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The FED could boost Bitcoin's price to all-time highs in 2021

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The United States Federal Reserve could be the surprising suspect that will give Bitcoin a serious price increase in the coming months and years.

Although the central bank may not directly help cryptocurrency number 1, its actions to prevent the U.S. stock market from seeing a total collapse appear to be working, leading some analysts to note that a rebound to new highs could come. in 2021.

If the benchmark indices regain their historical highs set earlier next year, this would be a highly optimistic fact for Bitcoin due to its status as a risky asset.

The US stock market still remains strong despite the current crisis

The stock market is holding up quite well, considering that the Coronavirus pandemic has brought the global economy to a virtual standstill.

Currently, the S&P 500 is trading less than 12% from where the year started, with a notable bounce of 10% in the past month.

The strength of the S&P 500 is emblematic of that of the entire market and has even led to smaller atypical markets like cryptocurrencies also recovering, with Bitcoin rising from its mid-March lows of $ 3,800 to highs of $ 7,500.

Amazon, one of the largest companies in the world, has even managed to hit new record highs today.

This unprecedented performance against unemployment has shocked some investors, but one economist noted in a recent tweet that it is important to separate unemployment, which marks a point in time, from financial markets, which are trying to price in present and future events.

"Unemployment figures describe a single point in time, while financial markets are discount mechanisms that attempt to price in current and future events. Unemployment numbers are data, while prices are driven by emotions, perceptions and other variables, "he explained.

The Fed could boost Bitcoin's price with its attempts to help the country's economy

This strength may also stem in part from the massive injections of liquidity that the Fed has undertaken to boost the economy.

These actions have led to a popular analyst annotate that the stock market could set new all-time highs in 2021.

“I would be surprised at this point, given everything the Fed is doing, if we break the market structure again. I think we have a V shape? No, but my thoughts do not move the markets. I think we are seeing something like this with the new ATH in 2021, ”he said as he pointed to the chart below.

Bitcoin BTC
Image courtesy of Cantering Clark

This possibility, should it develop, would be highly optimistic for Bitcoin, as the number 1 cryptocurrency has established a surprising correlation with traditional markets in recent months.

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