Bitcoin jumped alongside the US stocks ahead of the Federal Open Market Committee’s September meeting this week.
The benchmark cryptocurrency advanced 4.10 percent in New York morning trading, closing above $10,750 for the first time in almost two weeks. Earlier in the European session, it was trading at just $10,253.
Sentiments shifted from sideways to bullish right after the US market open. The S&P 500 index surged 1.68 percent, while the Dow Jones and the Nasdaq Composite jumped 1.39 percent and 2 percent, respectively.
A recovery rally in tech stocks served as the major influencer behind Wall Street’s strong opening on Monday. The gains specifically appeared on the backing two high-profile Merger and Acquisition deals.
Database software firm Oracle won the bidding for the US operations of TikTok, a China-based video-sharing app. Meanwhile, chipmaker Nvidia agreed to acquire its British counterpart, Arm Holdings, for more than $40 billion from SoftBank Group.
Investors also increased their holdings in riskier assets, including Bitcoin, as they anticipated more dovish news by the end of a two-day FOMC meeting on Wednesday.
Last night S&P Futures opened with a gap up 🔼 and were slowly climbing up throughout the night#Bitcoin followed and has been feeding off that positive sentiment to drive bullish speculation today
Keeping a very close eye on this correlation over the next couple weeks
— Kevin Svenson (@KevinSvenson_) September 14, 2020
The Federal Reserve Chairman, Jerome Powell, expects to shed more light on how his office would achieve its 2 percent inflation target. At his Jackson Hole announcement two weeks ago, Mr. Powell had committed to tolerating higher inflation in an attempt to compensate for periods of lower rates since 2013.
Since then, the Fed has given seesaw takes to provide context about the policy change. There have been minimum details on how the new framework would work in real-time.
Observers believe the US central bank would persist on keeping its benchmark interest rates near zero for an unforeseeable future while committing to more stimulus packages, especially after the US Congress’s failure to reach one as of late.
That has weakened the US dollar on an intraday timeframe. Its index fell 0.31 percent in the early New York morning session, signaling a capital shift towards riskier safe-havens, such as Bitcoin, Gold, and the US stocks.
Bitcoin Targets $11K
FxStreet noted that the dollar is looking for support near 93 even as it bears risks of correcting further lower towards its 2020 low near 91.70.
“Supporting this view is located of a (more) dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections,” the website added.
A weaker dollar looks bullish to Bitcoin, an asset that has surged about 200 percent throughout the second and third quarters – the same period that saw the greenback crashing to its two-year low.
Technically, Bitcoin is now eyeing a close above $11,000 to establish its short-term bullish bias.