Despite the uncertainty around the US elections along with a prospective lockdown by European countries, the value of bitcoin has seen continuous growth. At present, the value is approximately $15,000 which is the highest since January of 2018. Since March, the value of bitcoin has grown by $10,000 and it is expected that it would be able to match the value from December of 2017 when it was worth $19,460. Bitcoins, despite having minimum fundamental value, have seen a significant leap in the market along with Fang+ and equities stocks. A major reason for this growth is thought to be a rise in the number of injections of liquidity as countries around Europe prepare themselves to counter the COVID-19 pandemic with strict restrictions.
Bitcoin Value Increases with Liquidity Injections
With the rise of the economic crisis, countries are severely dependent on aid provided by the government as they prepare themselves to go into lockdown. This will only cause the growth of assets for the central banks, as we have seen from 2008 to earlier this year. The value of the assets for five major central banks has seen a growth of $1.25 trillion each year, amounting to a total of $15 trillion for the past twelve years. The current year has already seen the value rise by $7.5 trillion as of the banks’ immediate remedy for the economic crisis was to inject the market with more cash. This would only mean a rise in the value of bitcoins.
Bitcoin vs Yen
It has been noticed that the value of bitcoin has seen a steady growth along with the value of Yen in Japan. This pattern has been described as perplexing since it was seen that the value of equities which the bitcoin was earlier compared to, started to slack when the value of Yen started to grow. However, recently it is seen that the value of bitcoin has shown a progressive relationship with the value of Yen, and both are moving up. Studies have shown that Yen has always been looked at as a ‘counter-cyclical’ currency which loses its value under the stress of the market. It is predicted that Yen is moving towards a period where it will lose its value against the US dollar which means that the value of bitcoin will keep increasing.
The equity shockwave poses the biggest risk that could create a situation of sell-off for assets that have recently experienced a gradual rebound for the last six months. In the 4th quarter of 2018, bitcoin rates declined by 42%. In the 1st quarter of 2020, the decline was 2%. More printing may guarantee a crash of equity and result in better bitcoin rates. Quite a few bullish indicators have shown up on the signal of cryptocurrency. $15,605 is expected to be the resistance which is equivalent to Fibonacci’s 76.4%. The ‘Winter’ dip is likely to show a level of 20,000 really quickly.