Published: October 30th, 2020
A new report says the coroinavirus pandemic has set off a Bitcoin gold rush while taking the shine off traditional instruments.
A survey published by Grayscale, the largest crypto asset manager in the world, captured investor attitudes amongst investors. Of respondents who had invested in Bitcoin, the survey found that 64 per cent of Bitcoin investors said the pandemic had impacted their decision to invest, and 40 per cent said that that COVID-19 had made Bitcoin a more attractive investment vehicle.
Grayscale also found that respondents aged 35-44, who researchers noted have lived through three recessions and seen familiar defensive instruments like Fortune 500 stocks and real estate lose their appeal as hedges, believed Bitcoin offered better potential as a safe haven.
Market data bears out that attitude. Aside from March’s price crash, Bitcoin has been on a long run above the $10,000 mark, and this week levitated above $13,000.
Competitor Monero, on the other hand, which had been basking in the glow of a price rally, dipped sharply after Donald Trump’s campaign website was hacked and the fraudsters tried to solicit bogus donations via Monero.
It was a bad week for investors over in traditional currency markets, as the number of COVID cases continued to rise and earnings season fell short of expectations.
The Nasdaq, Dow, and S&P futures markets were all in decline, making it a week of consecutive losses on the major indices.
End of October marks one of the biggest weeks in the annual earnings calendar as hundreds of big-cap companies release their Q3 reports. Around a third of the publicly traded companies on the S&P 500 had released their numbers by mid-week.
While close to 18 per cent of reports more or less met analyst expectations, most market watchers believe stocks will finish the season down by 20 per cent or more versus 2019
Against that gloomy backdrop, it's not a shock that Bitcoin has crept back into the spotlight, regularly featuring on nightly business news recaps as it continues to outperform other asset classes.
At the end of September Bitcoin posted its longest consecutive run above $10,000, ending the week of 28 September at $10,700. It confirmed a 63-day period of valuations at $10k or more, its longest since 2017.
Since then Bitcoin has been on a steady run above $10,000, and this week levitated above $13,000.
BTCs last long 10k stretch hit 62 days in 2017. A second run in 2019 looked like a go-er but lost momentum. The latest run looks unstoppable at the moment, and with Grayscsale’s data in mind, analysts say it could keep chugging all the way to January.
A poll of cryptocurrency investors in September found most believe BTC will finish the year above $10,000. Some thought there was potential to sail as high as $17,000 maybe even more.
Analysts at Bloomberg were even more optimistic, responding to Bitcoin’s long 10k run with conjecture that it might even hit $20,000 by New Year’s Eve. The block reward doled out earlier is seen as another critical factor in the run.
‘Bitcoin is mirroring the 2016 pattern that saw it go back to its previous peak. In our view, Bitcoin could well touch close to a record high of about $20,000 this year.’
Which is not to say the ride hasn’t been bumpy. BTC’s price touched $12,350 on 17 August. Later on 7 September it briefly dipped below the $10,000 mark and bottomed out at $9,900 before climbing back before the closing bell. While the drop was short-lived, it nonetheless represented a 20 per cent dip in BTC’s price.
But even those peaks and valleys indicate Bitcoin’s is on a more stable footing. The fluctuations this year have been less extreme than on Bitcoin’s previous runs when price volatility could see it move by as much as 50 per cent in a single day.
A 62-day run that kicked off in December 2017 saw BTC hit its highest ever price: $20,088.
Earlier this year Bitcoin saw off competition from Tether, which briefly stole BTC’s crown in July as the world’s most popular crypto.
Tether posted some of the highest monthly and daily trading volumes seen up to that point in the year. It’s market cap was (and is) still puny compared to BTC. But it’s on the move. Volume pushed past BTC for the first time in May 2019, and it regularly pushed past it ever since.
No one knows if Tether’s monthly trading volume will keep beating Bitcoin, but it remains a challenger for the ‘most popular crypto’ title. Amongst stablecoins its number one with a bullet.
Despite the competition, however, Bitcoin looks un-beatable.
While BTC remains well below its 2017 peak of $20,000, the extended run and rise prove Grayscale's contention that its achieving new levels of mainstream appeal.
As ever, the critical moment will be when acceptance and investment by institutional investors become the norm. CEO of MicroStrategy Michael Saylor said recently he believed Bitcoin represented a kind of ‘digital gold,’ and that BTC has become a dependable store of value. ‘Bitcoin should be embraced now as an asset,’ he said, ‘ …with more long-term appreciation potential than simply carrying cash.’
Bitcoin may be benefiting from that sentiment, which has helped progress the mainstreaming of crypto in recent months. The latest move by American regulators to let US banks back stablecoins is a huge step forward in terms of recognising crypto’s legitimacy, and that’s good news for Bitcoin.