Bitcoin Launches in US After Record Rally – Business News

It was by all accounts a difficult year. But for Bitcoin, 2020 was a wonderful time.

The cryptocurrency has tripled, surpassing $ 20,000 for the first time as it hit record after record. The diehards hailed it as an inflation hedge in an era of unprecedentedly large central bank. Wall Street veterans from Paul Tudor Jones to Stanley Druckenmiller blessed it as an alternative asset and contributed to the rally. And companies like MicroStrategy Inc. and Square Inc. has shifted cash reserves in crypto in search of better returns than interest rates yielding almost zero.

While none of the reasons for buying Bitcoin comport with its origins is an alternative to fiat currencies, it does point to a growing acceptance of crypto as a proprietary asset class. And this gives the zealous community another round of victory in their pursuit of legitimacy.

“What’s happening now – and it’s happening faster than anyone could ever imagine – is that Bitcoin is moving from a rand esoteric asset to the mainstream,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “When it comes to mainstream, there is just so much money along the sidelines that will have to come in and establish a position that will leave me very strong for 2021.”

But because Bitcoin is attracting more attention, it could also gain further scrutiny from regulators, says Guy Hirsch, managing director for the US on eToro online trading platform. “Despite this meteoric rise, there are some thunderstorms on the horizon,” he said, including the consequences of, among other things, last-minute actions by the outgoing Trump administration.

Fans say the pandemic-ridden year was in some ways the perfect environment for the digital currency. Warnings about unbridled money pressure by global central banks – some of which have begun to reveal their own interests in digital assets – have raised fears of eventual inflation, while interest rates have fallen to lower levels. This has prompted some investors to pursue yields and hedging with cryptocurrencies, pushing the $ 24,000 price to around $ 7,200 in early January.

Predicting where it is going is an experience. Many left the coin for dead after the rally in 2017, which led to an accident the following year, sometimes called a “crypto winter”. But it rose by more than 200% in 2020, and many investors believe it could continue next year. According to a Deutsche Bank survey, the majority thought it would end higher in 2021, with 41% of participants predicting a target between $ 20,000 and $ 49,999 and 12%, according to Jim Reid, a strategist at the firm.

What else is on the radar? For Meltem Demirors, strategic head of digital asset manager CoinShares, there are concerns about what the incoming Joe Biden administration could mean for the crypto-space.

“Overall, I think we had challenges with the Dems – they prefer more regulation, more oversight,” Demirors said. “I’m a little worried about the direction things are heading,” especially about antitrust lawsuits and an erosion in Internet privacy. However, the industry has a number of allies, Demirors said, including Patrick McHenry of North Carolina and Warren Davidson of Ohio, who she said advocated for the preservation of consumers’ financial privacy.

Many strategies and investors say the industry would see more investigation going forward and stricter regulation with Biden in the White House.

Much will, of course, depend on who holds the key positions within the administration. Janet Yellen, who has been nominated to serve as treasury secretary in Biden’s government, has warned investors over the past few years about Bitcoin, saying it is a ‘highly speculative asset’ and ‘not a stable value store’. A representative did not immediately return a request for comment.

Meanwhile, Bloomberg News reported that Gary Gensler could be nominated to replace Jay Clayton at the U.S. Securities and Exchange Commission. Clayton’s exit from the regulator is welcome news for crypto fans who have seen him act hard over the years, suing to stop initial currency offers, reject applications for Bitcoin exchange-traded funds and file a lawsuit against Ripple Labs Inc. , who served as chairman of the Commodity Futures Trading Commission during the Obama administration, is a senior adviser to the MIT Media Lab Digital Currency Initiative and teaches about blockchain technology and digital currencies.

According to Hirsch of eToro, there is uncertainty about how the Biden administration will approach cryptocurrencies, but the appointments are notable “because Yellen is famously anti-crypto and Gensler is known as pro-crypto.”

‘Without knowing how authorities will make a stronger effort to regulate cryptocurrencies in the coming years, it is difficult for markets to continue to grow at the same rate as now, especially if regulations, as some fear, are aimed at limit innovation rather than promote it. is issued, ”Hirsch said. “Again, clarity is the name of the game.”