Bitcoin Moves Past $9000 Levels As Fed Pumps More Money On Weak Economic Outlook

01. May 2020 Posted by Akolkar B on News

Bitcoin price moved past $9000 levels jumping close to around 10% on Thursday, April 30. The surge in BTC came amidst the Federal Reserve announcing an unexpected stimulus package amidst the poor economic data.

The government data shows that the economy is sliding into a recession as the Federal government has pledged to keep pumping more money into the system. As the Coronavirus pandemic continues to expand in other regions of the U.S. and the world, the Fed has painted a gloomier “medium-term” economic outlook.

With Thursday’s surge, Bitcoin’s returns year-to-date stand at over 20% beating gold which has appreciated 12% since the beginning of 2020.

While the central bank continues to pump more money in the market, there are significant risks of inflation as well. As per the Deutsche Bank estimates, the central bank balance sheets have expanded by $3.7 trillion in the last two months.

Just like the gold, many analysts now see Bitcoin as a potential hedge against inflation. On Wednesday, Fed Chairman Jerome Powell said that it would keep the benchmark U.S. interest rates close to zero and will continue buying Treasury bonds and other assets.

Speaking on this matter, Fed chairman Jerome Powell said: "It's clear that the effects on the economy are severe. We won't run out of money. It's an unlimited pot. “The Federal Reserve is committed to using its full range of tools to support the US economy in this challenging time”.

The Commerce Department's Bureau of Economic Analysis said that the country’s GDP has been contracting at an annual rate of 4.8% during the Q1 2020 as the government has issued stay-at-home orders. Economists have called this as the first official data from the government confirming that the U.S. is sliding into recession.

Well, we are just 10 days from Bitcoin halving as investors now rush to buy the world’s largest cryptocurrency. At press time, Bitcoin is trading at a price of $8795 with a market cap of $161 billion.

Due to the Coronavirus outbreak, there has been a considerable impact on the earnings of the Chinese miners. China still continues to be a hub of Bitcoin mining due to the availability of abundant and cheap electricity.

Analysts are predicting that by the halving event, Bitcoin can go up to $10,000 levels.