Bitcoin Hits $17,000, But It is Clearly Different This Time in a Number of Ways
Bitcoin is back on the move.
After a small pullback over the weekend, the start of the week was an explosive one as BTC ripped past $16,800 on Monday and hit $17,000 today.
With this, yet another milestone was achieved by Bitcoin as the last time we reached this point was on January 7, 2018, marking the close of the 6th consecutive up week in a row. These came a single-day high USD transaction volume of 2020 was made just two weeks ago at $13.56 billion.
Still, no one is late to the party yet as “many on-chain indicators show that the bull market is only getting started. With BTC at $16.8k, Reserve Risk is just breaking out of the green zone and even lower than 2019 when BTC hit $13k,” noted Rafael Schultze-Kraft, CTO at Glassnode.
This uptrend actually started when Square first invested $50 million in Bitcoin; it has been pretty much one-way traffic since then. Even PayPal sees great demand as seen in the surge in the volume on ItBit, the exchange service provider of Paxos.
No wonder why Paxos is excited to power PayPal's new crypto service. Look at the surge in volume on ItBit this month. Coincidence? pic.twitter.com/3DihC5ezyc
— Bendik Norheim Schei (@bendikschei) November 16, 2020
Grab those BTC
As Bitcoin continues to edge higher to the congestion area between $16,100-17,150, the risk-on sentiment remains unchanged with the aggregate open interest (OI) rising yet again to a new record high led by stablecoin margined futures as opposed to Bitcoin margined products.
Amidst these gains, miners have been selling an average of 11 BTC per hour at exchanges compared to 214 BTC per hour being scooped off the exchanges; this week, it was 328 BTC per hr.
Meanwhile, the miner hash rate has stabilized following the difficulty adjustments and miners’ transitioning their ASIC hardware to coal-powered northern regions like Inner Mongolia and Xinjiang following the end of the rainy season in China’s Sichuan province.
There are whales who desperately wanted to sell near the top of the prior cycle. Their supply, which will be unlocked as we approach the prior all time high, is the last hurdle before #Bitcoin enters open fields and runs free without let or hindrance. https://t.co/NDhbILR2C2
— Vijay Boyapati (@real_vijay) November 16, 2020
Need to Break Above the 2017 High
Currently trading above $17,050 in the green with $3.4 billion in volume. With these gains, Bitcoin has surged 55% in this quarter.
Even despite the significant big gains and being more volatile than stocks, “the so-called minimum variance portfolio — comprised of the S&P 500 and a handful of digital coins — can nonetheless reduce risk meaningfully relative to equities alone, including during the worst of 2020,” said strategists Roberto Perli and Benson Durham of Cornerstone Macro LLC.
This year, cryptos are on a tear amidst the increased institutional acceptance, interest from not only younger investors but also family offices. The significant variance in their price moves is what makes them good diversifiers.
The great 2020-2030 rotation is upon us.
From strong dollar to weak dollar.
From growth to value.
From US equities to EM equities.
From gold to BTC.
— Qiao Wang (@QwQiao) November 17, 2020
Bitcoin is seen as more and more like gold for the 20th century — a store of value. Compared to bullion’s 24% gains YTD, and down -0.29% in the fourth quarter, Bitcoin recorded a year-to-date performance of +133%.
— Holger Zschaepitz (@Schuldensuehner) November 16, 2020
Still, as we reported, the market isn’t that excited yet with the traffic seen during the 2017 top not here, by a wide margin. This can be seen in the Bitcoin-related tweets a day, which was around 120,000 at the height of the crypto boom and is now oscillating between 30,000 and 60,000.
“This rally is clearly different in a number of ways,” Guy Hirsch, managing director for eToro US, told Bloomberg. It is less speculative, and although despite recent developments, it has been advancing at “a snail’s movement, it’s in the right direction. Generally speaking, we’re very bullish on what’s happening.”
Even in the crypto market, the crash in the DeFi space in Sept. also has a lack of excitement in market participants.
“The individuals — a lot of those people got burned badly — they’re less excited about it now,” said Matt Maley, chief market strategist at Miller Tabak + Co. “It’s certainly not the huge hoopla we had back in 2017 — that could change if it breaks above the 2017 highs.”
According to Greg King, CEO of Osprey Funds, a subsidiary of REX Shares that runs a Bitcoin trust, people at the dinner table will be talking about Bitcoin when it hits $50,000 or $100,000.