Bitcoin prices have bounced back to resistance levels in the mid-$6K area following a recent U.S. Central Bank announcement with the proposal of an unprecedented fiscal stimulus package.
Since its plunge below US$4,000 [AU$6,700] last week, BTC has recovered almost 65% to current levels.
Bitcoin bounces back
The move has resulted in an impressive 14% gain on the day for BTC, which is again outperforming all other traditional assets.
Bitcoin has now recovered over half of its losses since the big plunge a couple of weeks ago. Almost $20 billion has flooded back into crypto markets over the past 24 hours, and they appear to be one of the more resilient asset classes at the moment.
Investors remain jittery while efforts by the world’s central banks to dump interest rates and pump newly minted money into economies are having little effect.
FED fiscal stimulus
The big Bitcoin move appears to have been driven by the Federal Reserve unveiling a sweeping series of unprecedented monetary measures to bolster the flailing economy.
According to Bloomberg, the U.S. Central Bank said that it will buy unlimited amounts of Treasury bonds and mortgage-backed securities to keep borrowing costs low.
The FED also set up programs to ensure credit flows to corporations, as well as state and local governments, though Democrats are still claiming that not enough is being done for average Americans.
The recent action has followed a number of extreme measures taken by the central bank over the previous months, which normally would have been unthinkable.
U.S. Treasury Secretary Steven Mnuchin told news outlets yesterday that it was not a slush fund, adding:
“It’s a mechanism we can use working with the Federal Reserve to provide another $4 trillion of liquidity into the market. That’s on top of the Fed’s balance sheet. This is a massive liquidity program.”
Quantitative easing, or injecting liquidity (a.k.a. printing money) is usually detrimental to a currency, as it reduces purchasing power.
Bitcoin, on the other hand, is immune from such practices, which makes it more bullish as recent market action has shown.