On Tuesday, the most popular cryptocurrency, bitcoin (BTC), breached the USD 17,000 level for the first time since January 2018. It took a week for BTC to increase from USD 15,000 to USD 16,000 and five days to reach USD 17,000.
At pixel time (12:58 PM UTC), BTC trades at USD 17,038 and is up by 4.5% in a day and 11% in a week. It also rallied by 49% in a month and 99.5% in a year.
And while BTC outperformed ethereum (ETH) today (+3.5%, USD 471), coins such as XRP, litecoin (LTC), ralied by more than 9%, polkadot (DOT) and cardano (ADA) – more than 8%.
“We are currently witnessing extremely bullish price action in BTC. Driven by a mix of market structure and strong fundamentals, BTC could now be within days of reaching it’s all-time high [of USD 20,000],” Nicholas Pelecanos, Head of Trading at NEM (XEM), said in an emailed comment.
According to him, underlying this bullish price action is the inflation hedge narrative “that has captured Wall Street since the immense money printing campaigns undertaken by the [Federal Reserve] earlier this year.”
“In the US, we are even seeing current or former government officials who are beginning to invest in bitcoin. SkyBridge Capital, an investment firm founded by former White House Communications Director Anthony Scaramucci, has indicated in a pair of filings that the fund may hold long and short positions in digital assets. US Senator-elect Cynthia Lummis has recently announced that she hopes to bring Bitcoin into the national conversation and that it should be viewed as a store of value to counter inflation of US dollars,” according to Kadan Stadelmann, Chief Technology Officer at Komodo (KMD).
Also, as reported, Tom Fitzpatrick, Managing Director at Citibank, said last week that “Bitcoin is the new Gold” that could hit USD 318,000 by December 2021.
“Improbable though that seems it would only be a low to high rally of 102 times (the weakest rally so far in percentage terms) at a point where the arguments in favour of Bitcoin could well be at their most persuasive ever,” he said.
Meanwhile, opinions are mixed whether this rally brings a lot of new investors in the space.
“The number of questions I get on it now is a fraction of what I got a couple of years ago when it was really hot,” Kathy Jones, Chief Fixed Income Strategist for Schwab Center for Financial Research, told Bloomberg.
“Bitcoin gets attention when it looks like the world is coming to an end, it’s the anti-vaccine trade. As stocks and everything else have done better and people have forgotten about trade wars and things have been eclipsed by the pandemic, Bitcoin has taken a back seat to all of that,” Bryce Doty, portfolio manager at Sit Fixed Income Advisors.
However, Matt Maley at Miller Tabak + Co. told Bloomberg that institutional investors might be paying more attention to the crypto space — he’s fielded some calls about it in recent weeks.
