Bitcoin topped $ 17,000 for the first time in the past three years.
The flagship cryptocurrency hit $ 17,100 before the opening bell in New York on Tuesday, forming another uptrend on a rally that had already risen 58 percent in the fourth quarter. Meanwhile, market cap closed at $ 315 billion, just $ 20 billion from its all-time high in December 2017.
Bitcoin hits $ 17,000 in a relentless upward rally. Source: BTCUSD on TradingView.com
Bitcoin reaches $17,000 in a relentless upside rally. Source: BTCUSD on TradingView.com
Bitcoin has risen more than 350 percent since March 2020, when its price fell to its annual low of $ 3,858 amid global market developments. In a period of one year it has increased by 136 percent.
Bitcoin’s latest parabolic rally is a reminder of the infamous boom of 2017, when the cryptocurrency stormed from USD 800 on January 1 to USD 20,000 on December 11, 2017. The only difference between then and now is institutional capital.
Then and now
The previous rally was hot due to the then booming ICO (Initial Coin Offering) industry. Hundreds of young blockchain startups showed up with a business model to raise funds in Bitcoin and Ethereum. Hence, investors who viewed these fledgling companies as unicorns started buying BTC and ETH as tools for buying their native tokens.
But more than 90 percent of these startups turn out to be either scams or vaporware. They sold everything they had raised to BTC and ETH, which caused their market to collapse in 2018. As of December 2017, a Bitcoin token was available for just $ 3,000.
This time around, however, the Bitcoin rally is opposing a deterioration in the economic outlook led by the coronavirus pandemic. Given the suffering and unemployment of companies at dangerous levels, global central banks are making lending cheaper. They also buy government bonds indefinitely.
Meanwhile, governments are also releasing trillions of dollars in economic aid to help businesses and individuals. Federal Reserve chairman Jerome Powell has openly claimed that they are aiming for higher inflation in the years to come.
Relentless quantitative easing will reduce the US dollar’s purchasing power. Also, a low interest rate environment steals long-term government bonds from returns, some of which are even generating negative returns.
This is the main reason legendary investors like Paul Tudor Jones and Stan Druckermiller are exposed to Bitcoin, an asset that comes with a limited supply of 21 million tokens. Other companies, including MicroStrategy and Square, have also replaced their cash reserves with Bitcoin.
I want to announce that after years of trying I firmly jumped on the #bitcoin cart and now I want everyone else to do the same.
– Eoghan McCabe (@eoghan) November 16, 2020
More Bitcoin profits ahead
Alex Saunders, CEO / Co-Founder of Nugget News AU, said Tuesday that the Bitcoin market will see the greatest parabolic advance ever.
He noted that the outflow of capital from the exchanges has increased relative to the rise in Bitcoin prices. Meanwhile, there is less money flowing into the trading platforms, which is due to traders wanting to hold Bitcoin instead of exchanging it for other assets.
Bitcoin net transfer volume to / from exchanges. Source: BTCUSD on TradingView.com
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 = ???”