“Obscenely Bullish,” Not Just Fast Money, But Real Money Buying Bitcoin Now
After a bout of volatility in the markets last week, investors and traders are back for another round.
Monday saw them coming back with an appetite for risk assets and technology as Bitcoin led its peers, climbing just shy of $19,600, “as the bullishness in this particular market has resumed with a vengeance,” wrote analyst Mati Greenspan in his daily newsletter Quantum Economics. He said,
“It's incredible to see this much bullish action, even as we consolidate near the top.”
“It should be noted that the level of $20,000, which is commonly equated with bitcoin's all-time high, represents a massive psychological barrier and could likely require a lot of force to breakthrough.”
Meanwhile, in the stock market, FAANG stocks flew yesterday, but the S&P 500 is down 1.5% from the all-time high hit just a week back.
Even though they're at all time highs, investor outlook for the stock market is more bullish then ever.
Yet… the stimulus continues to flow. pic.twitter.com/2x2lUJM6wt
— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) December 15, 2020
Gold had a bad start of the week as it again dropped to $1,820, but today with a bullish push, the precious metal is around $1,845.
The dollar meanwhile continues to hover near two-year lows, under 91, as riskier currencies got a boost from the possibility of a US coronavirus relief plan and progress on COVD-19 vaccines “that has created a very strong risk-on sentiment.” Ed Moya, the senior market analyst at foreign exchange broker OANDA, said,
“I think you’re going to have some optimism that maybe we’re going to be able to get some relief push through.”
“And that is going to be very negative for the dollar.”
In the week ahead, market participants will be focusing on the US Federal Reserve meeting on Wednesday and the Bank of England’s on Thursday.
“Gradually then suddenly”
Struggling around $19,000, Bitcoin has yet to breach $20,000, despite having hit a new all-time high earlier this month.
But still, the digital asset continues to outperform the traditional markets, beating the traditional instruments by a wide margin. In 2020, to date, BTC has recorded an upside of 167% compared to bullion’s 20%, SPX’s 12.90%, Nasdaq 100’s 36%, and WTI’s -26% year-to-date performance. Michael Saylor, CEO of MicroStrategy, which has bet more than a billion dollars on Bitcoin noted,
“Gradually then suddenly, thoughtful investors will realize that the riskiest decision they can make is to ignore or under-allocate to Bitcoin. A decision to invest 1% in BTC is a decision to underperform, increase risk, or destroy wealth in the other 99% of the portfolio.”
Asset Class Returns over the Last 10 Years…
— Charlie Bilello (@charliebilello) December 14, 2020
With bonds and cash providing not much value in an investment portfolio, the market realizes that Bitcoin has a place in a diversified portfolio.
This is why Bitcoin has been attracting institutional market participants' attention, but it is not just fast money like hedge funds, CTAs anymore. Real money that includes pension funds, insurance companies, mutual funds, and endowments are also rushing in. Economist and trader Alex Kruger said,
“Unlike fast money, real money is usually long-only and has extended holding periods. Fast money may dump on you. Real money may do so indirectly as it rebalances exposure.”
“Real money buying bitcoin is obscenely bullish.”