Bitcoin hits $27,700 – Reasons why the price reached a new all-time high

Bitcoin investors could enjoy an additional Christmas present this year. Since December 24, the BTC price has risen from around $24,200 to $27,700 at times. This continues the meteoric rise in the price over the past two weeks since BTC broke through the psychologically important all-time high at $20,000 on December 16.

The Christmas boom saw Bitcoin overtake both Visa and Walmart to become the 11th largest asset by market capitalization (excluding gold, silver, etc.), according to Asset Dash. At the time of writing, BTC was trading near its new all-time high at $27,620.

Bitcoin’s market capitalization was thus $510 billion, and it now ranks behind Berkshire Hathaway B ($531 billion) and Taiwan Semiconductor Mfg ($550 billion) in Asset Dash’s ranking. Apple ranks first with $2,243 billion, ahead of Microsoft with $1,684 billion.

Reasons for Bitcoin’s Christmas rally

Blockstream CEO Adam Back expressed his opinion via Twitter that the price increase had nothing to do with institutions, but came from small investors. The Bitcoin maximalist and pioneer reasoned that institutions do not trade over the Christmas holidays. So possibly retail FOMO could be a reason:

So $25k* on 25th, three new ATHs $24.7, $24.8 and $25k in a day. You think institutions did that? On Christmas day? Retail did it – only people near a keyboard.

On the other hand, there are numerous analysts who attribute the Bitcoin bull run to new institutional investors entering the market. After MicroStrategy and Square led the way, numerous institutions have followed suit. Most recently, Anthony Scaramucci’s Skybridge Capital ($25 million in December), MassMutual ($100 million in December), and Guggenheim (up to 10% of its $5 billion macro fund – late November) made their investment in Bitcoin public.

In addition, global monetary policy and, in particular, the U.S. Federal Reserve are also likely to play a role. Central banks around the world are printing vast amounts of money to ward off the economic impact of the pandemic.

In mid-December, the Federal Reserve decided to continue buying bonds at a rate of at least $120 billion per month, while U.S. President Donald Trump is currently pushing Congress to pass an even larger aid package to allow for bigger stimulus checks. The narrative of Bitcoin as a hedge against the devaluation of fiat money has therefore never been more relevant, and at the same time, more recognized.

However, a third factor that is more often forgotten may have been this year’s halving. Bitcoin production was cut to 6.25 BTC per block, laying the groundwork for the liquidity crisis that many experts cite. As CNF has reported several times in recent weeks, individual institutions such as Grayscale or PayPal are already buying close to or even more than the newly produced Bitcoin on a daily average.

Sourse: crypto-news-flash.com

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