November 2020 kicked off with much excitement. The US was in the middle of finalizing its presidential elections, Ethereum confirmed the release of the deposit contract, and perhaps the most interesting of all, Bitcoin crossed the $15,000 mark. Gaining over 50% compared to a month prior, this put Bitcoin in range of its all time high of $19,891 set back during the cryptocurrency boom of late 2017. As November’s Bitcoin rally surges BTC past $15,000, many are trying to figure out what’s behind it all.
Although triggered by a myriad of factors, many believe the November rally to be related to the US elections and a general improvement across the stock market. Wall Street has been betting on a Biden victory and celebrating the likelihood of his election, with the S&P 500 surging nearly 7% this week. This would be the best election week performance for the stock market since 1932.
Bitcoin Is Behaving More Like Stocks – And The Rally Is Likely Related To The US Elections
Investors on Wall Street refer to a divided government as “gridlock”, which they believe to be the ideal “Goldilocks solution” for markets. A mixed selection of policies benefiting investments in general are expected: Republican control of the US Senate would mean no chance of higher taxes on corporations and the wealthy. While stimulus packages would likely be reduced if Biden is elected President, allowing the Federal Reserve to keep interest rates low and continue the trend of high investment into the stock market.
Bitcoin, which has recently taken a solid position in the top 25 largest companies and assets by market cap, has properties which make it the ultimate portfolio asset of today:
- It’s had the best historical performance of any asset of this decade, or even just 2020.
- It’s got the hedging properties of gold, due to its limited supply.
- It’s seen as a technology play, similar to investing in tech startups and unicorns.
- It’s a highly liquid asset that you can purchase while maintaining anonymity.
- It’s seen as the currency counterplan against excessive “money-printing” by governments in response to the Covid 19 crisis.
Biden is also seen as a favourable supporter of Bitcoin, though more due to his lack of comments. As compared to Trump, who has stated on Twitter that he is “not a fan of Bitcoin and other cryptocurrencies, which are not money”. As November’s Bitcoin rally surges BTC past $15,000, let’s uncover what is behind it all.
Bitcoin Recently Received Massive Shoutouts And Industry Support From Two Of The Biggest Payments Companies, Paypal and Square
Although it’s becoming month-old news, Bitcoin and cryptocurrency news have been left out of the average joe’s vision in lieu of the heavily-publicized US elections and Covid 19’s rampage. Paypal and Square’s respective declarations to support cryptocurrency are likely to have trickled down to retail investors and the mainstream, bringing huge awareness to cryptocurrencies and Bitcoin in general.
With Paypal’s over 346 million active users and Square’s 24 million users, the combined news of both payment giants putting their user base behind cryptocurrencies is the fastest way to bring crypto into the hands of consumers. As well as huge liquidity and volume to the Bitcoin markets.
Square announced in its Q3 investor letter that the Cash App generated $1.63 billion of Bitcoin revenue and $32 million in Bitcoin gross profit during the third quarter of 2020. Signalling an increase of over 11x and 15x respectively – showing that retail interest in cryptocurrencies is growing.
USDT/Tether’s Increase In Market Capitalization
Tether’s market capitalization is often a growing indicator of market interest in cryptocurrencies, as it’s the largest stablecoin and also a gateway for fiat currencies to be converted into crypto. According to Tether’s official transparency data, the USDT market cap crossed $17 billion for the first time. Meaning that a purported $17 billion in total assets and equivalents are locked in Tether reserves to maintain the stablecoin’s currency peg.
In order for Tethers (USDT) to be issued, potential investors need to convert their USD or other fiat-based equivalents into the stablecoin by contacting Tether Limited and creating an account. Subsequently, they deposit fiat currencies with Tether and receive minted USDT in return, thus creating a new supply of USDT available for circulation and increasing the market capitalization.
It’s not just Tether stablecoins that have increased in number; other stablecoins have also seen increased deposits or minting, a trend that experts believe to be the start of a BTC surge.
The Covid 19 Situation Brings Questions About Monetary Policy
Months into the pandemic, the number of cases and deaths are increasing with no end in sight – bringing into question how nations and governments intend to deal with the economic fallout. With supply lines disrupted and a wave of fiscal stimulus made necessary, funds and reserves necessary to support continued stimulus are being sourced from currency manipulation. Through mechanisms like interest rate and federal reserve credit to banks, these avenues are detrimental to any fiat’s strength.
With the expectation that sovereign fiat currencies are going to see the fallout and impact of the Covid 19 crisis in time to come, investors of all demographics are flooding to Bitcoin. Known as “Digital Gold,” Bitcoin is being considered to be the potential hedge against a currency crisis. When governments print money to address economic problems, there is an increase in the amount of circulating currency – and a resulting devaluation in its value. Decentralized currencies such as Bitcoin often carry limited-supply properties similar to gold, making them resilient to devaluation.
November’s Bitcoin Rally Surges BTC Past $15,000
With so much going in its favor, it’s no wonder that Bitcoin has gone up almost 50% compared to its price just one month ago. With an international pandemic, a surge of money printing, a wild US presidential election, it’s no wonder that the cryptocurrency is surging. Find out more about the latest market trends at Oobit. Oobit is a financial service that makes buying and selling digital currency easy, simple and lets you use crypto with the same ease as traditional money.
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