$11,000 Bitcoin Just Happened: What’s Fueling the Massive Pump?
- Bitcoin briefly traded above $11,400 Monday, the highest in over a year.
- The largest cryptocurrency has made remarkable gains over the past 48 hours.
- The overall cryptocurrency market is now worth almost $330 billion.
Bitcoin’s price blew past $11,000 Monday for the first time since 2019, signaling the end of a multi-year downtrend and pointing to further gains over the horizon.
Bitcoin Making Waves
The bitcoin price peaked at $11,417.11 Monday evening, up more than $1,500 on the day. At the time of writing, the digital asset was sitting on a gain of 13% at $11,233, according to TradingView.
From a technical standpoint, bitcoin’s price far exceeds the 50-period and 200-period moving averages. The relative strength index on the hourly chart points to overbought conditions.
A similar observation is made on the daily chart:
At its current price point, bitcoin has a total market cap of nearly $205.2 billion. That accounts for 63.1% of the overall crypto market, which is presently worth almost $327 billion.
Is Bitcoin Becoming Digital Gold?
The rally caught the attention of mainstream media and casual traders who have grown accustomed to seeing bitcoin rejected in and around the $10,500 mark. After months of lateral moves, the largest cryptocurrency by market capitalization is finally breaking out.
Bitcoin is surging at a time when gold–the world’s most trusted haven asset– is trading at all-time highs against the U.S. dollar.
In both cases, investors appear to be hedging their bets against a shaky economic recovery–one that could dismantle the stock-market rally over the medium term.
While bitcoin still has a long way to go to prove it’s an established store of value like bullion, the digital currency continues to defy the odds with jaw-dropping returns.
Despite being written off in mainstream circles due to its volatility and regulatory scrutiny, bitcoin is up nearly 60% year-to-date. It remains the best-performing asset of the past decade.
If bitcoin’s proponents are correct, the digital currency is about to enter another bullish cycle–one that could end with 10x returns by the end of 2021. For that to happen, adoption will have to keep growing in the face of record central-bank stimulus, ballooning budget deficits, and worsening economic conditions.
Although central banks like to pretend inflation doesn’t exist, investors flocking bitcoin and gold are preparing for an alternate scenario where the value of their local currency depreciates rapidly.
No Need to FOMO Buy (Yet)
The inflation story has a lot of merits, according to Gavin Smith, the chief executive of crypto consortium Panxora.
Our view is that we still believe the markets are pulled on the one hand by the inflation hedge story driving bitcoin higher…
But that’s only one part of the story. Smith added:
… while at the same time the global economy is suffering a massive demand shock with the potential to drive bitcoin lower.
He believes bitcoin will end the year sharply lower before resuming its uptrend next year. Smith’s view still lines up with the four-year-cycle theorists (video above) who believe we will see a new, parabolic high by the end of 2021.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. The author owns bitcoin and other cryptocurrencies.
Last modified: July 28, 2020 12:50 AM UTC