Bitcoin prices soared past $38,000 on Friday after a sluggish US jobs report boosted traders’ anticipation of a fresh coronavirus stimulus package to boost the economy.
The benchmark cryptocurrency gained 2.84 percent to an intraday high of $38,349, raising the possibilities of an extended bull run towards its previous record high, near $42,000 during the weekend session ahead.
Elsewhere in the cryptocurrency market, Ethereum inched towards establishing a new all-time peak after rising 6 percent in a day. Meanwhile, Cardano’s ADA shot up by more than 20 percent on the latest hard fork news that would put it in direct competition with Ethereum over smart contracts services.
Slugging US Economic Growth
Money poured into the crypto market after the US Labor Department reported that employers added 49,000 jobs in January. That pushed the unemployment rate lower from 6.7 percent in the previous month to 6.3 percent.
Nevertheless, despite a modest growth, many people lost jobs in sectors affected most severely by the coronavirus pandemic, including leisure and hospitality, warehouses, healthcare, and retailers. That weakened the pace of the US economic recovery overall.
Many investors believe that the US’s relatively weaker outlook will bolster the prospects of a new government stimulus package gaining approval. In January, Bitcoin has rallied as President Joe Biden pushed ahead with efforts to finalize a $1.9 trillion relief fund.
So far, Democrats have used a special procedure to pass the package: On Friday, the Senate approved a budget plan that accelerates the reconciliation process required to have the plan approved by a simple majority in the House.
Bitcoin Eyes ATH
Traders in the Bitcoin market looks at the fresh spending as their cue to go bullish on the cryptocurrency. While a stimulus package boosts the economic recovery, it also creates inflation by devaluating the US dollar. Many traditional investors, including billionaires Scott Minerd, Stan Druckenmiller, and Paul Tudor Jones, have earlier projected Bitcoin as a hedging asset against the ongoing fiat depreciation.
Not just #bitcoin. I was at the store… eggs are hitting new ATHs… milk, bread, meat all about to breakout too.
— email@example.com (@Coaden) February 5, 2021
Further tailwinds for Bitcoin’s bullish case come from the Federal Reserve. The US central bank has committed to purchase government and corporate debt at the rate of $120 billion per month until it achieves “maximum employment” in the US. Meanwhile, its plans to keep interest rates near zero further makes the dollar a cheaper asset, in the long run, creating an upside case for Bitcoin.
That partially explains why the cryptocurrency closed above $38,000 for the third time in the last two weeks and why it should be focusing on a new record high over the coming weekend.