Bitcoin (BTC) is inches away from getting the same boost that helped it hit $12,500 earlier this month, data shows.
On Aug. 28, the U.S. dollar currency index (DXY), fresh from losses caused by a speech from the Federal Reserve, returned to crucial low levels.
At press time on Friday, DXY measured 92.28 — its lowest since Aug. 19. At that time, the index had seen years of decline, with 92.17 marking the floor which challenged precious lows from April 2018.
Safe havens, including Bitcoin, appeared to benefit throughout the summer as DXY fell — gold hit highs of $2,075, while BTC/USD topped out at $12,500 two weeks ago.
As Cointelegraph Markets analyst filbfilb noted on Friday, a repeat performance was now on the cards. Thursday’s speech from Fed chair Jerome Powell sent DXY tumbling after days of gains.
The impact on the U.S. dollar may in fact be the only meaningful takeaway from a “non-event” policy shift for Bitcoin which many had already expected.
Nonetheless, the implications for the rigidity of the fiat economy thanks to the Fed were much more severe — to the extent even fiat business voices were now plugging Bitcoin.
“Jerome Powell’s speech today will be for the history books,” Andy Yee, senior director of public policy at Visa tweeted.
For Real Vision CEO Raoul Pal, Powell’s words were confirmation that Bitcoin and gold would remain strong in future — but Bitcoin would win out for investors.
“I think they both rise over time in inflation or deflation,” he told Twitter followers.
“Most people don’t understand the latter but is simply put, Powell has shown that there is ZERO tolerance for deflation so they will do ANYTHING to stop it, and that is good for the two hardest assets – Gold and Bitcoin. Powell WANTS inflation.”
Even before the speech, Bitcoin supporters were eyeing the long-term consequences of Fed policy.
For Saifedean Ammous, author of the popular book, “The Bitcoin Standard,” it was a question of “time will tell” for Bitcoin versus fiat.
“The reduction in the new supply of bitcoins clearly reduced the new selling onto the market, so probably has helped keep the price up or keep it from dropping further,” he told the Unchained Podcast on Aug. 25.