Bitcoin edged higher on Thursday as traders showed cautious optimism that the US Congress would finalize the coronavirus stimulus deal. The cryptocurrency also surged after Square, a multinational payments company, invested $50 million in it.
Headed by Twitter’s Jack Dorsey, one of the few high-profile executives who support Bitcoin, Square repeated their chief’s encouraging words on the cryptocurrency as they purchased 4,709 BTC units.
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose,” it said in a press release.
Bitcoin now represents 1 percent of the total assets held by Square.
Bitcoin Breaks Above $10,900
BTC/USD responded to Square’s announcement with a dramatic price rally. The pair jumped by a little more than $400 – from $10,532 to $10,950, thereby breaking above crucial resistance levels that were notorious for hosting sellers.
Bitcoin eventually landed near the green horizontal resistance, as shown in the chart above. It holds a track of record of rejecting bulls, which may add psychological selling pressure on some daytraders.
Should that happen, BTC/USD risks correcting lower towards the Ascending Trendline (pink).
Nevertheless, the optimism has leveled up among the Bitcoin investors following Square’s investment. Tyler Winklevoss, the co-founder of US-based Gemini crypto exchange, compared the purchase with a “tsunami,” noting that Mr. Dorsey’s endorsement of Bitcoin would bring more visionary leaders to the cryptocurrency market.
First, it was @michael_saylor and publicly traded @MicroStrategy buying $425million of #Bitcoin. Today, it is @jack and @square buying $50million of bitcoin. Tomorrow, it will be another visionary leader, and another, and another…the tsunami is coming https://t.co/MjF5z6u7ha
— Tyler Winklevoss (@tylerwinklevoss) October 8, 2020
Square has included a roadmap for other companies to securely add Bitcoin to their balance sheets.
Bitcoin’s rise also followed a modest plunge in the jobless benefits that boosted buying sentiment all across the risky markets. The S&P 500, for instance, added 0.5 percent to its market cap in the early New York trading. The Dow Jones and the Nasdaq Composite also climbed by 0.1 percent and 0.4 percent, respectively.
The surge appeared also after President Trump showed his support for individual spending packages aimed at airlines, small businesses, and delivering checks to households.
“It’s still all about stimulus at this point: we’re seeing markets move on optimism that some kind of package is going to get done,” SAID Esty Dwek, head of global market strategy at Natixis Investment Managers. “It’s just a question of how much the Republicans will agree to.”
Bitcoin was correcting lower over a long delay in the second stimulus package. Economists noted that the US Congress will be unable to reach a deal until the November presidential election.