Litecoin is one of the first open-source altcoins based on the original Bitcoin code. It was initially a strong competitor to the first cryptocurrency. However, as the cryptocurrency market expanded, Litecoin’s popularity gradually declined.
Bitcoin’s path to an all-time high – highlights of the week
On this week, bitcoin gradually took new heights: on December 16, the maximum mark of $20,800 was recorded on the Bitstamp exchange, and on December 17, bitcoin reached a new all-time high of $23,000. The levels of $20,000, $21,000 and $22,000 were overcome in a day. After a sharp increase in trading volumes, the price of bitcoin fell below $22,300 and stayed within $23,000 for another two days.
Analysts saw opportunities for Bitcoin to rise to $23,000. First, each drop below $18,000 encouraged investors to buy cryptocurrency. Another positive factor was the growth in the number of wallets with a balance of more than 1 BTC. Countries are looking into the possibility of switching to a digital currency, such as the e-krona in Sweden. Investment companies and pension funds invest in bitcoin and thus attract the attention of more conservative investors. Large investors prefer bitcoin over gold due to its declining returns.
The fact that the Fed promised to print $120 billion a month probably played a role in holding the $22,000 position. The Federal Reserve will buy government bonds and mortgage bonds until the desired employment and inflation targets are reached. The regulator somewhat improved its forecast for economic recovery: instead of the previously expected 4% annual economic growth, there will be 4.2%.
The reaction to the current events is very ambiguous. Canadian economist David Rosenberg saw this as a brewing bubble that was about to burst. There are only speculators on the market and quotes will soon fall.
There are those who consider the first cryptocurrency to be greatly undervalued. The director of the investment company, Scott Minerd, is confident that bitcoin should be worth about $400,000, given the current price level. The company has already invested in bitcoin during its course of $10,000. Analysts justify the potential multiple growth of the asset by its limited emission, as well as by its cost compared to gold.
Robert Kiyosaki has invested in bitcoin and believes that its price will rise due to the influx of institutional investors into the crypto market, as well as due to economic problems in the United States. The best-selling author of Rich Dad Poor Dad urged people to buy the first cryptocurrency before its price rises above $20,000, because in the future it will grow to $50,000. In his opinion, the current crisis will bring a “bright future” for bitcoin, precious metals and business.
In 2020, Bitcoin has demonstrated itself from the position of not only a profitable, but also a protective asset. It was actively growing against the backdrop of the coronavirus pandemic, the trade war between the US and China, and the armed conflict between the US and Iran, but the main reason for the strengthening, of course, can be considered the opposition of the inflationary dollar to the deflationary bitcoin. While the growing dollar issuance and near-zero Fed rates have practically leveled income from traditional financial instruments, the number of bitcoins is strictly limited to 21 million. MicroStrategy set the trend for bitcoin among institutional investors.
A little about the investments of large companies in cryptocurrencies:
- Ruffer Investment Company allocated 2.5% of its assets to insure against the risk of devaluation of world currencies. About $15.5 million has been allocated for bitcoin.
- Hedge fund One River Asset Management plans to increase its cryptocurrency holdings to $1 billion by early 2021. Without attracting general attention, so as not to cause an increase in the rate, the company bought $ 600 million in cryptocurrency in November, the purchase price was just under $ 16 thousand.
- Payments giant American Express has invested in the FalconX cryptocurrency trading platform, but the amount has not been disclosed.
- Paxos has raised $142 million from investors including PayPal Ventures. The company, which has applied for a nationwide trust bank license, will use the funds to develop infrastructure solutions and create new products.
Perhaps next year, bitcoin will grow even more aggressively, because there are prerequisites for this: the interest of institutional investors, the halving of miners' rewards, and other macroeconomic factors.
Read also: Large investments in bitcoin
