Bitcoin Moves #37 — A weekly review of what’s moving Bitcoin and crypto markets.
On Saturday, per OKCoin market data, Bitcoin reached $60,000 for the first time in its history. That was almost exactly a year after March 12, 2020 — sometimes referred to as “Black Thursday” — when the cryptocurrency’s price crashed from $8,000 to under $4,000 in under 24 hours.
After reaching a high of $61,776 this Saturday, the BTC price dropped on Monday. It has stabilized back around $55,000 levels over the rest of this week — where the leading cryptocurrency was trading last week.
Concern around the effects of monetary inflation — most recently inflamed by the approval of a $1.9 trillion stimulus package in the United States — has pushed retail and institutional investors alike towards assets like Bitcoin.
- Bitcoin peaked above $60,000 for the first time this weekend.
- The cryptocurrency’s price stabilized around $55,000 for the rest of the week.
- Fear of inflation is partially driving the current bull run.
- The latest U.S. stimulus bill may be fueling retail investors’ involvement.
Key Bitcoin metrics
- Current BTC price: $54,900, down 3.4% compared to last week’s price of $56,189
- 7D low / high: $54,071 / $61,776
- Total market cap: $1.04 trillion, up 3.7% over last week
Fear of inflation may be driving Bitcoin’s bull run
On Wednesday, March 10, a U.S. Labor Department report revealed the U.S. Consumer Price Index (CPI), a traditional inflation metric, rose 0.4% in February. It has been up 1.7% over the last 12 months.
Earlier this month, Chairman of the Federal Reserve himself, Jerome Powell, mentioned that inflation would probably rise in the coming months but assured the phenomenon would remain temporary:
“If we do see what we believe is likely a transitory increase in inflation, where longer-term inflation expectations are broadly stable, I expect that we will be patient.”
Bank of America’s latest survey of 220 top fund managers, published this week, shows that they think “higher than expected inflation” is the biggest tail risk now, over COVID-19 or bond market concerns.
Since Bitcoin — among other so-called safe-haven assets, like gold — is more and more being seen as a hedge against inflation, these data may explain part of the cryptocurrency’s bullish trajectory this week.
Stimulus bill could fuel retail investors’ involvement
On Thursday, March 11, President Biden signed a $1.9 trillion coronavirus relief package into law. As the package is funded by an increase in the supply of USD, many analysts believe it will lead to sustained inflation and further nourish the safe-haven asset narrative mentioned above.
The bill includes direct payments of up to $1,400 to most Americans. Quickly after it was signed, on Saturday, the Bitcoin price rallied above $60,000 for the first time.
A report from JP Morgan argues that retail investors have collectively bought more BTC this quarter than institutional players have. Stimulus checks in the U.S. may increase this dynamic further.
JPMorgan launches crypto basket, with no crypto in it
Last week, filings from the U.S. SEC revealed that banking giant JPMorgan Chase is launching a new investment product called Cryptocurrency Exposure Basket. However, despite the naming, the investment vehicle does not actually allow clients to invest in cryptocurrencies. Rather, it provides exposure to companies that are “directly or indirectly related to cryptocurrencies or other digital assets.” These include many firms currently getting attention for their involvement in the crypto space, namely MicroStrategy, Square, PayPal and Riot Blockchain, as well as seven others.
The product will pay out based on the companies’ performances, minus a 1.5% fee, costs a minimum of $1,000 to invest, and will mature in May 2022.
If JPMorgan’s offering sounds indirect and antiquated, it’s because it is. To invest directly in top cryptocurrencies, you can create an account on OKCoin in a few minutes. You will be able to trade real crypto on your own terms: buy and sell when you want, for as little as you want and for as long as you want.