Cryptocurrencies

Bitcoin (BTC) sinks into $ 23,000 and doesn’t stop anymore – Cryptocurrencies

BTC / USD has broken its glass ceiling. Figures 21,000, 22,000 and 23,000 $ were shattered and we are off to a good start to get rid of the $ 24,000 very soon. The Fed’s statements, the fall of the dollar and the unexpected migration of well-known whales have pushed Bitcoin (BTC) up 20% this week.

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Dollar Index (DXY)

Bitcoin and dollar have a very strong inverse correlation as both compete for the title of international reserve currency par excellence.

Bitcoin vs DOllar
Inverse correlation between the dollar and the Bitcoin. Bitcoin goes up when the dollar goes down and vice versa. / Source zerohedge

The Bitcoin therefore logically benefits from the descent into hell of its counterpart. The dollar is at its lowest since April 2018 against the euro. The EUR / USD exchange rate has indeed gone from 1.06 in March to 1.22 today. The dollar therefore depreciated 13% against the single currency and 9% against the Chinese yuan.

DOllar Index
Dollar Index

This decrease is linked to three factors that shouldn’t be fading anytime soon. The first is the chronically negative United States trade balance. The number of containers arriving at the 10 largest US ports jumped 25% in November alone. It’s simple, at the current rate, Uncle Sam imports twice as much as he exports …

The closure of restaurants, bars and other services has redirected consumption towards objects (generally made in China). Result: Trump administration’s efforts to reduce imports from China with tariff barriers are no longer being used. And who says trade deficit, says devaluation of the currency. And this even for the country with the exorbitant privilege of being able to attract the bulk of foreign savings to artificially support its exchange rate.

By the way, a recent poll found that 61% of restaurants and 35% of small businesses in America will not be able to pay December rent. Christmas is not going to be happy for independents this year …

Central Bank and Politics

The dollar also suffers from the American political comedia del arte. The US Senate (Republican majority) yesterday began hearings on electoral irregularities. The first hearing sparked between Senator Peters (Democrat) and Johnson, the chairman of the committee, who did not hesitate to say that the election was stolen.

This political upheaval rekindles the specter of the secession of certain states. And especially since the Supreme Court recently dismissed a complaint brought by Texas and 19 other states against the 4 states suspected of having rigged the election results (notably via the Dominion electronic voting system) .

And as if all this was not enough, the FED gave a layer yesterday in declaring that they want to raise the inflation rate above 2% (it is already well above 2% but shhh…). Jérôme Powell also promised to spin the printing press even faster if necessary. ($ 120 billion per month currently).

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The 10-year US rate remained low at 0.90%. Real rates are therefore still clearly negative. Even for 30-year loans. Negative real rates are Bitcoin’s best ally …

real US 10-year rate
10-year US “real” rate (i.e. after subtracting inflation) VS gold (the more real rates fall, the more gold rises) / Source: zerohedge

Are the whales changing sides?

The “whales” (traders holding large amounts of Bitcoins) decided to push higher, taking the opposite view of the cohorts of amateur traders who were probably expecting a “double top”.

The famous VIX whale “(50 cents)” stepped up to the plate yesterday reporting that its fund was now 2.5% Bitcoin.

We see Bitcoin as a small but powerful insurance policy against the continued devaluation of the world’s major currencies. Bitcoin helps diversify the company’s (much larger) investments in gold and inflation-linked bonds. It acts as a hedge against some of the monetary and market risks that accumulate. “50 cents

Moral of the story: the whales no longer seem to want to risk shorting Bitcoin now that an army of institutional investors are about to step in. This bodes very well and we covered it in our BTC / USD analysis yesterday.

And while gold apparently remains the investment of choice, note that even JP Morgan now believes that Bitcoin is overshadowing the barbaric relic. The renegade bank has also hinted that its long-term goal is around $ 130,000 for a Bitcoin. Ours on Thecointribune is rather around $ 500,000…

The performances of the two assets in recent months are clear:

gold vs btc
Bitcoin price vs Gold price per ounce / Source: zerohedge

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Bitcoin is closing the gap with the yellow metal weighing more than $ 10,000 billion against less than $ 400 billion for BTC. Good room for improvement in perspective … Bitcoin is currently showing an average increase of 200% per year since its inception … We remain bullish. The $ 23,000 in the crosshairs.

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