Bitcoin’s record rally continues to smash new all time highs

Bitcoin hit a new all-time high of $US37,300 tonight even as the American political system descended into chaos after protesters stormed the Capitol buildings.

Earlier today the stock market rallied after Democrats were confirmed to take the Senate following dual election victories in Georgia. The Dow Jones Industrial Average rose to an all-time high on Wednesday. Investors were buoyed by the prospects of new fiscal stimulus in the near term. The 30-Dow climbed 438 points. The S&P 500 was up 0.6% while the Nasdaq closed lower by 0.6%.

However, it was Bitcoin, the honey badger of money that once again showed gravity-defying strength continuing its record run to break US$37,000 for the first time. With the prospect of $2000 stimulus payments back on the table, the gains may be set to continue.

Source: BNC

Other indicators also suggest that the bull run is far from over. Bitcoin’s hash rate is at an all-time high. The estimated seven-day average Bitcoin hash rate has reached 148 exahashes per second. This number represents the amount of computing power that global Bitcoin miners are directing towards the Bitcoin network. An increase in both the Bitcoin price and hash rate is a bullish indicator.

Source: Blockchain.com

With capital inflows into Bitcoin showing no signs of slowing down, one of the reasons for Bitcoin’s sustained price increase is a lack of available float on exchanges and OTC desks. According to a report by Glassnode, only around 4.2 million BTC (22% of issued coins) are in circulation by active traders. The remaining 18.6 million BTC (78% of issued coins) are held by holders, investors, and institutions.

Glassnode CTO Rafael Schultze-Kraft said “It’s worth looking at how this trend has evolved in the past. Looking at the change of supply in each category from the beginning of the year, we can see a clear upwards trend of Bitcoin illiquidity. This indicates that the present bull market is driven by a staggering amount of illiquidity.”

This illiquidity is another sign of bullish momentum as a wave of new buyers are competing to secure a BTC position for the long term. This inevitably puts upwards pressure on the BTC price.

Source: Willy Woo

Bitcoin analyst Willy Woo suggests the “latest buying has been driven by participants who are long term holders. This is bullish, this rally is far from done. This is the change in Bitcoin’s supply moving between participants. When more coins move from liquid (active traders) to the illiquid (HODLers), it’s bullish.”

Finally, after appearing almost flat since the bull run of 2017, Google Trends search data for “Bitcoin” has exploded at the start of 2021. A rise in Google searches is an indication of new interest from retail buyers.

Following today’s events in the U.S., it is clear that the volatility of 2020 is set to continue in 2021. How long Bitcoin can continue to rally remains unclear. However, if there is one asset that is best placed to perform well against an increasingly volatile macro-environment, it is Bitcoin.