Bitcoin [BTC] has continued to trade above $11,500 with traders turning more bullish than ever. Analysts are attributing the US-China Trade war as a prominent reason. Nevertheless, apart from the rising tension, there are a couple of internal factors which seems to be influencing the rise.
Brian Kelly, the Founder & CEO of BKCM LLC, noted
The narrative of ‘Why’ you own Bitcoin is starting to unfold before our eyes. We’re seeing that happening with the currency wars.
The rise in the support from financial institutions in the US has positively affected Bitcoin’s price. Moreover, China, who had held a negative stance towards cryptocurrencies until now has started to change its perception.
“We have been seeing, from my vantage point, a softening in the Chinese stance towards crypto,”
The first-ever court case in China recognizing Bitcoin as a ‘virtual asset’ marked the legal stand of holding Bitcoins in the country. Moreover, the Chinese Central banks also released an info-graphic on Bitcoin and cryptocurrency investment. The info-graphic seems to take a neutral, if not a bullish stand on Bitcoin.
Moreover, Bitcoin [BTC] has recently exhibited an inverse but a strong correlation with the Chinese Yuan. The rise in Bitcoin has usually been at the wake of a drop in Yuan. Tom Lee, the Co-founder of Funstrat, analyzed other correlations of Bitcoin and shift in market perception. He said,
The last couple of years, it has been really correlated to the dollar… This year it has delinked from the dollar, as the dollar is been strong and Bitcoin is up. It has gone negative on correlation with the equity market and positively correlated to gold. I think Bitcoin is proving itself to be a hedge against global risk.
Last but not least, both Brian Kelly and Tom Lee seemed to agree that Bitcoin could reach new highs driven by these factors.
Furthermore, Brian Kelly also noted that Bitcoin is currently behaving like a ‘reflexive asset.’ The price going up does not necessarily increase risk, as it motivates more people to buy than sell as a ‘store of value.’ Nevertheless, while the positive outlook was maintained, timelines on the rise were not suggested.
When do you think Bitcoin would break above its All-Time Highs? Please share your views with us.