Bitcoin’s weekly close on Sunday, 8 2020 is seeing many of those invested in this digital asset cheering for the coming weeks. This is because the coin was seen to crush it’s 2019’s peak price last week and has demolished the barrier between itself and a new all-time high. Just scraping $20k in 2018, the coin has been on a track to make new records this year, as it has crested the $15K restriction band.
Retail investors are turning towards exchanges like Bitvavo, hoping to find information that can bolster these feelings of positivity and find data that suggests the new found highs are here to stay. But investors may not even need to go that far, as once again the top crypto is making headlines all over the world as a newly unprecedented future is finally in the cards.
Legacy Markets Take Backseat
Throughout 2020, bitcoin has been overtaking and outperforming legacy markets. Having nearly tripled the NASDAQ year-to-date returns, and overtaking the S&P 500 by 1600%, the coin has even begun to take over other legacy investments like Apple, Tesla, and even mega-giant Amazon. Which is ultra-impressive considering the massive jumps that Amazon has made this year amidst lockdown purchase increases. But the good news doesn’t stop here, as the future of the cryptocurrency looks bright and the bubble has no signs of popping.
Bullish News Behind the Blowout
Even though bitcoin has cleared its latest resistance band of $15k, clearing its path to see a $20k bull run, some less informed investors worry that this rally may not have staying power, reminiscent of the bubble and bust seen in 2018. However, there are a few important factors to consider this time around that is keeping long term investors interested.
● Miner Outflow
Recently, miners have been noted to be selling more bitcoin than they own, shelling out nearly 3,000 BTC back into market liquidity in the process. Historically, miners will sell the bitcoin they earn when they believe the market is strong enough to absorb the coins, preferring to practice HODL techniques when they view the market as weak. Miners, one of the beating heart fundamentals of bitcoin and a long trusted vital sign of the network, have some excellent insider knowledge on how the market is functioning. So, seeing a high miner outflow is often the sign of a minerrock-solid bitcoin market.
Institutional Interest
Perhaps one of the biggest influencers of the current rally, and one that gives many a positive outlook for the staying power of the current rally, is the surge of institutional interest that has been shown recently. Huge names in payment platforms have recently unveiled plans to begin supporting crypto payments. Meaning that millions of businesses will now be able to accept cryptos, whether or not they have the infrastructure for it. With the likes of PayPal, Square, Venmo, and Visa all hopping aboard the crypto train, this means that retailers can enjoy fiat payments, even if buyers are using bitcoin. Creating an entirely new paradigm for digital payment systems.
Slow Ascent
Many still hold concerns of the recent bitcoin flux, largely owing to this 2017-2018 bubble that rocked crypto holders everywhere. Whether this is all due to some long-standing investor PTSD, or some long- but not forgotten FOMO, investors still seem edgy when it comes to the holding power of bitcoin rallies. However, the current rally comes with a much more positive sentiment and bullish outlook due to the coin’s slow ascent. This slow but steady march to the top has given the coin a much more stable market cap, one that by all accounts, may be here to stay
Whales Sell, Prices Stay
Historically, large net-worth investors- better known as whales- have heavily influenced the price of bitcoin. When these investors have been noted to start transferring bitcoin from cold storage to exchanges, it often signalled a weakening market. However, despite the recent sweep of whales bringing their coins to market, bitcoin prices have little more than wavered. Perhaps even more encouraging is that this new found liquidity was swept up quickly by the growing number of retail investors.
Growing Distrust of Fiat
As governments around the world continue to use QE practices to print money, concerns of impending hyperinflation abound. When governments use QE to essentially print money and stimulate an economy, this is often offset by low cost lending practices- people feed their money back into local economies. However, with the economic uncertainty that covid-19 closures continue to bring, coupled with unstable global marketplaces, it looks as though the QE practices may not be offset. So rampant hyperinflation could realistically occur. Pushing investors towards digital currency as a hedge for personal assets.
