Investors in Fear and Awe As Bitcoin Nears All Time Highs

There’s something about the phrase ‘all-time-high’ that seems to evoke feelings of awe and fear in equal measure. 

Here at Market Watch, we’ve watched over the last few months as Bitcoin has tip-toed toward the mythical $20,000 mark. While there seems to be some confusion over what the actual all-time number is, there’s broad agreement that $20k is the mark everyone has in mind. 

Yesterday, Bitcoin was steaming towards the big 2-0, but has since pulled back as investors seem to be asking themselves if they should keep buying or wait to see how the market pans out. They’re right to be cautious. If we cast our minds back to that hallowed day on December 18 2017, no sooner had Bitcoin broken through $20k it began a pullback almost immediately. 

By December 21, it had dropped $4,000 as investors felt $20k was as good as they were gonna get and high-tailed it out of the markets with profits still in tack leaving those who bought at the top of the market with nothing but losses. 

So it’s understandable there’s unease, and looking at the technicals, there may be something in this superstition. The Relative Strength Index – a measure of whether an asset is overbought or oversold – has shown that Bitcoin has been overbought for 36 days straight. How long will it go on for? Who knows. What investors fear is that a harsh correction seems likely as the run has been so sustained. 

Others are looking to Bitcoin’s previous pattern of rises then pullbacks that happen in cycles. 

During the 2015-2017 bull market in Bitcoin $BTC, there were 9 significant corrections with the following averages:

37% decline from high to low
14 weeks from one ATH to the next ATH

Since the early Sep low there have been two 10% corrections pic.twitter.com/E1LbN7VDa5

— Peter Brandt (@PeterLBrandt) November 16, 2020

Investor Peter Brandt says there are more corrections to come based on historical cycles, others feel this will be the fifth correction before a push above $20k to around $21k. But like my mother always used to say, charts don’t predict prices, prices dictate charts. 

Global market cap continues to rise

While that’s all been going on, crypto global market cap is still sitting healthily above $500 billion, thanks to performances from XRP, Stellar and NEM. As we wrote yesterday, Ripple’s cryptocurrency has exploded in value after a combination of regulatory clarity and states looking to get into the digital currency market. That trend continued today with a 12% gain in the last 24 hours.

Stellar holders meanwhile are enjoying the warm glow that comes when your holdings grow by 40% in one day, thanks to the successful upgrade of the Stellar network. The good news has doubled XLM’s price over the last 48 hours and put it top of the leadership of coins with the biggest weekly gains. 

Dow Jones reaches historic milestone

While investors tread carefully in crypto, investors in the Dow Jones Industrial Average are trampling over each other to pour money into the market. 

The reason comes as the Dow crossed the 30,000 mark for the first time ever. That’s just four years after the index closed above 20,000 for the first time. For context, the gap between when the Dow hit 10,000 and 20,000 was 18 years. 

While many of you might be thinking why on earth that has happened when the world seems to be heading in to a long depression, the reason is simple: what happens to Joe Public does not reflect what happens to Joe Boardroom. I’ll explain more about this in another article, but for now stock markets are riding the waves of a vaccine around the corner, the Federal Reserve looking more likely to pump more money into the economy, and the expected rebound of the broader economy in 2021. 

At the same time, news that another 730,000 people are filing for unemployment benefits for the first time taking the unemployment rate to more than 6 million in the United States suggest the epidemic is far from over.

All of which cements the idea that while many lose jobs and access to the things we cherish, others are quietly getting wealthier. Enjoy your breakfast. 

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