Bitcoin Tests $11K as MicroStrategy Adds $175M To Its BTC Stash

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Bitcoin came closer to jumping the $11,000 level on Tuesday as traders assessed its growing adoption as a hedging asset.

MicroStrategy, a US-based public-traded company, announced earlier today that it acquired around $175 million worth of BTC units in a single purchase. That marked the firm’s second-biggest Bitcoin purchase in just over a month. Earlier in August, it has reallocated $250 million of its US dollar reserves to the benchmark cryptocurrency.

The event partially served as a bullish catalyst for BTC/USD entering the New York trading session Tuesday.

The pair climbed towards $11,000 in a sharp upside move but pared part of those gains on profit-taking sentiment among daytraders. Even so, it held above a critical support level of $10,700 as MicroStrategy validated Bitcoin as a long-term investment asset just like any other traditional investment.

“Single greatest financial decision of all time by a public company, hands down not even close. World-changing. MicroStrategy will be a key institution of the digital age now,” commented Francis Pouliot, the CEO of Canada-based Bull Bitcoin. “Who could have guessed?”

Other Bullish Narratives

MicroStrategy’s decision to increase its exposure in the Bitcoin market also appeared a day ahead of the conclusion of the Federal Open Market Committee’s two-day meeting.

Analysts at TD Securities said in a note that they expect the Federal Reserve to send “a dovish signal through the wording on quantitative easing, the extension of the dot-plot through 2023, and the Chairman [Jerome Powell’s] press conference.”

Bitcoin pundits anticipate the cryptocurrency to turn up volatile upside moves towards $12,000, and even $20,000 as long as the Fed’s open-ended stimulus policy hurts the US dollar. That is the same reason why firms like MicroStrategy are raising their stakes in the crypto market. Excerpts from their August’s statement:

“Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that, we believe, is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively.”

Bitcoin Technical Outlook

Technically, Bitcoin is showing signs of continuing its uptrend towards and above $11,000 in the coming sessions. Especially as the FOMC looks to conclude its meeting on Wednesday, the cryptocurrency might close above the said level by then.

Bitcoin, BTCUSD, BTCUSDT, XBTUSD, cryptocurrency

Bitcoin intraday trade setup. Source: TradingView.com

BTC/USD is maintaining support above a trading area made between the levels of two visibly accurate Fibonacci retracement graphs. That price floor is now sitting at $10,416-$10,697 range.

The pair might hold the area for another day as traders open new long positions against the FOMC meeting outlook. That would most likely push the price towards $11,000, a psychological resistance target.

BTC/USD can expect another retest of the sessional lows near $10,700 before continuing further higher above $11,000. Should that happen, the pair could extend its rally towards the next Fib range defined by the $11,934-12,501 area.

Traders can also expect to consolidate for a while above $10,700 before making a big upside move.

Conversely, a plunge below the $10,416-$10,697 range would risk sending BTC/USD lower towards $10,000.

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