Bitcoin is rising so far on Wednesday as stock markets cheer the U.S. Senate’s decision to approve $484 billion in new coronavirus relief.
The top cryptocurrency by market value is changing hands near $6,970 at press time, representing a 1.6 percent gain on the day. Prices look to have steadied in the $6,930 to $7,000 range over the last hour or so., according to CoinDesk’s .
Meanwhile, the Euro Stoxx 50 – the eurozone’s benchmark equity index – is reporting a 1 percent gain, and there’s been a 1.26 percent increase in the value of futures tied to the S&P 500.
The positive moves come after the U.S. Senate a new stimulus bill on Tuesday to bolster aid for small businesses, fund more coronavirus testing, and provide support to hospitals facing a deluge of sick patients. The new package comes nearly four weeks after the U.S. lawmakers approved an $2 trillion federal stimulus program. This new bill now moves to the House of Representatives for approval before it can be signed by President Donald Trump.
That the trillions of dollars of stimulus is inflationary and could bode well for bitcoin in the long term is by now. So far, however, bitcoin has failed to perform as a significant haven asset or an inflation hedge, and has been generally tracking equities through the crisis.
While the cryptocurrency has recovered over 80 percent from the March low of $3,867, the price rally has coincided with the notable recovery in the S&P 500. That said, signs of bitcoin decoupling from traditional markets have emerged this week.
For instance, the West Texas Intermediate (WTI) crude, the main oil benchmark for North America, fell to $37 below zero on Monday, sending shockwaves across the global financial markets.
Bitcoin wobbled slightly following the oil price slide and registered a 4 percent drop Monday. But the decline was moderate considering the scope of the oil losses and the stressed state of the global economy the event reflected.
Further, bitcoin remained steady near $6,850 on Tuesday even though the June futures contract on the WTI fell by 40 percent and the S&P shed more than 3 percent of its value.
More important, classic safe havens like gold and U.S. Treasurys also faced selling pressure on Tuesday, while the U.S. dollar strengthened in the forex markets – a sign of a renewed dash for cash.
A similar cash crunch seen in mid-March triggered a violent price drop. Bitcoin fell by nearly 40 percent on March 12 and printed a low of $3,867 the following day as investors scrambled for liquidity.
This time, however, the cryptocurrency is showing resilience, possibly because the crypto market focus has shifted to bitcoin’s mining reward halving in 19 days.
“Last month’s rush to cash hit bitcoin especially hard. This time around, the impending halving could have mitigated outflows from crypto into cash,” said Marcus Swanpoel, CEO of cryptocurrency exchange Luno.
Bitcoin undergoes the halving process every four years, reducing block rewards by half in order to curb inflation.