Bitcoin Near $42,000 As Stocks Hit All-Time High

Avatar
Written by Dana Sanchez
bitcoin
Bitcoin Near $42,000 As Stocks Hit All-Time High. Photo by Karolina Grabowska from Pexels

Despite recent volatility, bitcoin hit a new all-time high of more than $41,000 on Friday, driven by coronavirus stimulus flooding markets and fears about inflation and currencies.

The cryptocurrency broke through $40,000 for the first time this week, then fell to less than $37,000 Thursday night before recovering as much as 10.4 percent to $41,793.73 on Friday. It traded as high as $41,973, according to data from Coin Metrics.

The rally was driven by massive amounts of money being pumped into economies by governments and central banks due to the coronavirus crisis, Market Insider reported.

On Thursday, the Dow Jones Industrial Average and S&P 500 closed above 31,000 and 3,800, respectively, for the first time. The Nasdaq also went above 13,000, its first time above that level.

A lack of investors interested in selling stocks is helping propel the stock market higher, CNBC’s Jim Cramer said. “People want to own stocks and there is not enough stock.”

Bitcoin has risen and crashed before, tanking from more than $19,000 in December 2017 to less than $4,000 a little more than a year later.

Bitcoin bulls say it’s different this time. Institutional investors and the super-rich are buying up the currency. “Investors continue to hop on the cryptocurrency train, which appears to be gaining more interest now that the U.S. economy is poised to deliver more stimulus in Biden’s first 100 days,” said Edward Moya, senior market analyst at currency firm Oanda.

Bitcoin accounts for about two-thirds of cryptocurrency market value, followed by ether at about 13 percent, according to CoinGecko data. It’s not just bitcoin. The total market value of cryptocurrencies climbed higher than $1 trillion for the first time last week, Bloomberg reported.

“Bitcoin continues to defy all expectations and doubters,” said Antoni Trenchev, co-founder and managing partner of crypto lender Nexo. “It’s leaving all other assets trailing in its wake like it’s done year-in-year-out for the past decade.”

Institutional investors see bitcoin as a potential safe-haven asset similar to gold, CNBC reported. It could hit $146,000 in the long term as it competes with gold as an “alternative” currency, JPMorgan strategists said recently.

Analysts have argued that out-of-control money-printing from governments around the world to tackle the coronavirus pandemic could lead to inflation. Bitcoin is gaining traction among investors as a hedge against inflation.

Crypto exchanges such as Binance and Coinbase have reported spikes in activity, driven, they said, from fear of missing out.

Listen to GHOGH with Jamarlin Martin | Episode 73: Jamarlin Martin Jamarlin makes the case for why this is a multi-factor rebellion vs. just protests about George Floyd. He discusses the Democratic Party’s sneaky relationship with the police in cities and states under Dem control, and why Joe Biden is a cop and the Steve Jobs of mass incarceration.

Not everyone agrees. Bank of America said in a note Tuesday that bitcoin was the “mother-of-all bubbles” comparable to the dotcom boom of the late ’90s and the U.S. housing bubble of the mid-2000s.

Stockbroker Peter Schiff and economist Nouriel Roubini view bitcoin as a speculative asset with no intrinsic value and a market bubble likely to burst, CNBC reported.

Bitcoin’s sharp overnight drop to less than $37,000 startled some commentators, Market Insider reported. “This could be a massive pump before a major selloff in the coming days. The rally we’ve seen is simply astonishing,” said Neil Wilson, chief market analyst at trading platform Markets.com. “I’d be mindful of a big crash, but shorting Bitcoin has consistently been a pain trade, like shorting Tesla.”

On Twitter, there was also some uneasiness.

“This won’t end well,” one person tweeted. “It’s illiquid. No one is getting rich here,” another posted. “The second people start selling in earnest, it’ll crash.”

Read more: 5 Things To Know About Bitcoin’s Risky Correlation With Big Tech, Risk Assets And The Stock Market