Don’t look now, but bitcoin is making a fast approach on $9,000–signaling a new wave of FOMO buying among retail investors.
The largest cryptocurrency by market cap is now up more than 22% year-to-date, overtaking gold as the best-performing asset of 2020.
After being rangebound for much of April, bitcoin’s price has been on a steady upward path since last Wednesday. In the span of a week, the cryptocurrency has appreciated 26.5%, or nearly $2,000, according to CoinMarketCap data.
On Wednesday, the price peaked at $8,970, following a 13% gain. At current values, bitcoin’s market capitalization stands at $162.1 billion, accounting for 65% of the overall crypto universe.
Bitcoin’s spot volume on verified exchanges has surged to $3.1 billion in the last 24 hours. (“Fake” volumes would have you believe that nearly $60 billion worth of BTC traded hands in the previous 24 hours.)
The status of bitcoin as a global reserve currency came under fire in late February when the king of cryptocurrencies sold off almost in lockstep with the broader equities market. While the epic flash crash of February and March spared no asset (not even gold), bitcoin’s performance appeared dangerously correlated with stocks–something its proponents vehemently deny.
Gold also suffered a historic flash crash in late February, but this was mainly due to a liquidity event that forced traders to cover losses in other markets. The yellow metal quickly recovered en route to new seven-year highs.
But not bitcoin. The cryptocurrency had been wallowing at sub-$8,000 levels since the second week of March. Even with the latest recovery, BTC remains well below pre-liquidity crisis levels.
Still, that hasn’t stopped bitcoin from reclaiming its rightful place as the top-performing major of 2020. (Before the coronavirus-fueled flash crash, bitcoin jostled with Tesla as 2020’s best-performing asset.)
About seven hours ago, Pantera Capital’s Dan Morehead tweeted:
Some analysts have attributed the rally to a gradual influx of new investors, while others have pointed to retail FOMO (fear of missing out). Then there are those who proclaim the May 2020 halving event as the biggest driver of adoption.
But not everyone believes bitcoin’s recovery is tied to good fundamentals. Bitcoin may have extended its rally on assurances that the Federal Reserve will do whatever it takes to prop up a sagging economy.
The central bank’s pledge to keep money flowing into capital markets was reiterated Wednesday at the conclusion of the Federal Open Market Committee (FOMC) meeting in Washington.
If bitcoin is as strongly correlated with stocks as it was at the start of the coronacrisis, the latest rally is no reason for bitcoin bulls to cheer. (Nobody is saying bitcoin is correlated with stocks, but its performance in recent months does show stronger correlation.)
Disclaimer: The opinions expressed in this article reflect the author’s opinion and should not be considered investment advice from CCN.com. The author holds bitcoin.
Last modified: April 30, 2020 1:21 PM UTC