08.12.2020 – Special Report. Resting after the summit storm: BTC has recently reached an all-time high. And has since then been stuck just below the high. Is there more to come? Or is that it now? A legitimate question. Especially since the Swiss central bank, with a successful test of digital money, has shot just about to the high Bitcoin.
High of 2017 cracked
According to CoinDesk, BTC reached an intraday high of around $19,835 last Monday. The previous high was 19,783 dollars on 18 December 2017. After BTC had plunged to $3,867 in March, a nice catch-up. What do we notice? First of all it’s December again – apparently the Millenials are shopping just before Christmas.
Retail purchases at Christmas
The “Wall Street Journal” also noted that young retail customers, who as digital natives are not afraid of e-cash, are probably behind the recent increase: to date, there have been 11.9 million transfers to personal e-wallets with a value of less than 1,000 dollars this year. According to Chainanalysis, a software company that specialises in cryptocurrency transactions, in 2017 there were around 9.1 million transfers. According to this, there are more participants in the rally. So if we have only seen a kind of Christmas shopping frenzy by retail traders with small wallets, then a correction is imminent.
Even the professionals get in
However, Smart Money has also recently bought money. Guggenheim Partners, for example, pumped around $5.3 billion into the Macro Opportunities Fund to get it involved with the Grayscale Bitcoin Trust – and the latter buys Bitcoin exclusively. Legendary investors such as Paul Tudor Jones and Stan Druckenmiller also committed themselves to the e-foreign currency. And Square – the other company of Twitter boss Jack Dorsey – announced in October the purchase of 4,709 Bitcoins with a value of around 50 million dollars. Incidentally, Dorsey already speculated two years ago that Bitcoin would become the world’s only currency within a decade.
Mega bull MicroStrategy
And then there is the software company MicroStrategy, which shocked the market back in August when it announced the purchase of Bitcoin worth $250 million as a hedge against inflation. On Friday the company followed suit and announced the further purchase of BTC for $50 million. After months of rallying, MicroStrategy is now sitting on just over 41,000 BTC worth $475 million.
Push through the fear of inflation
Indeed, the argument of inflation is currently the main driver for BTC. New global corona stimuli are on the horizon, plus endless quantitative easing from central banks. And that would already be the biggest bullish factor for the e-foreign currency – investors rightly fear a devaluation of the dollar, euro, rouble, yuan and co. and move their money into the safe haven of Bitcoin. However, this could ultimately be the end for cyber-warfare. Because whoever controls the currency controls the economy and the labour market: the masters of money pump capital into the economy through low interest rates and quantitative easing. And thus boost the real estate and construction sectors, for example. The flight into uncontrollable parallel currencies disrupts these mechanisms.
Kiss of Death at an all-time high
Almost exactly at the Bitcoin high, we received a message from the Bank for International Settlements (BIS) in Basel last week: According to this message, all major central banks in the world are currently investigating digital money and its function. The BIS is the “bank of central banks”, it reported on a first successful attempt in Switzerland to use digital central bank money to settle securities transactions between banks. In a telephone conference, former ECB Director Benoît Cœuré – who heads the BIS innovation centre responsible for e-foreign currencies – spoke of a breakthrough. He said that this was an attempt at interbank transactions, not digital money for consumers. Digital central bank money in securities trading and settlement is technically and legally feasible, according to the BIS and the Swiss National Bank. The Swiss National Bank has not yet decided whether it will actually issue digital central bank money.
Headwind for Libra
Soon things will get serious in the cybercurrencies market. The BIS, SNB as well as the European Central Bank and other central banks are responding to Bitcoin, but also to Facebook’s Libra project, with their field tests. And the resistance of the money empire is having an effect, as the “Frankfurter Allgemeine Zeitung” noted: In the meantime, the Libra had to be slimmed down so much that it was renamed “Diem”. According to its own statements, Facebook had to deal with the concerns of central banks and supervisory authorities around the world, who feared for their state monopoly on money.
And that is exactly what BTC may one day flourish: the end of monetary policy. Please do not ignore this fact: Those who invest in Bitcoin and suddenly the central banks ban competing e-foreign currencies will have to expect heavy losses. We keep an eye on the matter – and wish you successful trades and investments!
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