As per Bloomberg, after surging about 20% this week, Bitcoin broke past the $22,000 mark for the first time. Experts believe that more gains are expected for the world’s largest cryptocurrency. Bitcoin paced up as much as 4.6% to about $22,173 on Thursday, before shedding some value of the advance.
The rally in the digital coin is garnering mixed reactions, given Bitcoin’s history of boom and bust. Proponents argue the cryptocurrency is gaining from gold as a portfolio diversifier amid dollar weakness and potential inflationary pressure. Others see speculative fervour that will inevitably result in a bust similar to the meltdown three years ago after a furious Bitcoin rally.Yet there are signs that longer term investors like asset managers and family offices are in the limelight this time around, alongside trend-following quant funds.
People in the market are voicing mixed opinions on this new development:
The “price will now go from linear to parabolic” in part because retail investors have so far largely been “out of this rally,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets Pte in Singapore.
“The move above $20,000 has been coming and I’m probably a little surprised it didn’t come sooner,” said Craig Erlam, senior market analyst at Oanda Europe Ltd. “Fed stimulus may have given it an extra kick but, let’s face it, Bitcoin doesn’t need it. A break above $20,000 may bring the buzz and a strong end to the year.”
Bitcoin and Gold
“The lowest-ever Bitcoin annual volatility measure versus gold and the stock market near the end of 2020 may sustain the crypto’s performance advantage in 2021,” said Bloomberg Intelligence strategist Mike McGlone in a report. He predicts the price ratio of Bitcoin-to-gold to reach about 100, if history is repeated, from its current level of around 12.
If Bitcoin sustains its momentum, then “testing $36,000 will be the next real objective,” said Dan Gunsberg, CEO of Hxro, a crypto trading platform. But he also expressed that a significant break below $13,800 would signal a much weaker period.