Bitcoin (BTC) has rebounded in the past 24 hours, buoyed by the US Federal Reserve's Coronavirus-related quantitative easing action. Having reached and surpassed the $6,000 level on Monday, the flagship cryptocurrency continued its upwards movement on Tuesday and is now trading 7.26% higher at $6,650.
The Fed announced on Monday an open-ended asset purchase program to thwart the pandemic’s’ effects on the economy. The central bank said it would buy $125 billion in bonds every day, making for a massive $2.5 trillion monthly buyback exercise. It also revealed $300 billion in emergency lending programs and noted it will continue to buy assets “in the amounts needed to support smooth market functioning.”
The news failed to impress stock investors but immediately pushed BTC from $5,800 to above $6,500, contributing to a continuation of the recovery rally from recent lows below $4,000. Technical indicators and analysts now point to a further strengthening of the upward momentum, with Bitcoin set to test resistance at $7,000.
Gold also rallied on the back of the Fed’s aid package. Over the past few years, Bitcoin has been likened to “digital gold” and has been seen by some as a safe haven asset to invest in when markets are under pressure. But in the recent crisis, the cryptocurrency appeared to be behaving more like a risky asset.
Since the coronavirus outbreak has ripped across the countries, the overall investor sentiment has been gloomy. The cryptocurrencies took a beating too, suffering a violent sell-off earlier this month. The crypto market capitalization has increased by $14 billion in the past 24 hours to reach $184.5 billion.
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