Cryptocurrencies

Bitcoin (BTC) chomping at the bit under the $ 20,000 glass ceiling – Cryptocurrencies

Joe Biden surrounds himself with a Bitcoin (BTC) pessimist

The $ 20,000 continues to taunt Bitcoin (BTC), without going for several weeks. This glass ceiling should not take long to give way, however, as Bitcoin seems to have finally won over large investors. The fall of the dollar is also auspicious.

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Dollar Index

The greenback remains heavy on forex. The Dollar Index is just above 90, its lowest since April 2018. A little longer and we will be at our lowest for 7 years. This is how the Dollar Index looks, not over one year, as we usually show, but since 1980.

DXY dollar 1980-2020
Dollar Index

We can see clearly cycles that, when they get going, are one-sided for years. In fact, many big banks, like Goldman Sachs, sees the international reserve currency decline over the next few years.

A recent survey conducted by CityBank shows that selling the greenback is the most popular trade lately, as is buying Bitcoin and multinational tech companies (the architects of the Great Reset).

The fall of the dollar is obviously linked to the confinement which left millions of people behind and forced the government to borrow ($ 2,220 billion) having notably made it possible to pay a check for $ 1,200 for each American. However, the latter will be absent from this second stimulus package of new $ 900 billion approved on Monday. All kinds of reasons are put forward but we think the Republicans refuse to pay it in the form of “Digital Dollar”.

In all, the Fed’s balance sheet swelled by 71% in 2020 to reach more than 7 trillion… All this money is then multiplied by a factor of sometimes up to 30 for the largest banks via the famous fractional reserve system …

FED balance sheet
The Fed’s balance sheet swelled by 71% in 2020

In short, the more the dollar falls, especially against the yuan (which is not included in the Dollar Index basket) and more Bitcoin is likely to continue its forward march.

Big fish and the US government

The main reason behind the reluctance of bulls on BTC / USD is undoubtedly rumors of murderous Bitcoin legislation. It is rumored, for example, that the American government would like regulate private wallets. This is physically impossible but you never know … The CEO of Coinbase has stepped up to the plate on the subject, which has cast a little chill on Bitcoin. That being said, Bitcoin will / cannot be banned anyway. The genius is out of its bottle as the Anglosaxons say.

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Large institutional investors have understood this and are increasingly jostling at the gate. JP Morgan recently stated that the Bitcoin market capitalization could increase by 600 billion (compared to around 350 billion currently) if Western pension and insurance funds allocate just 1% of their portfolio to Bitcoin. Which would propel BTC towards $ 60,000.

We learned this week that the MutualMass fund, an American fund with 5 clients, has decided to invest 100 million in Bitcoin. The CEO of MicroStrategy has him squarely raised $ 650 million in the markets to transform them immediately into Bitcoin. The largest fund invested in Bitcoin (Grayscale), told it to have reached $ 13 billion in management.

Lately, big investment bank Morgan Stanley has crossed the rubicond. The firm’s global strategist discussed in the Financial Times that the Bitcoin may one day replace the dollar as an international reserve currency. The giant fund ($ 3.3 trillion) Fidelity, which has been mining Bitcoin since 2016, also gave it a helping hand by declaring that many customers deposit their Bitcoin with them.

If we had been told a year ago …

Watch out for whales

The number of addresses containing Bitcoin continues to grow, proving that the evolution of the value of Bitcoin is not based on wind.

Number of Bitcoin addresses with a scale
Number of Bitcoin addresses with a balance (50 million, which represents 0.64% of the world population)

Ki Young Ju, CEO of CryptoQuant, said on Dec. 15 that he was reducing his position due to the increase in deposits of “whales” on the exchanges. However, in the past, large inflows of Bitcoins on the exchanges from a handful of addresses have very often coincided with massive sales:

BTC correlation and net bitcoin flows on exchanges
Correlation between net Bitcoin flows on exchanges and the price of Bitcoin
(the graph is not up to date)

This is currently the case so beware:

98% of deposits come from the TOP 10 depositaries. Whales massively deposit Bitcoins on exchanges. I expect a decline or eradication movements over the next few days.

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However, if we break the $ 20,000 threshold, it is also possible that this time around we will see bullish speculation taking advantage of the euphoria. We remain bullish on BTC / USD. Dips are buying opportunities.

  • BTC / USD weekly chart (one candle = one week)
BTC / USD
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