Bitcoin is surging in recent days. The cryptocurrency markets as a whole are over $500B in market capitalization for the first time since 2018 and Bitcoin (BTC) makes up about 2/3 of that amount at roughly $19,000 at the time of writing. Bitcoin is also breaking records by being more stable at higher dollar figures--it has been over $10,000 for about 130 days now.
What is it that keeps investors wanting more from the top cryptocurrency?
This article will look at 3 of the most important bullish signs for Bitcoin, even amid a slowing economic recovery characterized by a weak November jobs report and recent COVID-19 case increases.
- The high price has serious hang time.
- Institutional money shows no signs of slowing.
- Stimulus package shows signs of passage.
Bitcoin has been over $10,000 for over 130 days. There were more people talking about this milestone before it happened, but at least some of the phenomenal November performance for Bitcoin (+39.5%) was related to changing market conditions. Increasingly, institutional players including Square and JP Morgan are endorsing Bitcoin as a store of value by investing massive amounts of money into it. This trend seems to be accelerating, and everyone wants more.
Institutional money is flowing into Bitcoin through a variety of channels, one of which is the performance of the Greyscale Bitcoin Trust, which has more than doubled since the beginning of October. In fact, this growth trend appears to be accelerating, as Bitcoin has recently established a new all-time high and appears to be in the midst of what investors refer to as a "consolidation" period of "sideways" motion which may or may not signify a coming breakout somewhere to the north of $20,000 per BTC. The growth BTC has experienced this fall has been markedly steadier than the meteoric ascent it experienced back in 2017, during the last major bull run, but time alone will tell if another pullback will follow this rise.
Good news is coming out of Washington today as House Speaker Nancy Pelosi shows that she is newly motivated to avoid a government shutdown by voicing optimism about a $908B stimulus bill. News from the Republican side is similarly positive, with Senate Majority Leader Mitch McConnell reportedly claiming that “compromise is within reach.” President Trump, on his way out of office, has withheld support for the bill by being generally quite vague about it, including leaving reporters guessing which stimulus bill the President supports.
Bitcoin has done fine this fall without a stimulus package, but the pandemic is accelerating dramatically and the American system is increasingly showing signs of distress as UPS calls a halt to some of its operations amid raging COVID-19 outbreaks. The outgoing administration seems to have no interest in the pandemic and has even refused to work with the incoming administration as is traditional during the transfer of power. All of these signs point toward more distressing times ahead, but despite all that, Bitcoin looks to be making serious progress toward a new trading range. Janet Yellen has been hailed as Biden's pick for treasury secretary, though there is some debate in the cryptocurrency community about how bullish her appointment really is for the markets.