The cryptocurrency market, which took off like a rocket at the end of 2017 and then collapsed and ruined those who believed in the blockchain revolution, is booming again.
For the first time in almost three years, the bitcoin rate exceeded the $ 18 thousand mark. According to Coimarketcap, which calculates the average quote for the 20 largest exchanges, its value reached $ 18,323.05. Bitcoin was only more expensive for three days in its entire history – from December 16 to December 19, 2017, when an absolute record was set at the peak of cryptomania – $ 19,876. But it is better to buy ltc to btc for example.
Since the beginning of November, bitcoin has soared by 33%, and compared to the lows of mid-March – by 374% and now exceeds the levels of the beginning of the year by 2.5 times. The possible reasons of such price rise could be:
- The influence of central banks
- The pandemic
- A change of power in the United States
The role of central banks
Central banks helped to awaken the crypto market from a 2-year hibernation, launching printing presses at an unprecedented capacity.
Since March, the US Federal Reserve, the European Central Bank, as well as the Bank of England, the Bank of Japan and the National Bank of Switzerland have pumped $ 5.5 trillion into the financial system by buying up assets and issuing loans, including at a zero rate.
A tsunami of free liquidity poured into the markets and inflated the quotes of risky assets – from commodities and EM currencies to stock indices of developed countries. As a result: despite the pandemic and the worst recession since the Great Depression in the global economy, the capitalization of global shares has soared by $ 5 trillion since March and for the first time in history exceeded the mark of 94 trillion.
Bitcoin got only a small part of the gigantic investment, but it was enough for the market capitalization to renew its historical record – $ 334 billion on November 18. Behind the bull market is the inflation hedging rate that has swept Wall Street after the Fed’s giant money-printing campaign.
Unlike fiat currencies, which are “printed” at an average rate of $ 1.5 billion per hour, the amount of bitcoins in circulation is capped at 21 million coins.
Central banks will continue to print money to patch holes in the falling economy, and this will give Bitcoin an additional boost, Galaxy Digital CEO and former Goldman Sachs partner Mike Novogratz is optimistic.
Power changes in the USA
A change of power in the United States could also be positive for cryptocurrencies. During the administration of Donald Trump, who bluntly said that he was “not a bitcoin fan,” the Securities and Exchange Commission (SEC) actively pressured the market, accusing companies of fraud and money laundering.
Investors who want to take profits or finally get out of losses can stop the Bitcoin rally. Many will sell at these levels, especially those who bought the top of the market in 2017-18.
But the correction was short-lived: the fall was bought out. “Until they stop buying cue ball for altcoins, this rally cannot be stopped,” says Antonov. – In theory, we should now consolidate in the range of 17,200-18,500 dollars for about three days. If the price goes up, then we are preparing to test the psychological level of $ 20,000. The resistance zone is between $ 0 500-22 600 dollars. The less liquidity, the higher the growth will be.”