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Despite last week’s sharp pullback, bitcoin appears on track to post its highest monthly price close on record.
The number one cryptocurrency in terms of market value fell more than $ 3,000 to $ 16,242 on November 26, removing excess leverage from the derivatives market. The decline was short-lived and prices recovered more than 50% of the decline in the days that followed.
At the time of going to press, bitcoin is trading around $ 18,600 on major exchanges. That’s significantly higher than the maximum month-end price of around $ 13,880 seen on December 31, 2017.
The impending record close could be the harbinger of a stronger bull run, some observers say. “Whenever bitcoin closed above the previous monthly high, a 700% to 1000% uptrend followed,” crypto analyst Josh Rager tweeted earlier this month. Market Analyst Lark Davis shared a similar point of view Monday.
Bitcoin jumped nearly 27% in April 2017, reversing the previous monthly close of around $ 1,150 reached in November 2013. What followed was a strong rally to nearly $ 20,000 in December 2017. October 2013 .
The story repeats itself?
Analysts are optimistic about the current longevity of the bull market, with some pointing to $ 36,000 as a level to watch once the immediate psychological resistance to $ 20,000 is scaled up.
Factors believed to be responsible for the recent eight-week rally from $ 10,000 to $ 19,400, such as increased institutional participation, demand coverage due to the dollar sell off, a potential rise in inflation, and research yield alongside a record global negative yielding debt stock, should continue to generate gains in cryptocurrency.
Also read: Guggenheim Fund wants to invest up to nearly $ 500 million in Bitcoin via GBTC
“People say institutions will be getting into crypto for years, but it looks like this year they already are,” EQUOS noted in its daily bitcoin analysis email. “There is a lot more to join, of course, and the amount of funds as well as the enduring scarcity of bitcoin will be felt very strongly.”
According to analysts at JP Morgan, the additional gains depend mainly on continued institutional participation. If flows in the Grayscale Bitcoin Trust decline, the cryptocurrency could suffer if momentum traders continue to decline, analysts wrote in a Nov. 27 note, adding that a decrease in flows would weaken the argument that institutions have started to prefer bitcoin to gold for a long time. term investment. Grayscale is part of Digital Currency Group, the parent company of CoinDesk.
Bitcoin has surpassed gold by leaps and bounds this year. While the major cryptocurrency is up 158% year-to-date, gold is only up 17%.
The two assets have diverged this month, with bitcoin gaining more than 30% and gold falling 5.5%, its biggest monthly decline since November 2016, according to data source TradingView.
Meanwhile, global stocks are on track to seal a record month on expectations that potential coronavirus vaccines will lead to a rapid global economic recovery next year. Bitcoin needs to post gains against a backdrop of potential stock sell-off to strengthen its appeal as digital gold.
Also read: Crypto Long & Short: How Bitcoin Development Is Trending – And What Behind It
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