Bitcoin rose Wednesday, right ahead of the release of the Federal Open Market Committee’s minutes from their November meeting.

The benchmark cryptocurrency climbed 0.13 percent to $19,198, with its rally slowing down as traders weighted vaccine progress against a persistent rise in coronavirus infections in the US. Technically, Bitcoin maintained support near $19,000, with bulls treating the level as a triggering point towards the next record high.

Bitcoin is up by more than 350 percent from its mid-March nadir. Source: BTCUSD on TradingView.com

FOMC Meeting

Much of Bitcoin’s short- and medium-term market bias expects to come from the Federal Reserve’s forward guidance on Wednesday.

The central bank may want to keep its existing monetary policy settings steady, considering a renewed surge in the number of unemployment claims in the week ending November 14. Pro-people policies could also come as states impose a fresh round of lockdowns.

The Fed Chairman Jerome Powell and his colleagues discussed the prospects of purchasing government and corporate debts indefinitely to keep the US economy afloat through the pandemic. For instance, New York Fed President John William said that these expansionary programs are “serving their purposes really well right now.”

St Louis Fed President James Bullard also repeated his associate’s comments, stating that the Fed has no reason to put brakes on a program that keeps the economy from falling into further recession.

Nonetheless, US Treasury Secretary Steven Mnuchin last week decided to cease some of the Fed’s emergency lending facilities after December 31. That has put a deadline on the central bank to act faster than usual — by bringing further easing measures in the remainder of this year.

As usual, it is bullish for Bitcoin.

Bitcoin vs. Dollar

The cryptocurrency does not react directly to the Fed’s decisions. Instead, it correlates with the US dollar that moves per the whims of the central bank’s forward guidance. And so far, the Fed policies have done nothing good to the greenback.

US Dollar Index under additional bearish risks should the Fed remains dovish. Source: DXY on TradingView.com

The US Dollar Index (DXY) is trading just a few notches above its yearly low of 91.75. If the Fed decides to continue its assistance programs, then the index may retest the low again, followed by a breakdown. Forex analyst Daniel Moss weighs:

“Ultimately, a daily close below the September low is needed to signal the resumption of the primary downtrend and bring 91.16 into play.”

A depreciating dollar allows investors to rotate their capital into higher beta currencies and growth-sensitive assets. Bitcoin, with its anti-inflation narrative, therefore rises to the occasion.

An assertively dovish Fed promises an upside scenario for the cryptocurrency. So it appears, Bitcoin could attempt a bull run towards its all-time high following the FOMC minutes.

Nevertheless, if the Fed bows down to Mr. Mnuchin’s demands, then it will serve a short-term setback to the cryptocurrency — until Ms. Janet Yellen takes over the Treasury Secretary role next month and reactivate the emerging lending facilities.