- Bitcoin surged Monday, moving past $12,000 to its highest point in over a year amid a broader risk-on rally in equity markets.
- Crypto peers including Bitcoin Cash, Litecoin, and Monero also gained, with the Bloomberg Galaxy Crypto Index rising to its highest since June 2019.
- Some Wall Street veterans have also taken a greater interest in the coin at the same time.
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Bitcoin surged Monday, moving past $12,000 to its highest point in over a year amid a broader risk-on rally in equity markets.
The world’s largest cryptocurrency soared as much as 5.3% to around $12,473 in New York, the highest since July 2019. Crypto peers including Bitcoin Cash, Litecoin, and Monero also gained, with the Bloomberg Galaxy Crypto Index rising to its highest since June 2019.
Bitcoin has regained its mojo after trading sideways for much of the summer, as a stock-market rally nudges the S&P 500 to near a new all-time high. And in an ultra-low rate environment, several analysts and crypto fans say Bitcoin—along with other assets like gold—could potentially act as an inflation hedge should prices start to rise.
“Inflation is currently low but real yields are across the board negative — negative real yields and the monetary stimulus/spending has driven investors to seek out inflation hedges such as gold,” said Seamus Donoghue, vice president of sales and business development at METACO. “Given its limited supply and growing institutional acceptance, Bitcoin will also likely benefit from the market seeking inflation hedges.”
Some Wall Street veterans have also taken a greater interest in the coin at the same time. Paul Tudor Jones made waves when he said he was buying Bitcoin amid central bank money-printing, while Michael Novogratz, founder of Galaxy Digital Holdings, told Bloomberg Television last week that about 25 percent of his net worth was tied up in the cryptocurrency.
The advance of bitcoin over $12,000 makes it one of this year’s best-performing asset classes. Since the end of December, it has gained about 70 percent and has risen more than 100 percent since mid-March, when it traded briefly below $4,000. This year’s gain nevertheless leaves it about 40 percent below the all-time peak of nearly $20,000 recorded in December 2017.
And technical indicators painted a positive outlook for the token: The surge of Bitcoin has taken it to the upper limits of its trading envelope indicator, a measure that smooths moving averages to map higher and lower limits. While a breach of this level typically indicates a reversion to the mean—and hence a decline in prices—technicals suggest that this time may be different. Bitcoin, with a reading of 69 on a 14-day Relative Strength Index (RSI), is not overbought, suggesting that more gains may be in the offing.
“The best analogue for today is perhaps the Great Depression,” said Nicholas Pelecanos, head of trading at NEM. “From the conclusion of this crisis to the years that followed, the price of gold more than doubled, rising with inflation, and it is this macroeconomic backdrop that makes Bitcoin so appealing to investors.”