Dec 16, · Exchange data shows exactly how the dollar price of bitcoin (BTC, +%) broke the key psychological $20, threshold in early trading hours Tuesday and kept on . Dec 18, · Bitcoin bulls hold firm control of the market as we end this troubled year and we look at some of the reasons BTC-USD rallies can continue in Market capitalization (often shortened to market cap) is the approximate total value of a cryptocurrency, typically shown in US dollars. The market cap of a cryptocurrency is calculated by multiplying the number of coins or tokens in existence by its current price.
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Industry participants said that a number of factors — from supportive central bank monetary policy to increased interest from institutional investors — has factored into the bitcoin rally. Meanwhile, stock markets, which also saw sharp drops in March, have recovered.
The U. Federal Reserve has announced a number of unprecedented measures to help cushion the economic blow from the coronavirus outbreak. Other central banks around the world, including the European Central Bank ECB , have unveiled their own stimulus packages. Central bank policies are seen as supportive of risk assets like stocks.
Part of the rise in bitcoin's price since the March low has been anticipation of a technical event known as "halving. Bitcoin is not issued by a centralized authority like fiat currencies are. That is why it is often called a "decentralized" cryptocurrency. In the world of bitcoin, so-called miners with specialized high-powered computers compete with each other to solve complex math problems to validate bitcoin transactions.
Whoever "wins" this race gets rewarded in newly minted bitcoin. This "mining" activity happens in blocks, which is essentially a group of transactions joined into one. Currently, these miners receive The rewards are halved every few years to keep a lid on inflation. On May 12, the reward per miner will be cut in half again, to 6. The effect is that the supply of bitcoin coming onto the market is reduced. Dibb said there are other factors at play as well, including more institutional money flowing into bitcoin.
This has, in turn, led to bitcoin's narrative as a 'store of value' to gain added traction amongst investors who are seeking to hedge against volatility in traditional markets. Bitcoin has often been compared to gold as a so-called safe haven asset during turbulent times for other risky assets like stock markets.
In the chart above, we can see that bitcoin bulls are ending the year with a firm control of the market. For tech investors focused on U. But are investors really aware of these diverging market correlations? In many cases, prominent criticisms of the cryptocurrency space seem to suggest that broad-based demand within the market at large still remains relatively weak.
Unfortunately, these criticisms have persisted in spite of the fact that bitcoin valuations have recently reached new record levels and this assessment of market sentiment has the potential to weigh on BTC-USD valuations in cases where this key cryptocurrency pair reached overbought levels. Obviously, cryptocurrency investors could engage in a lengthy debate about why this may or may not be an accurate description of the broader macroeconomic environment.
Additionally, those criticisms seem to indicate that the investors that are actually buying bitcoin and other cryptocurrency assets are part of a unique demographic that is somehow separate and apart from the market majority. In other words, the recent buying activity that has generated short-term gains for BTC-USD traders might be limited in scope because this enthusiasm might never translate into broad-based adoption that is accepted by a majority of global consumers.
However, we have encountered recent examples of major corporate names that are entering into the space and we believe that this activity will help support market valuations in BTC-USD over the next few quarters. According to analysts at JPMorgan , however, these perceptions might now be on the brink of a major change and evidence of this perceived reversal can be found in the latest round of bitcoin investments initiated by Massachusetts Mutual Life Insurance.
Ultimately, this represents a rising rate of bitcoin adoption that could impact public sentiment in ways that are highly bullish for the asset's underlying market valuation.
For these reasons, this recent story from Massachusetts Mutual should not be viewed as insignificant because these are the types of the corporate decisions that could open the floodgates for those seeking bitcoin adoption going forward. In our view, these are also the types of stories that could set cryptocurrency assets on a very firm path toward extended gains in Essentially, recent trends in the U.
Dollar Index have shown a massive reversal after hitting spike highs in March and a continued deterioration in this key benchmark for global markets could easily create an additional factor that boosts sentiment with respect to the major cryptocurrencies. In our view, the recent surge in M2 money supply in the United States is likely to work as the most important fundamental factor influencing valuations in the greenback over the next few quarters. As more money is pumped into the market, we expect the U.
Recent comments from Fed Chair Jerome Powell seem to support this dovish outlook and this is likely to remain the case for an extended period of time.