Bitcoin was trading modestly higher at the start of Monday’s New York session as the US dollar showed signs of weakness.

The US Dollar Index, which measures the greenback against a basket of foreign currencies, plunged 0.02 percent. The marginal drop followed Donald Trump’s signatory approval to extend the coronavirus relief package.

The US president on Saturday signed executive orders to halt the collection of payroll taxes, assist students with loan repayments, extend a portion of unemployment benefits that had expired on July 31, and provide assistance on rent.

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The dollar responded negatively to the news while entering the new weekly session. Its weakness was reflective in the markets that investors deemed as their safe-haven against inflation. Gold, for instance, surged 0.2 percent to $2,039 an ounce in the early New York session.

Bitcoin, an arguable safe-haven itself, did better than the precious metal. As of 1056 EDT, the benchmark cryptocurrency was trading 2.02 percent higher at circa $11,925 per token.

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Bitcoin price rally paused near $12,000 during the Monday session. Source: TradingView.com

The $12K Breakout

Earlier in the Asian and European sessions, Bitcoin attempted to close above $12,000 on two separate occasions. The cryptocurrency met with a decent selling pressure near the level. At its intraday lowest, it was changing hands for approx $11,470.

It was Bitcoin’s third attempt at breaking above the $12,000-level in two weeks. The cryptocurrency on August 2 fell by more than $1,500 upon testing the said price ceiling, a sell-off that was missing in this week’s price action.

Macro investor Raoul Pal took notice of Bitcoin’s repeated efforts to puncture the $12,000-level. The founder/CEO of Global Macro Investor – a crypto-focused investment advisory firm, tweeted:

“These are all INCREDIBLY BULLISH long-term chart patterns. The probabilities in the charts suggest that Bitcoin is likely [to] set to be the best performing major asset in the world over the next 24 months and by a big margin.”

He added that he is irresponsibly long on the cryptocurrency.

Bitcoin Versus Dollar

The statements also took cues from Bitcoin’s overblown price rally from its mid-March nadir.

At its yearly low, the cryptocurrency was trading at $3,858. Later in the month, a flurry of dovish Federal Reserve policies helped to inject trillions of dollars of liquidity in the coronavirus-struck US economy.

The oversupplied US dollar fell, as a result. Meanwhile, as the Fed reduced its benchmark rates to near-zero, the otherwise attractive bond market also started reporting lower yields. Just last week, the real yield on 10-year inflation-linked US government bonds–called Tips– fell below 1 percent.

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US Dollar Index is trending lower after topping out in March 2020. Source: TradingView.com

Investors decided to move their capital into riskier assets. As a result, equities, gold, silver, and even Bitcoin benefited from people’s fear of inflation.

With Trump pushing further stimulus packages to help American people through the pandemic, and Federal Reserve’s commitment to keeping rates near zero, the medium-term outlook for risky assets remains bullish. At the same time, the dollar is under pressure.

“Since the FED stated they’ll be pursuing inflation, Gold smashed through $2K [and] held it,” SAID Alex Saunders, the founder of Nugget News AU. “Bitcoin‘s still 70% below ATH but it’ll do the same soon enough.”

Bitcoin is trading roughly $8,000 lower from its all-time high.