Bitcoin Market Cap Reaches ATH with $20k in Sight; Gold Dumping Hard & USD on to Multi-Year Lows
With more than 70% surge in this quarter, Bitcoin has been trading around $18,500, with volume slowing down to $4.7 billion when today BTC broke into a new 2020 high at about $19,150.
With these gains, Bitcoin’s market cap has reached a record of over US$350 billion, overtaking the previous 2017 high.
It’s yet to be seen if Bitcoin will continue its ascent to $20k or we come back down under $19k.
The price action this week is expected to be impacted by the looming derivatives expiries, and “any dips are expected to be bought up promptly,” said Denis Vinokourov of Bequant, who added that despite these expiries, “the curve structure remained rather steep and the open interest (OI) rose to a new record high.”
The OI on Huobi has risen towards $750mln and OKEx through the $1.2bln; even BitMEX is at its highest level since late September at around $750mln. On Binance, OI has hit an all-time high of $1.17 billion.
Bears are Ruling Gold
Compared to BTC’s 156% year-to-date performance, the equity market (S&P 500) has only increased by 10.7%.
Even the precious metal that made a new peak at just above $2,000 is up only 20% YTD. Ever since hitting this high in early August, gold has been on a decline.
“Bitcoin is more stable than Gold as an investment vehicle. If you're in it for the long run, you want long term stability of returns for the risk you're undertaking. Day to day price volatility drops to the background for long term investors,” noted on-chain analyst Willy Woo.
The bullion has fallen to $1,805 level, to July levels on Tuesday, and with that, “a single Bitcoin is now worth over 10 ounces of gold.”
It has been expected that once BTC hits a new peak, it could also pull a gold-like move and rest there or even have that long-awaited pullback.
The largest digital asset is still less than 5% away from its all-time high.
USD Declining in 2020
Bitcoin’s retest of its $20k ATH is coming at a time when the US Dollar Index isn’t really having a good time. Down 2.34% in the month, the USD Index has lost 3.78% of its value in the last quarter of 2020.
Yesterday, in a big move, DXY went from 92 to 92.8, and today it is back to 92.2.
“Bitcoin ATH retest is happening at the same time DXY is ready to poop itself to multi-year lows but keep that head in the sand that they are not correlated. Price discovery will occur together, but inverse, brah,” noted trader @ledgerstatus.
A weakness in the US dollar has been historically good for the BTC price. The current environment, stimulus measures, and zero to negative interest rates, also paint a bullish picture for the digital asset.
Additionally, in scenarios like Argentina where inflation is high, and their currency is devaluing, with BTC already hitting an ATH in Argentine pesos, the latest “confiscatory” wealth tax — 2%-3.5% of the wealth of people with a net worth over $1.5 million to be confiscated — if implemented, could further drive people to Bitcoin.