Bitcoin’s Battle With $50,000 is On Amidst the Risk-On, Weaker-Dollar Mode
The price of Bitcoin has finally hit $50,000.
However, not all exchanges got to see the breakout of $50k, which was missed by a hundred or fewer dollars. But the price is now back below the level and around $49,500 at the time of publishing. According to Messari Crypto, which uses a weighted average for pulling the price, it hit $50,685.21 in the last hour. Overnight, it briefly went above at $50,038.22 only to drop back down. Most exchanges besides Bisq and Deribit and the average on Messari hadn't crossed that threshold.
“Negative Coinbase premium, but plentiful stablecoins in exchanges. Negative premium should be cooled down to get another leg up.”
If this #Bitcoin bull run is like 2017, we are about half-way.
Price action, HODL waves, DNVT, everything looks like June-August 2017.
The difference is we now have 20% monetary inflation, so I expect we are less than half-way, as this has a ratcheting factor.
— Charles Edwards (@caprioleio) February 16, 2021
With this latest uptrend move, the open interest on the futures market is also growing fast, surpassing $17 billion in all exchanges, up from just over $11 billion earlier this month. On CME, it jumped to $2.26 billion from under $500 million in September last year.
With so many coins getting locked-up in derivatives contracts, the billions of dollars locked up as collateral/margin is one side of the futures market becoming HODLers, combined with the options markets, “as long as leveraged longs maintain a 20+% basis rate for carry trades, bitcoin will pump,” said analyst PlanB.
Bitcoin is up 67.75% YTD, outperforming the traditional investments like stocks, gold, and commodities massively, which according to Paolo Ardoino, CTO of Tether and crypto exchange Bitfinex, is Bitcoin on a nascent journey to “becoming an established asset class.”
And if one is focused on the short-term and worried about the volatility, PwC’s Hong Kong-based Global Crypto Leader Henri Arslanian only has one piece of advice — probably should avoid Bitcoin if one “wants to avoid sleepless nights.”
In the macro market, the US dollar fell to a three-week low on Tuesday, hitting 90.240, its lowest since Jan. 27, while the euro hit its highest since that date.
The greenback is trading near milestone lows against other currencies. “It’s a risk-on, weaker-dollar mood taking over,” said Bank of Singapore currency analyst Moh Siong Sim, as investors focus on a global bounce back in growth, inflation, and spending.
According to him, the investors weighed up whether the recovery would be US-led and if that could support the dollar. While the dollar has been the casualty, the global stocks have climbed for a dozen days straight amidst the growing expectations for higher inflation and central banks keeping rates low for a long time.
Risk-on continues … 75% of inflows now going into equities (most since late 2018); global, thematic & inflation-friendly assets continuing to see heightened interest @DataArbor pic.twitter.com/sDvE8sq27x
— Liz Ann Sonders (@LizAnnSonders) February 16, 2021
These expectations are further boosted by a jump in oil prices and driving US Treasury yields to their highest since March.