In the middle of the week, the Bitcoin market experienced substantial losses as declining rates from its top of $19,500 to $16,200.
Any experts assume that the cryptocurrency is more likely to decrease considering its 100% upside rally prior to the current correction. In spite of that, the macro fundamentals still favor the bullish outlook of the young asset.
One of Bitcoin’s big upside factors is a weakening U.S. currency. The cryptocurrency was among the main beneficiaries since the Federal Reserve flooded global markets with excessive greenback liquidity in a flurry of emergency facilities to curb the coronavirus pandemic’s economic effect.
Since the US government opened the economy up again many strategists anticipated the dollar to rebound. While there were attempts, the US dollar index still declined, having hit its lowest level since 2018 just this week. Its downside pattern shows the possibility of investors maintaining their exposure to more volatile assets, providing Bitcoin ample opportunities to resume its uptrend.
“Excess dollar liquidity [from the Fed] is still in the system,” Salman Ahmed, global head of macro at Fidelity International, told WSJ. “Once things improve and reflation returns, that liquidity can go back into riskier assets.”
Investors and traders both hedged into Bitcoin and its sister currencies to escape inflation uncertainty. In short, their deviation away from the US-pegged assets also raised BTC/USD’s potential to hit $20,000 despite cyclical downside corrections.