BTCUSD, Weekly
Bitcoin is likely to end 2020 at a near $30,000 high, as the price has moved almost in a vertical trajectory and has attracted a lot of attention and some solid investors. The movement of BTC, in 2020, has benefited from the behavior of the Federal Reserve which spreads liquidity through financial markets. To protect financial institutions and financial markets facing closure due to the spread of the COVID-19 pandemic, the Federal Reserve has pumped a lot of money into the economy, something that is being done not only in the US, but by nearly every Central Bank in the world.(seekingalpha)
This resulted in many US companies having more cash on their balance sheets than ever before, and interest rates remaining near historical lows, making it difficult for investors to decide where to invest. At the time of writing, bitcoin is selling for around $28,950, and technically it looks as if this bubble may continue, possibly even reaching $29,000-$30,000.. This figure is the highest since 2017, when the price touched $20K. Of course a lot of people are making money at high prices nowadays, but a lot of people are going through bad times and still don’t believe the reality of today’s prices.
The cryptocurrency market has matured over the last three years as it has become more regulated and players like JPMorgan Chase have gotten into the cryptocurrency game. JPMorgan said that bitcoin could reach $650K if it continues the positive trend seen during the Covid-19 pandemic. According to JPMorgan, alternative currencies including gold and bitcoin will see asset growth of 27% and 227% respectively by 2022. (express.com.uk)
Anthony Scaramucci’s investment firm SkyBridge Capital has invested $182 million in bitcoin, according to an investor flyer shared with CoinDesk about an upcoming bitcoin fund. The company, which has $9.3 billion in management, launched SkyBridge Bitcoin Fund LP in January, according to Securities and Exchange Commission documents filed on December 21, as reported by CoinDesk.
Previously, the co-head of Portfolio Strategy at Bernstein Research, Inigo Fraser Jenkins, reported the positive trend of bitcoin. He said that the pandemic had caused a number of governments to make changes in financial policy. The change also made investors more interested in saving their assets in bitcoin, due to an increase in fiscal expansion and high inflation. Meanwhile, the billionaire CEO of Galaxy Digital, Mike Novograts, said that the increase in digital activity during the pandemic was one of the factors that made the bitcoin value skyrocket, as well as benefitting Zoom, which has become part of the life of the world community. This change in activity also makes investors feel more comfortable using digital wallets.
However, it remains a very volatile market and investors need to be aware of this fact as we enter the world of radical uncertainty 2021. The bitcoin market exploded this year with all the money in circulation in the economy. As can be seen in the chart, there was a boom in the bitcoin market in 2017, when the price was close to $20,000. However, the bitcoin market was still new, unreliable and subject to many regulatory issues.
Because many big names are expanding their investment into cryptocurrency, more and more small investors are following and the volume of transactions is increasing. As a result, the investment outlet is becoming more viable as the volume of money flowing into that space grows and expands. Bitcoin seems no exception.
In early October, bitcoin reached a price of around $11,000. At the end of October, the price was over $13,000, and then it hit $14,400 in early November. It was at $20,000 in mid-December and closed on December 28 at a price of nearly $27,000. During this time, the S&P 500 stock index hit record highs and on December 8, hit another historic high to close at 3,736. There seems to be some parallel movement in bitcoin and the stock market. It looks like the money the Fed is pumping into the economy is going to make some people very, very happy. Volatility has increased in both areas, but bitcoin price volatility far outweighs stock market volatility. Additionally, investors do not need to make diversification decisions when it comes to bitcoin investments.
The era of digitalization in life has been becoming increasingly significant is it unstoppable?
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Ady Phangestu
Analyst – HF Indonesia
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