On March 24, some assets, including BTC and gold, showed clear signs of strength. The leading cryptocurrency rises in price for the second day in a row after the US Federal Reserve announced the true scale of the release of new money.
BTC rate dynamics for the last 7 days
On Monday, Bitcoin overcame the $ 6,000 level, above which it was trading for a short time on Friday, March 20. On Tuesday, the uptrend continued: the bulls not only protected an important level of $ 6,400 as support, but also provided an impulse to $ 6,600. The last time a leading digital asset was trading above $ 6,600 before a historical dump on March 12, during which BTC depreciated by 40%.
Buyers of the gold market also stepped up on March 24, and some analysts are already in a hurry to announce the completion of the sale.
US Federal Reserve Announces Unlimited Cash
At the moment, the yellow metal is trading at around $ 1,572, which is 1.35% higher than yesterday.
The dynamics of the BTC and gold over the past year
As for gold, as Goldman Sachs analysts pointed out with reference to Bloomberg, the current dynamics mirror the trend of the asset during the 2008 financial crisis. Then, as now, the Fed announced an active solution to any problems with the liquidity of the dollar, which ultimately led to an increase in the price of the precious metal.
According to various sources, in the current crisis conditions, the Federal Reserve System is activating gigantic volumes of asset buybacks on the open market - by about 125 billion dollars a day or an incredible 2.5 trillion dollars a month.
This strategy, aimed at strengthening the US economy, involves the infusion of "new" dollars on the market, which may be the most risky experiment in the release of money in US history.
Finance Minister Stephen Mnuchin has already called the liquidity offered to enterprises and banks “almost unlimited.”
In a CBS interview on Sunday, Neil Kashkari, president of the Federal Reserve Bank of Minneapolis, said:
The Federal Reserve has an unlimited amount of cash. We will do everything necessary to make sure that the banking system has enough money.
As the dynamics of the markets show, such statements encourage both the golden bugs and the crypto advocates who claim that the fiat will lose the status of a trustworthy financial instrument. Yesterday, a well-known PlanB analyst wrote on Twitter that the actions of the authorities and the situation in the United States remind him of Zimbabwe. He hints at the inefficiency of issuing new money to combat poverty and the aftermath of the crisis. Weak fiat money acquires special relevance 50 days before halting on the BTC network:
Updated Stock-to-Flow Model
Recall, PlanB recently said that its price model remains relevant even though the BTC / USD rate fell below $ 4000. According to Stock-to-Flow, by the end of 2021, the Bitcoin exchange rate will reach $ 100,000.
