Why did Bitcoin break it's All-Time High Today?
Three years of waiting are passed and now we (un)expectedly saw Bitcoin breaking the all-time high of $19,783, getting over the previous one set in 2017. Now the most advanced cryptocurrency is unbelievably volatile with its price changing by hundreds of dollars just in minutes, trading $19,230 at the moment of writing the article.
2019: Almost There
Last year everyone relied on the significant bullish BTC rally, which unfortunately finished in June at the point around $14,000. From that mark, Bitcoin was impressively crashing down, reaching a low of around $3,800 in March 2020 amid the COVID-19 pandemic.
How it All Started
Of course, 2020 is not yet over, but since the March collapse, Bitcoin is up more than 400% and currently does not show us any signs of slowing down. Although Bitcoin started its recovery already in March, the real bullish rally started in August, after a business intelligence company MicroStrategy began to actively invest in BTC, helping the most advanced digital asset to move on.
“Bitcoin is digital gold - harder, stronger, faster, and smarter than any money that has preceded it,” said MicroStrategy right after the first investment.
Big Investments in Numbers
The numbers have already proved this theory. Firstly, MicroStrategy invested $250 million. Then in September the amount of investment was added to $425 million in total. Since August, Bitcoin’s market cap has increased by 64% from $216 billion to $356 billion. Interestingly, during these three months, the BTC trading volume has also doubled from $23 billion to $48 billion.
Following MicroStrategy, in October Square invested $50 million (1% of the company’s total assets) in Bitcoin.
“We believe that Bitcoin has the potential to be a more ubiquitous currency in the future. …for a company that is building products based on a more inclusive future, this investment is a step on that journey,” Amrita Ahuja, Square’s CFO at the time of the investment said.
Then PayPal entered the Bitcoin market at the end of October, offering its users payment support for BTC and other cryptocurrencies. And in just a month we watch PayPal buying 70% of the newly-mined Bitcoin.
Bitcoin`s Institutional Glory
Now again let’s go back to November when billionaire investor Stanley Druckenmiller publicly claimed Bitcoin to be better than gold:
“It could be an asset class that has a lot of attraction as a store of value to both Millennials and to the new West Coast money—and as you know they’ve got a lot of it,” Druckenmiller said on CNBC.
Incredibly, but just in a day after his words, Bitcoin went up from $10,800 to $15,479, and in a couple of days to $16,463.
Rick Rieder, the CIO of BlackRock also said that Bitcoin soon to replace gold:
“Do I think it’s a durable mechanism, do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.”
Macro-market
Binance Research offers several factors that explain Bitcoin’s price rally.
First, Bitcoin is considered to be a new hedge against inflation. While governments provide economic aid in terms of the Coronavirus pandemic, the value of the fiat money continues falling down due to inflation. People moved towards digital assets, including Bitcoin, to save themselves.
In addition, Bitcoin’s rally has benefited from some "hidden" factors, such as an increased regulation from governments, a bullish futures market, and more reachable access to the digital asset.
“Over the last three years, and increasing regulatory certainty enabled the entrance of licensed custodians, which are now at the center of a prime brokerage industry and are absolutely crucial in enabling companies to hold Bitcoin,” Binance Research said.
The Bitcoin market is obviously different today than it was back in 2017. We are excited to watch the crypto industry growing and becoming a safe place anyone can access.