Bitcoin inched back into positive territory on Wednesday just as Pfizer and BioNTech’s coronavirus vaccine won UK authorization.
The country’s Medicines and Healthcare Products Regulatory Agency announced the approval Wednesday morning. Meanwhile, Pfizer and BioNTech stated that they would start delivering doses of the two-shot vaccine to the UK in the coming days, marking the first key milestone in curbing the virus that has infected tens of millions and killed more than 1.5 million people around the world.
Pfizer/Biontech Covid-19 vaccine approved for use in U.K.
— Holger Zschaepitz (@Schuldensuehner) December 2, 2020
The Bitcoin market’s first reaction to the vaccine approval was positive.
The benchmark cryptocurrency rose by up to 2.99 percent, hitting an intraday high of $19,340 ahead of the London opening session. Its gains followed a depressive Tuesday, wherein the price plunged by about $1,000 ahead of the close, pointing to profit-taking behavior among daytraders at recent record highs.
Technically, the rebound prepared Bitcoin to retest its record high established a day before. A cryptocurrency trader commented that he is willing to extend his long targets towards $19,964, noting that the “[bullish] setup has officially triggered.” Fundamentally, it appeared like a signal to another record high adjustment.
Bitcoin so far remained immune to news of successful vaccine trials as more mainstream investors endorsed its bullish bias or allocated a portion of their portfolios to it.
For instance, the Pfizer-BioNtech vaccine came out with 90 percent efficacy around November 11. It prompted a sell-off in the gold market but failed to impact fellow safe-haven Bitcoin. That somewhat proved that the cryptocurrency is on its way to decouple from traditional markets.
Meanwhile, the Bitcoin price also rose because many economists embraced the idea that a prospective vaccine would increase inflation.
The outlook for the potential broad use of a vaccine against COVID-19 next year could impact several areas, including global trade and inflation. Watch Chief Economist Blu Putnam's latest video.
— CME Group (@CMEGroup) November 23, 2020
They noted that protection from COVID-would boost economic recovery in the US, allowing people to spend more than they save. That would raise the price index for personal consumption expenditures, the Federal Reserve’s benchmark measure of inflation. The US central bank expects to reach the 2 percent annual inflation target using the same metric.
Bitcoin bulls treat the cryptocurrency as an anti-inflation asset, given its limited supply cap of 21 million tokens. On the other hand, the US dollar has no such supply limitations. In an inflationary environment, the greenback tends to fall lower. It even fell on Wednesday after the UK’s vaccine approval.
Therefore, bulls believe that large firms sitting atop bearish dollar reserves would eventually reshuffle a portion of it for Bitcoin. As a result, the BTC/USD exchange rate will increase.
Switzerland has around 850 billion in fiat forex sitting in the central bank. All losing value every year via inflation. A 1% #bitcoin allocation would buy them 420,000 BTC and in 100 years the moon and maybe Mars too.
— Lark Davis (@TheCryptoLark) December 1, 2020
Insofar, Bitcoin looks stronger against the prospect of economic recovery led by the vaccine.