Bitcoin price update: Price DROPS despite stimulus proposal
Further stimulus could push Bitcoin higher, but it will need to break its all-time high first.
- Bitcoin falls to a daily low of US$18,114.
- Whitehouse proposes US$916 billion stimulus plan for Americans.
- Citibank downgrades MicroStrategy over Bitcoin purchase.
Bitcoin is trading at US$18,191.47 as of 5pm Wednesday, which is a 5% decrease in the last 24 hours.
The drop comes as Whitehouse Treasury Secretary Steven Mnuchin proposed a US$916 billion stimulus plan as the US faces a second wave of lockdowns. The proposal is considered long overdue, with a deadlock around stimulus spending having persisted since before the election, and only several days left for Congress to reach an agreement before it closes for the year.
If passed, the bill may mimic the market effects of the US$2.2 trillion CARES act passed in March, which began a prolific rally for both cryptocurrency and legacy markets.
However, with Bitcoin remaining range-bound as it fails to break through its all-time high of $20,000, it's possible investors are looking to move their capital to markets they believe will better capitalise on the next round of government funding.
Bitcoin's recent upward movement has been showing signs of fatigue for a fortnight now, since breaking above US$19,000 in late November.
Bitcoin's sudden sell-off following a week of relative stability.
Citi downgrades MicroStrategy to "sell"
Citibank has indirectly cast doubt on Bitcoin's ability to push higher, with analyst Tyler Radke downgrading his trade recommendation on MicroStrategy (NASDAQ: MSTR) following the company's announcement it had acquired more $50 million of BTC for an average price of $19,427.
This is not the first time MicroStrategy's treasury has replaced US dollars with Bitcoin. Purchasing them at such a historically high price may have something to do with the downgrade, as Radke criticised MicroStrategy's CEO Michael Saylor for having a "disproportionate focus on Bitcoin".
The market appeared to agree with Citi's criticism of the strategy, with shares of MSTR down 10% on the day.
Disclosure: The author owns a range of cryptocurrencies including BTC at the time of writing