Prime mover: do you call it a record? Bitcoin’s November earnings are 3 times that of the stock market

Bitcoin was higher, appearing for a new run to an all-time high near $ 20,000. The largest cryptocurrency slid 1.3% in the seven days through Sunday, scoring a seven-week winning streak.

As November draws to a close, bitcoin has grown 37% this month alone, its best performance since May 2019.

“Even if the market has some foam, bitcoin’s fundamentals look solid,” blockchain research firm Chainalysis wrote in a report.

In traditional markets, European equities were stable and US stock futures indicated a bearish opening as investors became cautious after large gains in recent weeks spurred developments in the coronavirus vaccine.

The market moves

From a broad 2020 perspective, it is hardly news that bitcoin once again outperformed the world’s major asset classes in November.

During a month when a closely monitored global equities indicator, the MSCI World Index, rose 13% for its best-ever performance, bitcoin jumped nearly three times faster.

But this has happened very recently, with the cryptocurrency so far up 163% in 2020, or about 13x the 13% YTD gains for US equities. Gold rose 17% in 2020.

Yet, in hindsight, November could prove to be a crucial month for bitcoin for a few key reasons.

First, in a theme that First Mover has repeatedly hammered into this year, many large institutional investors are followers of packs, driven by previous performance results, and often ape other investors who have previously performed well. The latest announcement of institutional adoption – possibly the the buzzwords most in vogue these days among cryptocurrency analysts – came over the weekend from the $ 233 billion investment firm Guggenheim. November’s outperformance, coupled with a series of breathless stocks in mainstream financial media trumpeting bitcoin’s approach to record highs, is likely to attract even larger investors. Platinum, which was suddenly in vogue due to its potential demand for clean energy technologies, also grew only 14% in November.

Second, bitcoin wiped out some market crashes that, in other years, could have triggered a massive sell-off. There have been massive outflows from one of the largest cryptocurrency exchanges, OKEx, following the lifting of an extended hold on withdrawals. There was news that the U.S. Treasury Department might consider new onerous cryptocurrency regulations during President Donald Trump’s last few months in office. There was data showing that large cryptocurrency investors known as “whales” could move their bitcoins into exchanges, preparing to take profits and potentially flooding the market. Sure, bitcoin rocked last week. But for a market that has given so much this year, it took very little.

Third, the key 2020 investment narrative for bitcoin – that cryptocurrency can act as a hedge against inflation and trillion dollar stimulus packages from governments and central banks, similar to gold – doesn’t seem to be going anywhere. . President-elect Joe Biden says he will appoint former Federal Reserve Chairman Janet Yellen as Secretary of the Treasury, and as a private sector commentator he has supported more stimulus from the government. But with US lawmakers potentially locked down, the Fed may have to continue buying government bonds to stimulate markets; US Treasury bond yields have remained close to all-time lows, assuming this is likely to be the case.

Bitcoin has had a very good year. In retrospect, November could prove to be the most crucial month.

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Bitcoin price returns for November, compared to other global assets.
Source: TradingView / CoinDesk

Bitcoin clock

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Bitcoin weekly price chart, with technical indicator signaling “upside fatigue”.
Source: TradingView / CoinDesk

Bitcoin looks set to post its highest monthly close ever.

The cryptocurrency is currently trading around $ 18,600 on major exchanges. It is significantly higher than the end-of-month peak price of around $ 13,880 observed on December 31, 2017.

According to some observers, the impending close of the record could be a harbinger of a stronger bull run. “Whenever bitcoin closed above its previous all-time monthly high, an upward trend of 700% to 1,000% followed,” cryptocurrency analyst Josh Rager tweeted at the beginning of the month.

Bitcoin jumped nearly 27% in April 2017, surpassing the previous monthly close record of around $ 1,150 reached in November 2013. What followed was a strong rally to nearly $ 20,000 by December 2017. Strong rallies were observed after bitcoin set record monthly closing prices in January and October 2013.

The recent seven-week rally started around $ 10,000 and prices rose as high as $ 19,400 before last week’s correction. The long-awaited break above $ 20,000 may take some time as signs of bullish fatigue have now emerged on the weekly chart. The cryptocurrency carved out a large Doji candle last week, indicating buyer’s indecision or exhaustion after a notable rally. Therefore, a deeper pullback to levels below Thursday’s low of $ 16,242 cannot be ruled out.

“Previous foam in momentum traders’ positioning has been erased to a large extent,” analysts at JPMorgan said in a November 27 note, as the addition of momentum signals will continue to deteriorate unless bitcoin recovers quickly and momentum traders have room to further propagate the decline.

The # 1 cryptocurrency by market value dropped over $ 3,000 to $ 16,242 on November 26, eliminating excess leverage from the derivatives market. The decline was short-lived and prices recovered more than 50% of the decline in the following days.

Read more: Despite 12% crashes, Bitcoin looks set to hit its highest monthly close ever

What’s new

  • Basis Cash launch brings defunct stablecoin into the DeFi era (CoinDesk)
  • DeFi YearnFinance protocol merges with Cover market hedging provider (CoinDesk)
  • Industry Professionals Evaluate Rumors US Treasury Department May Consider New Regulations for Self-Hosted Wallets (CoinDesk)
  • Ripple is cashing in on a third of its stake in MoneyGram (CoinDesk)
  • Unpublished email timestamps from Satoshi Nakamoto ignite a new debate on the position of the inventor of Bitcoin (CoinDesk)
  • Libra, backed by Facebook, aims for January to launch dollar-linked stablecoin (Financial Times)
  • The Guggenheim fund proposes in the deposit to invest up to $ 500 million in bitcoin through the Grayscale Trust (CoinDesk) (NOTE: Grayscale is a unit of Digital Currency Group, parent company of CoinDesk)
  • Saudi Arabia and UAE Bilateral Digital Currency Experiment Shows Benefits of Distributed Ledgers, Central Banks Says (CoinDesk)
  • Curve Finance votes to distribute nearly $ 3 million in accrued commissions to holders of CRV governance tokens (CoinDesk)
  • Russian bankers tell central bank official they would gladly serve as intermediaries for a digital ruble, but fear that a scenario where the Bank of Russia provides direct individual accounts could trigger bank runs (CoinDesk)
  • New York Times Reveals Claims of “Racist or Discriminatory” Treatment of Employees of Cryptocurrency Exchange Coinbase (CoinDesk)

Analogues

The latest news on traditional economics and finance

  • The world is binging in debt and record-breaking records, with $ 9.7T issued in 2020 by companies and governments (WSJ)
  • Black Friday failed for many stores, best for online (WSJ)
  • US Congress Tackles Spending, Stimulus, and Shelton Deadlines (Bloomberg)
  • China expands programs that allow residents to buy foreign stocks, as the yuan gains in global foreign exchange markets (South China Morning Post)
  • Investors Pile In Risky ETFs During Wild Market Rally (WSJ)
  • The US economic downturn is hitting state and local government budgets and 2021 could be worse (WSJ)
  • From San Francisco to Washington, public transit agencies are cutting services, staffing as coronavirus (and remote working) keeps passenger numbers down (WSJ)
  • Tokyo stock exchange chief executive is expected to step down after an outage in October saw the platform go offline for the whole day (Reuters)
  • JPMorgan wants to capitalize on growth from Asia’s second largest asset market by doubling the number of private bankers serving Chinese clients from Singapore in two years (Bloomberg)
  • Measures to recover the signal of expansion of Chinese economic activity (WSJ)

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