The current Bitcoin price rise looks promising to say the least. Within a brief moment, Bitcoin (BTC) burst through the $13,000 mark and even jumped above $13,500. At the time of writing this article on October 28, 2020, the Bitcoin price is sitting at $13,664.69 (+3.92%). In the last 30 days, the Bitcoin price has increased by almost +28%.
These numbers are impressive, but we could be merely at the beginning of a massive Bitcoin bull run to end 2020, let’s see why. Here are 5 fundamental reasons that could launch a year end Bitcoin rally.
1. COVID cases in the EU and US at record highs
U.S. stocks had their most damaging day in four weeks over the dual increase of record coronavirus cases and political stalemate in regarding a new economic stimulus package. The United States, Russia, France, and many other EU countries are displaying a record number of daily corona virus cases. This tidal surge of cases over large portions of the Northern Hemisphere, pushed some countries to force new restraints. Still, Bitcoin is sitting near $14,000, the highest since January 2018. The Bitcoin price has been on a growing trajectory for many months.
After the Covid-19 pandemic hit the world, the crypto market’s correlation with the stock market seemed clear. The S&P500, NASDAQ, and other indices were driving the trend for Bitcoin and the majority of other cryptocurrencies. This does not seem to be the case in recent weeks anymore. The important thing to remember here is that anything that affects the price of the USD also invariably influences the price of gold and Bitcoin. This is because investors look at these two assets as safe havens whenever the USD looks shaky. This pandemic has drawn lot of attention on Bitcoin as a safe haven, with some investors choosing it as an asset of choice besides or even instead of gold.
2. No US agreement on a Stimulus
On October the 27th, the US Senate decided to adjourn until after the US presidential elections with no agreement reached on a stimulus bill.
As mentioned earlier, the corona virus has stiffened its hold across much of the U.S. with record new daily COVID cases, weakening the legacy markets. The fact that any new stimulus would have to await the election, added to the most dangerous selloff in U.S. stocks since early September. This further pushes people towards safe haven investments such as Bitcoin and gold.
3. Bitcoin Price Decoupling From The Stock Market
Lately, the stock market has encountered a visible sell-off, driven by concerns that the market has yet to recover, as there appears to be no end to the corona virus pandemic. Meanwhile, the Bitcoin price had a major breakout above $12,000 on October 20 accompanied by a breakout over $13,000 and even $13,800 for a short time.
Similarly, the crypto market has been inversely connected with the Dollar Index, indicating that when the U.S. dollar augmented power against the Euro, cryptos would go down. Recently, due to multi-million corporate investments like Stone Ridge, Square or MicroStrategy, Bitcoin and the crypto market appear to be leaving the stock market behind. And speaking of corporate investments…
4. Institutional Adoption Of Bitcoin
At least 4% of #Bitcoin (probably more) is now locked up in long term holdings by institutional investors.— Bill Barhydt (@billbarhydt) October 13, 2020
If you don’t get what’s about to happen then you’re just not paying attention.
Why does this matter? Read on… (1/6)
A rising amount of Bitcoin is now being held by companies. For instance, Stone Ridge Asset Management admitted that it had pulled up 10,000 BTC, signifying one percent of its assets under administration. Also, in July, MicroStrategy adopted Bitcoin as primary treasury reserve asset. After this, just a few days ago, PayPal entered the cryptocurrency market, cofirming that it will soon enable its 300 million+ users to buy, sell, and use Bitcoin along with LTC, BCH, and ETH. Bitcoin’s supply is limited at 21 million, barely enough for every Paypal user to own 0.07 each!
Additionally, news of JPMorgan launching its own stablecoin, the JPMCoin, came to light yesterday.
5. 2020 US Election Results
The 2020 U.S. presidential election is seen by many as one of the most crucial in recent history. An economic stimulus is likely to come no matter who wins, supporting the Bitcoin’s attractiveness as a fence against inflation. The negative response to the outcome in established markets will boost the attractiveness of safe haven assets such as gold and Bitcoin.
Both Trump and Biden have remained reasonably unbiased and diplomatic on the subject of cryptocurrencies, but with enhanced consciousness encircling global CBDCs and institutional inflow into Bitcoin, the two competitors will be pushed into taking a more direct approach in their next term. As uncertainty increases, Bitcoin’s attractiveness will increase.