What a week we had last week. Are you exhausted? We’re back to bring you a little update on where Bitcoin’s at right now and also a rundown of the key events that simply must be in your diary this week. It’s all here in a super-casual, totally digestible 900 words. Let’s get to it!
Bitcoin and COVID-19
Covid-19 has wrought tremendous damage on almost every business on the planet. While there are a few industries that can cautiously say they haven’t felt the full-force (yet), banking certainly isn’t one of them. The world’s biggest banks have seen their valuations go through the floor, underscored by billionaire investor Warren Buffett cashing out his long-held bank stocks earlier this year.
Could the reeling banking sector open the door to a legitimate alternative? Is bitcoin’s time finally here?
Pre-pandemic, just a handful of investors that bitcoin may be worth a punt, sticking ca. 1% of your portfolio on it, just in case. Speculation was high, but so was the chance of volatility.
Fast forward to today, that volatility isn’t gone (by any means), yet many more investors are starting to believe that it might make sense to pair bitcoin with investments in gold, as safe-haven assets.
Part of the appeal is that bitcoin (like gold) has a fixed circulation, it’s finite, with only 21 million BTC that can ever be produced. Investors like that and are encouraged to use the commodity as a potential hedge against the inflation that may well come as a result of unprecedented coronavirus-induced stimulus measures.
Lockdowns, money-printing and stimulus measures have encouraged many bitcoin and cryptocurrency on-lookers. Crypto exchanges have reported sky-high trading volumes and surges of new users over recent months. Politicians are also starting to take notice. In August, US Congressman Tom Emmer said that he expects bitcoin to “get stronger” as the world emerges from the coronavirus crisis.
Bitcoin and the US Presidential Election
One welcome distraction from the pandemic over the last few months has been the US Presidential Election. If you didn’t catch it last week…
…it was a train wreck. But, did we really expect anything else?
It appears that the US is even more polarised and divided than we all thought, with a much closer than predicted finish. This has heaped uncertainty on an election that was already drenched in it, adding to the tsunami of uncertainty that we’re all feeling right now.
Enter bitcoin. The King of Crypto capitalised on this uncertainty, last week reaching a value of $16,000 before a slight correction.
BTC/USD, Sep-Nov 2020
Bitcoin’s value has skyrocketed 75% this year and, as usual, it’s pulling the rest of the market up with it.
Biden has never confirmed his personal position on bitcoin, but there is a feeling that his presidency may be a good thing for bitcoin. The gigantic stimulus package that he’s likely to put in place (tempered slightly by a Republican Senate) will mean that the US will need to start printing money again, devaluing the dollar, seeing it potentially hitting the 1.20 level vs the Euro. This will automatically push BTC into a stronger position and continue to encourage Wall Street firms to look at the crypto as a hedge.
Bitcoin: What to look out for
It’s not only the election or the steady trickle of investors looking to BTC as a safe-haven that’s pushing the value up.
Increased confidence in the commodity has been coming in from all over the shop. In recent months, JP Morgan, formerly BTCs greatest foe recently declared that it felt the digital currency was a worthy rival to gold as an “alternative” currency.
PayPal’s also announced that it would allow payments using the crypto-currency.
Finally, just last week the citizens of Wyoming elected the US’ first Bitcoin HODLer to the Senate. Cynthia Lummis (R) stated that she bought her first bitcoin in 2013 because she believes in the “economic power of scarcity and the potential for bitcoin to address some of the manipulations in the financial system.” Good for you, Cynthia!
Financial guru Max Keiser recently tweeted, “We have crossed the Rubicon in crypto adoption, and we’re at the start of a really big bull market there. You’re going to have every central bank issuing a digital currency within the next five years.”
If you want to know what to look out for, check the headlines, especially ones regarding eye-watering stimulus packages.
What’s on the trading agenda this week?
Here’s everything you need to keep track of this week.
Monday 9th November
No major events are planned.
Tuesday 10th November
● China will unveil its YoY inflation rate for October (CNY)
● The UK will announce its latest change in employment figures (GBP)
Wednesday 11th November
● New Zealand will update us on their interest rate (NZD)
Thursday 12th November
● GDP day in the UK, as we’re treated to the 3-month average, preliminary YoY growth rate for Q3 and September’s YoY GDP (GBP)
Friday 13th November
● The EU jumps on the GDP bandwagon, announcing its Q3 growth rate estimates, QoQ and YoY (EUR)
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The Contentworks team