While the economy has been on thin ice, no asset has benefitted more from the post-pandemic “new normal” than Bitcoin. Fear of the uncertainty has caused demand to rise in the insurance policy against the unknown.
But as news of a vaccine being 90% effective broke today, so potentially did Bitcoin’s uptrend. Here’s how the positive vaccine news from Pfizer might change the cryptocurrency’s attractiveness to the recent wave of institutions considering adding BTC to their portfolios.Economy Could Get Shot In The Arm With Widespread Vaccine Distribution
2020 kicked off as a year like any other with high hopes for the future. The throwback to the “roaring 20s” however, ended up being a lot more similar than anyone bargained for.Related Reading | Bitcoin Responds To Biden Victory With Rollercoaster Intraday Volatility
There was also an enormous stock market crash in the 1920s. The fear of a second-leg down like what took place back then has kept the stock market sentiment fearful despite valuations soaring.With a vaccine on the way and the stock market never having collapsed a second time, traditional on-risk assets like stock indices, could become attractive once again, and pull capital away from safe havens like gold and Bitcoin.
The stock market surged to all-time highs as positive vaccine news broke. Bitcoin plummeted. | Source:
But Could The Lack Of Uncertainty And Stimulus Cause Bitcoin To Cool Off?
While that might be difficult to imagine, as soon as the vaccine news broke, the stock market immediately shot to a new all-time high. Even the Dow Jones, which lacked a higher high since the Black Thursday, finally surged to set a new peak.At the same time, Bitcoin suffered one of the largest single-candle selloffs on the 6H BTCUSD chart. The selloff coinciding at the exact same time that stocks went flying, suggesting that the move could be institution-driven profit taking out of safe havens, back into the stock market.
Related Reading | Bitcoin Hash Ribbons Trigger Rare Bull Market Capitulation Signal
Bitcoin’s momentum has been unstoppable in 2020, but it could be due to institutions seeking to hedge against inflation, or even the unknown.
As things begin to stabilize not just in the economy, but in politics, if a vaccine does come soon that is 90% effective as Pfizer claims, Bitcoin’s use as an insurance policy against an economic crash, could become less viable.
Featured image from Deposit Photos, Chart from TradingView.com
