Bitcoin (BTC), the leading digital currency, continues to set all-time highs while the US dollar keeps falling (but still remains the world’s most dominant global currency). Notably, Bitcoin is now being supported by even more Wall Street giants.
The OKCoin team has noted:
“We’ve said it before, and we’ll say it again, it’s been another wild week for the Bitcoin market. The leading cryptocurrency set a new all-time high this past week at $34,830, some 20% higher than last week’s high.”
Bitcoin is trading at over $36,000 at the time of writing.
The pseudonymous digital currency appears to be consolidating for “the first time in weeks,” allowing altcoins (or alternative cryptos besides BTC) to break even higher, OKCoin confirmed in its latest digital assets market report. Ethereum (ETH), the world’s second-largest crypto, is one of the very few assets that has been outperforming Bitcoin. OKCoin market data shows that ETH surged 48% during the past week.
It seems that crypto investors who took some profits on the recent BTC rally may have cycled some of their returns into certain altcoins, expecting this digital asset subset to catch up to Bitcoin (at least in the short-term), OKCoin claims.
During the last week, we’ve seen continued institutional support for Bitcoin (BTC). SkyBridge Capital, which is Anthony Scaramucci’s hedge fund, has invested $310 million in Bitcoin in its previously announced SkyBridge Bitcoin Fund LP. This is according to a statement by SkyBridge that said BTC was purchased during November and December – just prior to market highs.
Some investors, however, have now cautioned that the digital assets market is “primed to cool down after the parabolic rally it has seen,” OKCoin noted in its report. However, the long-term trends that are driving this crypto market rally are “still potent,” the report claims.
It’s worth noting that Bitcoin turned 12 this past week. Interestingly, the day Bitcoin turned 12 (on January 3, 2021), it was also featured on the front page of the FT.
Bitcoin’s rally has come as the US dollar moved (slightly) lower, the report confirmed.
The report also mentioned:
“The Dollar Index (DXY) fell from 90.00 to 89.50, which brings the measure to multi-year lows. The DXY is an index of foreign currencies against the U.S. dollar. The indicator falling indicates that the U.S. dollar is losing relative value against foreign currencies. The U.S. dollar appears to be dropping as a result of the latest $900 billion stimulus bill, which will put $600 into the hands of a majority of adult Americans.”
As stated in the report, it seems to have become a “mainstream narrative” that further losses in the value of the US dollar could drive the Bitcoin price a lot higher.
When Wall Street billionaire Stanley Druckenmiller claimed his support for the flagship cryptocurrency, he had mentioned that a declining dollar was among the main reasons he’s quite optimistic about BTC investments.
Analysts have stated that investors may expect increased volatility with so much trading volume and news developments playing out in the digital assets market.
JPMorgan analysts recently claimed that Bitcoin could potentially reach $146,000 in the long-term as it begins to compete for market share with the gold bullion.
Bitcoin’s market cap of over $660 billion would have to increase by around 4.5x for a theoretical price of $146,000. If and when BTC reaches this price, it will begin matching private industry investments in gold through exchange-traded funds (ETF), bars, and coins, according to Nikolaos Panigirtzoglou, the MD of Global Market Strategy at JPMorgan. However, the bank’s researchers pointed out that this outlook or forecast depends on the volatility of BTC converging with gold’s volatility (which could take a fairly long time).
JPMorgan analysts noted:
“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term, [but] a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”