Bitcoin (Symbol: BTCUSD) rebounded Wednesday, continuing its wild swing moves that saw its prices earlier hitting a record yearly high before plunging towards $10,500 a token.
After climbing by about 25 percent in the running quarter, Bitcoin’s rally came to a surprise halt as US bond yields recovered. The cryptocurrency nevertheless remained one of the best-performing assets in 2020, as the coronavirus pandemic prompted the Federal Reserve to maintain its benchmark interest rate near zero and influenced the US government to deploy massive stimulus. Its haven appeal improved as the US Treasury real yields slipped below zero.
After dropping by as much as 6.31 percent in the last 24 hours, Bitcoin recovered during the Wednesday trading session. The cryptocurrency rose by more than 1 percent to $11,508.90 a token, bouncing right off its 20-daily exponential moving average wave, as shown via blue in the chart below.
Benchmark US Treasury yields rose to 0.68 percent following a four-day winning streak. The jump came amidst improving risk appetite led by the hopes of a working coronavirus vaccine.
Yields’ rise also had to do with gold that lost some of its shine after rallying to its record high. Traders sold off the precious metal to collect short-term profits – and US bond yields rose owing to its long-term positive correlation with the safe-haven asset.
Next Bitcoin Targets
Bitcoin traders saw the intraday dip as a forgettable event. They noted that the cryptocurrency’s bullish bias remained untouched on larger timeframes. Anonymous Twitterati Rekt Capital added his two cents to the narrative, stating:
“DIPS IN PRICE ARE IMPORTANT. BUT WHEN YOU ZOOM OUT TO HIGHER TIMEFRAMES – YOU REALIZE HOW INSIGNIFICANT THEY ARE FOR [THE] PRICE. DIPS ARE ONLY IMPORTANT IF YOU USE THEM TO INCREASE YOUR HOLDINGS IN PREPARATION FOR THE EUPHORIC STAGE OF THE CYCLE THAT STILL LIES AHEAD.”
Analyst Josh Rager dwelled into the technical side of the narrative. He noted that Bitcoin needs to maintain support above $11,500 to continue its move towards the $12,000-level.
“RECLAIM $11,900 ON A DAILY CLOSE AND WE GO UP TO $12,500,’ HE ADDED. “NOT WORRIED ONE BIT IN THIS RANGE UNLESS PRICE BREAKS BELOW $10,500.”
Bitcoin still has plenty of upside narratives led by the Fed’s commitment to keeping rates near zero for as long as required. Meanwhile, the US Congress is also close to launching its second stimulus program. It might put additional downside pressure on the US dollar.
The US dollar index dipped to its two-year low recently.
Publicly traded company MicroStrategy announced on Tuesday that it would use $250 million worth of BTC as a Treasury reserve asset in its bet against fiat inflation. That further points to why the cryptocurrency’s rally appears far from over.