Bitcoin has breached $17,000 for the first time in the last three years.
The flagship cryptocurrency hit $17,100 ahead of the New York opening bell Tuesday, forming another upward leg in a rally that has already ballooned by 58 percent in the fourth quarter. Meanwhile, its market cap closed towards $315 billion, just $20 billion away from its all-time high established in December 2017.
Bitcoin reaches $17,000 in a relentless upside rally. Source: BTCUSD on TradingView.com
Since March 2020, when its price crashed to the yearly low of $3,858 amid a global market rout, Bitcoin has surged by more than 350 percent. On a year-to-date timeframe, it is up 136 percent.
Bitcoin’s latest parabolic rally serves as a reminiscent of the infamous 2017 boom. Back then, the cryptocurrency had stormed from $800 on January 1 to $20,000 on December 11, 2017. The only difference between then and now is institutional capital.
Then and Now
The previous rally ran hot due to the then-booming initial Coin
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‘ href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin offering (ICO) industry. Hundreds of young blockchain startups appeared with a business model to raise funds in Bitcoin and Ethereum. Therefore, investors who saw these young companies as unicorns started buying BTC and ETH as their tools to purchase their native tokens.
But more than 90 percent of those startups either turn out to be scams or vaporware. They sold whatever BTC and ETH they had raised, causing their market to crash throughout 2018. As of December 2017, one Bitcoin token was available to purchase for as cheaper as $3,000.
But this time, the Bitcoin rally appears against a worsening economic outlook led by the coronavirus pandemic. With businesses suffering and unemployment at dangerous levels, global central banks are making lending cheaper. They are also buying government bonds infinitely.
Meanwhile, the governments are also releasing trillions of dollars worth of stimulus aids to aid businesses and individuals. Jerome Powell, the chairman of the US Federal Reserve, has openly claimed that they are targeting higher inflation in the coming years.
A relentless quantitative easing is reducing the purchasing power of the US dollar. Also, an ultra-low interest rate environment is stealing yields away from long-dated Treasuries, some of them even returning negative returns.
That serves as the primary reason why legendary investors like Paul Tudor Jones and Stan Druckenmiller have gained exposure in Bitcoin, an asset that comes with a limited supply of 21 million tokens. Other firms, including MicroStrategy and Square, have also replaced their cash reserves with Bitcoin.
I would like to announce that after years of dabbling I’ve jumped firmly onto the #Bitcoin wagon and would now like everyone else to do the same.
— Eoghan McCabe (@eoghan) November 16, 2020
More Bitcoin Gains Ahead
Alex Saunders, the CEO/co-founder of Nugget News AU, said Tuesday that the Bitcoin market is about to see the greatest parabolic advance ever.
He noted that the capital outflow from exchanges has increased against the rising Bitcoin prices. Meanwhile, less money is entering the trading platforms, which reflects traders are looking to hold Bitcoin instead of trading them for other assets.
Bitcoin net transfer volume to/from exchanges. Source: Glassnode
“Remember, Bitcoin hasn’t really scaled since 2017. Full Mempool + Euphoria = Empty exchange order books. $BTC Price = ???”
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