Bitcoin's price shot up along with gold and stock futures after the U.S. Federal Reserve announced a quantitative easing package with no upper limit to support the economy amid the coronavirus crisis.
Immediately after the 12:00 UTC announcement, bitcoin jumped from $5,860 to $6,628 in an hour, according to CoinDesk's Bitcoin Price Index. Gold, a classic haven asset, rose from $1,494 to $1,524 over the same time frame.
The Fed's announcment indicates it is taking stronger actions, including open-ended asset purchases, to support the flow of credit to households and businesses.
"The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions," the central bank said.
Essentially, the Fed now stands ready to expand its bond purchases as required. The central bank's balance sheet hit a record $4.7 trillion last week.
With the Fed going all in to support the economy, sentiment on Wall Street turned positive alongside the uptick in bitcoin and gold. Futures tied to the Dow Jones Industrial Average, which were down nearly 900 points during the European hours, are now reporting a 400 point gain.
The foreign exchange market reacted to the Fed's new QE effort by offering the greenback. The U.S. dollar index, which tracks the value of the greenback against majors, fell from 102.80 to 101.70 following the central bank's announcement.
Bitcoin's move higher along with gold is likely to revive the safe haven narrative, however, it will be interesting to see if the positive correlation persists.
Both gold and bitcoin have fallen sharply over the last two weeks, reviving memories of the 2008 crash when the yellow metal had declined by 30 percent from $1,030 to $680 from March to October before decoupling in November. Gold went on to hit record highs above $1,900 per ounce in September 2011.
"History doesn't repeat itself but given the deluge of fiscal and monetary stimulus, incoming bitcoin bulls are hoping that it will rhyme," said crypto derivate research firm Skew Market in its daily update.
At press time, bitcoin is trading at $6,383 – a 5.14 percent gain on a 24-hour basis.
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