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Bitcoin Bounces Back

bitcoin price rebound

  • Bitcoin rebounds on Biden’s fiscal stimulus package prospects fueling concerns over inflation and a general rotation into risk assets
  • Goldman Sachs (-0.58%) survey of clients reveals that the demand for cryptocurrencies from its well-heeled clients remains robust and should help to provide a floor for Bitcoin’s price

Bitcoin rebounded sharply over the weekend on the back of the Biden administration getting its US$1.9 trillion stimulus package approved at the Senate level, where it now heads to the House of Representatives before it can finally be passed.

Last week’s selloff in risk assets, including Bitcoin and cryptocurrencies was largely attributed to the spike in U.S. Treasury yields.

And while yields remain high, positive employment data is fueling bets on a more robust American economic recovery and heightened sensitivity to increased inflation.

Business software firm MicroStrategy (-3.94%) took the opportunity to “buy the dip” snapping up an additional 205 Bitcoins for an average price of US$48,888, according to a regulatory filing, which brings the company’s total Bitcoin stash to around 91,064, worth almost US$4.7 billion based on today’s price.

Crucially, Bitcoin cleared the US$50,000 level of resistance over the weekend and with the Biden stimulus package looking set to fuel risk sentiment this week, is likely to send the benchmark cryptocurrency higher.

Speaking with Bloomberg Television in an interview last week, long time cryptocurrency proponent and CEO of Galaxy Digital Holdings Michael Novogratz reiterated his bullish call for Bitcoin to be worth around US$100,000 by the end of the year.

Novogratz noted that digital currencies have become an “institutional asset class” and that banks are “frantically” trying to get in on the action.

Supporting that view, banking giant Goldman Sachs announced last week that it was restarting its cryptocurrency trading desk, amid growing demand from its clients for access to the nascent sector. Last week Goldman Sachs posted the results of a client survey which found that some 61% of its respondents expected their digital asset holdings to increase over the next 1 to 2 years and with over 40% of respondents already having exposure to cryptocurrencies.

Notably, almost 60% of Goldman Sachs clients who were surveyed revealed that the most important factor driving Bitcoin’s price action was “institutional investing or offering of additional products.”

The Goldman Sachs survey also revealed that amongst its (well-heeled) clients, over a fifth predicted (much like Novogratz), that Bitcoin would be worth over US$100,000 in a year and over half expected the cryptocurrency to continue trading within the US$40,000 to US$100,000 range.

But Goldman Sachs clients also noted something that the industry could look forward to this year – greater regulation.

Citing the lack of clear and comprehensive regulations as being one of the major hurdles to investing in cryptocurrencies as investors lack access to well-regulated, investable assets, that could change this year as crypto-savvy Gary Gensler looks set to helm the U.S. Securities and Exchange Commission.

Greater regulation from the U.S. could pave the way for the long-awaited U.S. Bitcoin ETF as well as more derivatives and other regulated cryptocurrency products within a more certain regulatory structure that institutional and professional investors have come to demand.

Retail investors continue to play a key role in the growth and development of Bitcoin for now and with the prospect of more stimulus checks heading towards American households, Bitcoin and its ilk should see another rally in the immediate term.   

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SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in crypto. We bring you expansive crypto news coverage especially in Asia, with a focus on Singapore, Thailand and Southeast Asia.

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