Bullish rally in BTC/USD is gaining momentum. Over the past three days, the BTC rate has increased by 7%, recovering from $11,400 to almost $12,500. Earlier, this resistance level was the nearest target that buyers had been trying to reach since August 2019.
Increased demand for Bitcoin is observed against the backdrop of a worsening global coronavirus situation. According to Johns Hopkins University, the number of reported coronavirus cases worldwide has already exceeded 40 million, and the number of deaths has reached 1.1 million. Many countries have tightened their quarantine measures in an attempt to curb further spread of infection. WHO keeps posting a record daily number of coronavirus infections since spring, while no country has yet completed their clinical trials. I
n addition, investors are reacting to unsettling news regarding the COVID-19 vaccine. A few days ago, US pharmaceutical firm Eli Lilly (NYSE:LLY) said it was suspending its vaccine trials due to a potential side effect. The trials have also been frozen by pharma giants Johnson & Johnson (NYSE:JNJ) and AstraZeneca (NYSE:AZN).
The negative impact of the pandemic on the global economy is forcing regulators and governments to consider additional monetary stimulus measures, which in the long run should have a positive effect on those assets that are generally considered the best protection against inflation risks. Bitcoin and gold take a special place among them. In other words, the more money is printed, the higher the BTC chances to update new highs.
The fact that bears began to lose their enthusiasm is also confirmed by the large volumes of short positions being closed in BTC/USD. Just this week BitMEX exchange reported a liquidation of a short position in BTC worth $5.5 million. If the closures of volumes continue, the Bitcoin pump will quickly become a self-sustaining mechanism.
Meanwhile, open interest in the cryptocurrency market from institutional investors keeps rising. According to the Chicago Mercantile Exchange (CME), institutional interest surged by over 20% to a seven-week high of $624 million on Monday. It is worth noting that the increase in open interest, observed amid the recovery in the exchange rate, is another sign of an emerging uptrend.
At the same time, if the US Congress agrees on an additional $ 2 trillion stimulus package to support the economy, it may become the next powerful driver for the BTC/USD rally. It’s worth noting that a decision on this matter can be well made by the end of this week. In this scenario, BTC may attempt to gain a foothold above $ 13,000.