Bitcoin fell Tuesday, with the bull run briefly predicted by short-term profit seekers.
The benchmark cryptocurrency fell nearly 1.5 percent to $ 19,385 ahead of the opening bell in New York, suggesting traders were able to secure their profits on local spikes.
The humble sell-off sentiment came after Bitcoin hit a new record high of $ 19,873. It also happened when futures pegged to the BTC / USD exchange rate surged above $ 20,000 but fell to just $ 19,000 just ten minutes later.
Notably, a $ 1,000 swing is now only 5%.
– Crypto₿ull (@CryptoBull) December 1, 2020
However, the traders who favored a bullish result were more numerous than those who favored a bearish bias. They caught up with the price just before it should drop below the $ 19,000 mark, showing a higher risk appetite for the cryptocurrency amid a favorable macroeconomic outlook.
Bitcoin targets a close above $20,000 heading into the Tuesday New York session. Source: BTCUSD on TradingView.com
On the way into Tuesday’s session, Bitcoin’s near-term outlook was more bullish. It is because of a critical event in the economic calendar. Federal Reserve Chairman Jerome Powell will appear before the Senate Banking Committee to give his testimony on the Coronavirus Aid, Relief and Economic Security Act.
In his prepared remarks, Mr. Powell highlighted the need to put in place unprecedented loan programs, a view from US Treasury Secretary Steven Mnuchin who ordered the facilities to be closed on or before December 31st.
The Fed’s spotlight programs helped buy corporate bonds, assisted medium and small businesses during the pandemic, and channeled money to local and state governments. With coronavirus cases still skyrocketing in the US, Powell noted that they were still needed.
“These programs provide backing for major credit markets and have helped restore the flow of credit from private lenders through normal channels,” he said. “We have used these lending powers on an unprecedented level.”
The US dollar index fell below long-term support levels after Mr Powell prepared comments on the wire. The downward trend came as investors hoped for additional monetary stimulus in the short term, along with hopes of developing a working coronavirus vaccine that could accelerate the recovery of the U.S. economy.
Good for bitcoin
Bitcoin, which acts as a safety net against a depreciating US dollar, has therefore been eager to expand its profits, according to Mr Powell. Traders also stuck with the cryptocurrency for a long time as more institutional investors came out in favor of keeping it in a traditional investment portfolio.