Bitcoin has soared by more than 10% in the past two days, overtaking the $15,000 mark for the first time since January 2018, with experts speculating it could reach $20,000 soon, back to its 2017 peak.
The crypto currency is now becoming the world’s favorite safe haven.
"It was important for bitcoin to overcome the resistance area near $12,000," Alex Kuptsikevich, FxPro senior financial analyst, told Forbes.
The fear factor plays into this, of course, and we saw it in 2016 presidential elections, too. Then, the price of bitcoin was around $709 before it climbed towards $20,000.
But this time around there’s history to learn from, in addition sentiment--as well as a series of positive moves towards bitcoin, including PayPal’s big tie-in to the crypto.
PayPal customers will now be able to use cryptocurrencies to pay merchants beginning in early 2021.
Last month, PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, the first approved entity for a conditional Bitlicense in New York State.
By many accounts, PayPal’s move makes crypto “useful”--to the mainstream.
With prices riding above $15,600 at the time of writing, it’s hard to argue--as many do--that it will end up crashing into oblivion.
Andy Edstrom of California-based WESCAP Group recently said that one bitcoin will be worth $400,000 by 2030.
Germany’s largest lender, Deutsche Bank, suggests that cryptocurrencies could replace cash payments within the next decade.
Bitcoin has witnessed strong growth this year during the COVID-19 pandemic, with the Bitcoin more than doubling in value year-to-date.
And mainstream companies keep jumping on board.
In addition to the PayPal tie-in, payment company Square is the latest big company to invest in cryptocurrency. In late October, the company said it bought 4,709 bitcoins, worth approximately $50 million, which represents about 1% of Square’s total assets.
In August, business analytics firm MicroStrategy announced that it had become the first Nasdaq-listed company to adopt bitcoin as a primary treasury reserve asset - using as much as $250 million of its cash pile to invest in bitcoin. Following month, the company purchased 16,796 additional bitcoins at an aggregate purchase price of $175 million.
Coindesk says that the spot market for bitcoin has taken over now, noting that “significant price movements typically trigger large-scale liquisitions in characteristically overleveraged cryptocurrency futures markets”.
But the market isn’t seeing that right now, says Coindesk. Instead, the spot market is in the driver’s seat and we’re not seeing large-scale liquidations of people taking bitcoin profit.
And now, it’s getting phenomenally easier to buy bitcoin, so the mainstream is piling it. That could mean this rally has staying power if it’s the spot market--and not the whales--making things happen.
By Tom Kool for Safehaven.com
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