The Bitcoin (BTC) rate was shot through the $19,400 Dutch time on Tuesday afternoon. It is the highest level of the cryptomint for three years. The previous record is just over $20,000 on 17 December 2017 according to market researcher Coinmarketcap.
Bitcoin +160% by 2020
Bitcoin is the best performing asset of 2020 with a return of over 160%. With this, the cryptomint beats the stock indices S&P 500, AEX, real estate and gold.
This year, the world was faced with the Corona virus, and the Federal Reserve and the European Central Bank opened the money tap.
However, the real economy is not benefiting from this. The average income level has barely risen to none, while governments are blowing bubbles in other assets such as the housing market.
In 2020, this trend continued. Under the Trump government, the US national debt increased by 33%. Since March, abundant amounts of dollars and euros have flowed to the financial markets.
As a result, the prices of shares and gold rose sharply. Think, for example, of the Tesla share.
Bitcoin showed several moments of strong correlation with equities and gold during the year, but has let this go in recent weeks. As a result, Bitcoin seems to be drawing the longest straw and benefiting most from the current impasse in the world market.
In May year, the ‚flow‘ of new Bitcoin halved from 1,800 to 900 ‚fresh‘ Bitcoin per day. As a result, much less Bitcoin is added every day.
Weapon against inflation
In the meantime, on the contrary, demand has risen sharply. Companies fear the ghost of inflation that hangs over the market and put some of their savings in Bitcoin.
Examples include MicroStrategy, an American ICT company. But also Square, larger than Goldman Sachs, sold $1.6 billion worth of Bitcoin to its Cash App customers in the third quarter of this year.
Research shows that listed companies now hold over 842,000 Bitcoin on their balance sheets. That is over 16 billion dollars at the current price.
However, it was PayPal with between 200 and 300 million active accounts that caused a considerable ripple in the market. The fact is that they are obliged by licence to cover every Bitcoin Compass offered with genuine Bitcoin. This leads to a shortage, because Square and PayPal buy more Bitcoin than they buy every day.
So the payment giant has become a buyer on the world market. This is a great pull factor for this disintegrating asset class, all the more so because there is a growing group of savers (hodlers) who hold on to their BTC, and they don’t sell their Bitcoin either.
According to CEO Dan Schulman, Bitcoin has more distinguishing features, as he stated this week: „I see Bitcoin as a means of payment“.
Next week it should become clear whether the market is ready for a new historical record. With a market value of USD 353 billion, this asset is small in proportion. The total market cap, for example, is 3% of the total market cap of gold.
Correction of the table?
Analysts anticipated a correction phase earlier this week. Precisely because the futures market is quite overheated with contracts speculating on an even higher rate.
Analyst John van Meer also saw enough bearish patterns on the timeframes this morning.
The Dutch analyst Bitcoin Jack is also anticipating a fall as soon as the scenario below unfolds.