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Bitcoin prices tested their highest levels on Tuesday as investors continue to hoard money in the world’s most popular cryptocurrency amid slow gains for gold and a weaker US dollar.
Bitcoin prices have more than doubled in the past six months, compared to a 4.7% gain for spot bullion prices and modest outflows for the ETFS on gold, thanks to the push towards alternatives to benchmark equity indices as central bank and government stimulus erode the value of fiat currencies. The US dollar index, which follows the greenback against a basket of its global currency counterparts, fell 7.5% over the same period the Federal Reserve’s balance sheet grew to more than $ 7 trillion, thanks in part to its myriad efforts to support the coronavirus-damaged economy.
Analysts also noted that the rise in cryptocurrency has been fueled not only by retail investors and traditional digital coin speculators, but also by a concerted shift of money from institutional funds.
The Grayscale Bitcoin Trust (GBTC) , the largest trusted cryptocurrency provider and a benchmark for monitoring institutional investor activity has increased 134% over the past six months and has assets of over $ 8.4 billion.
“Bitcoin’s ongoing rally is challenging our previous assessment that overbought positions by momentum traders such as CTAs could potentially trigger short-term profit-taking or medium return flows,” noted analysts at JPMorgan. a recent report led by strategist Nikolaos Panigirtzoglou.
“The inability to see the return-to-average flows that have been unleashed in recent weeks may reflect the minor role of momentum traders such as (commodity trading advisors) in bitcoin trading compared to their role in more asset classes. traditional, such as gold and other raw materials “.
“The rise of the grayscale suggests that demand for bitcoin is not only driven by the younger cohorts of retail investors, namely millennials, but also by institutional investors such as family offices and asset managers,” added JPMorgan.
Bitcoin prices on the Bitstamp platform were marked 4.5% higher in Monday’s deal, suggesting a transaction price of $ 19,408.00 each, a move that extends Bitcoin’s 2020 gain to around 170%. and sets it by just 2% from the all-time high of $ 19,783.06 reached in December 2017.
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