Bitcoin Price is Ready to Break $10,000—Here’s Why

摘要： Bitcoin's price has plunged below $11,000 for the first time in over a month, breaking two support levels in less than a week. The world’s largest cryptocurrency is now trading at the $10,200 levels, slightly recovering from its low of $10,024, according to Binance. However, Bitcoin’s price at $10,000 can hardly be seen as a support level. Let’s take a look at a few major factors that led to the Bitcoin price plunge and crypto market crash.

Fiscal stimulus packages have come to a halt

There is no doubt that the money supply is one of the most important factors that influence asset prices, including Bitcoin and other cryptocurrencies. For now, the US stimulus packages have come to a halt, although it seems as though it is urgently needed.

Treasury Secretary Steven Mnuchin testified to Congress on Sept. 1 that parts of the US economy urgently need additional fiscal stimulus for a full economic recovery from the COVID-19 pandemic. A day later, Senate Majority Leader Mitch McConnell expressed doubts about another stimulus package. He added, “I don’t know if there will be another package in the next few weeks or not.”

This could lead to a sudden shortage of money supply which would remind us of the days in 2018 when Bitcoin nearly reached $3,000. In 2017, the Federal Reserve said that the US economy is strong enough for the central bank to begin reducing its $4.5 trillion balance sheet in October. Federal Reserve Board Chair Janet L. Yellen said at the time, “The basic message here is US economic performance has been good.”

This overlapped with the policy of raising interest rates that started in 2015, indicating a signal of a strong tightening of fiscal policy. Then witnessed the crash of asset prices, including the stock market, real estate, and Bitcoin. It would be chaos for the market if the money shortage continues, considering that the COVID-19 pandemic has not ended, and cases in the US seems to be growing every day. As the economy is in jeopardy, investors tend to urgently sell assets for cash.

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