Bitcoin Tests Key Support Level – Wrapped BTC Hits a New Record
The Bitcoin price is testing key support after the US Dollar forced another dip in the coin but Wrapped BTC was at another record. BTC was a key beneficiary of the dollar’s slump in July, but the greenback has reversed to put pressure on commodities, with the price of Gold slumping another 25% today at 1,875.
Comments from Fed Chair Jerome Powell on Tuesday were relatively neutral and dollar traders have likely heard all that they can before the U.S. election. Powell recently committed to targeting a 2% inflation rate in the U.S. economy and another Federal Reserve member suggested yesterday that rates could rise before the target is reached. This helped to boost the dollar further after recently testing its 50 day moving average.
Bitcoin is currently seeing a new phenomenon with the addition of “wrapped BTC”, which is a tokenized form of Bitcoin which runs on the Ethereum network. Last week saw the supply of BitGo’s wrapped bitcoins (WBTC) topping 76,000 after setting an all-time record of almost 21,000 of the tokens created in a week, which was up from 12k the week before.
WBTC is the first ETH token to be backed by 1:1 Bitcoin and allows the coin greater flexibility to be run in the Decentralized Finance (DeFi) world, which saw strong growth this year and boosted the Ethereum price. The new token allows smart contracts to be written for Bitcoin and will see its use case go beyond a safe haven commodity and alternative financial asset.
Bitcoin Technical Outlook
Bitcoin has fallen to test the support level which connects the highs from February 13th and June 1st. If the coin finds support here then the moving average at 11,200 would be a target. Further support is below at 9,800. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.