After 10 wild years, Bitcoin has achieved a jaw-dropping increase in price by 62,500%. While the first and still biggest cryptocurrency has had its ups and downs, and despite the overall downtrend since last July, Bitcoin seems to have a lot more to offer than we have seen.
Square Crypto the Bitcoin division of Twitter founder Jack Dorsey, said, “This decade was bitcoin just warming up”. The optimistic assessment is not a shoot for the moon. Bitcoin was named the best investment of the decade by Bank of America. It is attracting more miners as hashrate steadily and strongly increased since Jan 2018.
Bitcoin has registered an increase of more than 20% in the fourth week on October. This surge went in tandem with the stock market after the US Federal Reserve has launched its Quantitative Easing (QE) program which has led the Fed’s balance sheet to explode by over $400 billion in about four months, according to newsbtc.com.
The US benchmark S&P 500 surged with Fed’s balance sheet expanding. Decline in balance sheet in the third week of November caused a plunge of the index and concurrently Bitcoin.
Nonetheless, S&P500 recorded its best performance since 2013, rising – along with Fed balance sheet – by 1%. Bitcoin, however, is on a decline ever since, failing to break the resistance level of $7,320. This suggests that the fresh injection of billions of dollars into the banking system did not enter the economy but rather entered the stock market, according to newsbtc.com.
Andrew Sheets, Morgan Stanley’s investment expert expects the central bank to end the QE in either April or May, which is seen to result in a stock market reversal. This would support projections of a correction upwards in Bitcoin performance.
“After that, markets may once again have to confront a world with limited trade progress and no further Fed support,” wrote Mr. Sheets.
The expected end of the program would coincide with the upcoming halving of Bitcoin reward, which fuelled mining activities just before it goes in effect. Investors’ appetite for risk-off assets goes up during the stock market reversal. And in light of the still unresolved trade war between the US and China, the picture is expectedly bright for Bitcoin long-term.