US equity markets took a deep plunge on Wednesday. The benchmark Dow Jones Industrial Average index or DJX fell by 516.81 points or 2.17%. The S&P 500 dropped 1.75%. On the flip side, BTCUSD surpassed the $9.4k mark, rising almost 6% in the same duration.
US Federal Reserve Chairman, Jerome Powell, warned of a slow and delayed economic revival, without a cure for the Coronavirus. Donald Trump said that the influential players in the stock markets are betting against the market.
The economy is distressed, yet Bitcoin prices are rising. Why?
The reasons as to which BTCUSD is rising is because of multiple factors:
- The overall demand for goods and services is falling. Wholesale prices are falling to record levels. And since the US Federal Reserve is on a money printing spree, there lies a grave danger of deflation.
- Bitcoin is being perceived as a hedge against future price shocks. Investors are ditching investments in stocks and running after BTCUSD, on hopes of higher returns.
- And so far, Bitcoin has not upset investors. Though a section of analysts claim that BTC is hugely overpriced at the moment, Bitcoin rose by 9.41% since its halving on May 12.
A return of 9.41% on investment in Bitcoin in a matter of two days is excellent, considering the current market scenario. All these factors, combined with the massive hype created by various media outlets surrounding BTC, the demand is growing, and so are the prices.
Technicals looking healthy for BTCUSD in the short term
The BTCUSD daily timeframe shows how Bitcoin is getting excellent support from the 20-day Exponential Moving Average. BTCUSD bounced back after touching this level.