought havoc in the spring of 2020, while the second made the damages more painful. Developed countries’ economies have been shutting down again since September 2020, which required more fiscal stimulus from monetary central authorities and once again raised inflationary risks for several major fiat currencies and the risks of a deeper economic recession worldwide. All these risks present a serious threat for the safety of investors’ funds allocated primarily in fiat currencies. But the funds invested in equities and bonds will not be secured from losses if the demand does not recover quickly.
Surprisingly for many, the silver lining amid the grim economic outlook has been found in Bitcoin, whose supply is strictly regulated and limited by 21,000,000 BTC. This technical distinction has been reassessed by many high-net-worth investors and public companies as a perfect mechanism for protection against inflation. Therefore, their demand for the pioneer cryptocurrency has been a serious driver in Bitcoin’s rising price action of the last three months.

Force of the trend
As for the motive force of the trend, it has been another key factor in the long-going uptrend in the BTC price. As the trend was going up, the uptrend was going stronger and accumulating more money, creating a situation where money was making money. With the lack of any strong resistance levels from the 2019 peak at $13,949 up to the historical high in 2017, it is no surprise that the price was able to reach a new historical high.
The US presidential elections
The outcome of the US presidential elections added buying pressure to Bitcoin’s upside price action, as the Democratic candidate Joe Biden was announced the victor after the preliminary count of votes, leading with a comfortable advantage in the number of electors’ votes. Amid the Covid-19 pandemic, American Democrats have been strong proponents of larger fiscal stimulus for American people and the US economy, offering a second fiscal aid package worth $2 trillion, while President Trump and his administration have been advocating a lesser stimulus.
The more money that is pumped into the economy, the higher inflationary risks are. Therefore, the initial reaction across markets to Joe Biden’s lead has been strongly bearish on the dollar; Bitcoin was no exception. On November 5th, the day after the elections, BTC/USD added 10.22% or some devastating 1,447 pips, adding more than 1,500 pips during the day, which was a crucial move in the BTC/USD capitalization above the 13,949 resistance level.
What to expect
Considering Bitcoin’s recently achieved, new historical high at above $19,900, it is reasonable to expect an interval of downside price action. With more or less certainty, we can expect the downswing to take the BTC/USD cross rate towards the recent double bottom at $16,522. If that happens, the pair may likely spend the next few weeks in the corridor between $16,000 and $20,000, with a breakout above $20,000 remaining a dominant trading option over breakdown below $16,000, at least until the end of the Covid-19 pandemic.

Konstantin Anissimov, executive director of the international cryptocurrency exchange CEX.IO . Graduated the Executive MBA program at the University of Cambridge. His area of responsibility at CEX.IO includes customer relationships with institutional and VIP-clients, overseeing the creation of the company’s development strategy, new products, markets and partnerships. As a member of the board of directors, Konstantin is also responsible for corporate governance.
 
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Wit Olszewski/OSTILL is Franck Camhi
The post Three Reasons Behind Bitcoin’s Heady Ride Above $19,900 appeared first on The Daily Hodl .

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