HomeBitcoin Close to All-Time Highs, So what?

Bitcoin Close to All-Time Highs, So what?

Another day, another Bitcoin article – this has been the theme for the last month or so. Since Bitcoin broke higher from the $10,000 support, scenarios about how it will reach $100,000 and more circulated with the speed of light. 

However, the rise of Bitcoin – and other cryptocurrencies, as a matter of fact – this Fall, to a nearly all-time high, did not create the fuzz it used to. For instance, during Bitcoin’s run to all-time highs in 2017, the number of searches on Google on the subject skyrocketed. Unsurprisingly, the moment that happened, Bitcoin collapsed.

It lost over 75% of its value in a short period, and its chart looked like a classic bubble. Fast forward three years and Bitcoin is close to all-time highs again. However, this time the Google searches on related terms are nowhere near the highs. Does Bitcoin have a chance to move much higher now that no one is looking?

Tremendous Rally in 2020

Bitcoin had a remarkably interesting year so far. It moved in a positive correlation with risk during the initial stages of the pandemic.

More precisely, Bitcoin fell in March when the stock markets around the world fell. Gold fell, too, so the two assets did NOT provide a hedge against market risk.

Next, the stock markets recovered. So did gold – and Bitcoin. The simplistic explanation was inflation. I mean, if the Fed floods the world with dollars, everything should go up against it – stocks, gold, Bitcoin. They did.

However, at some point, gold stopped rallying. Also, stocks stopped advancing the way they did and only put some marginal new highs. Yet, Bitcoin continued to rally.

At the time of writing this article, Bitcoin is down 12% from its highs. It trades at $16,500 after less than 24h ago it was trading above $19,000.

This is the major problem with Bitcoin. It is too volatile to be a store of value. It may reach that level in the future, but at this point, no one is happy with a 12% decline in a day, even if the intent is to remain invested for a long time.

From March to November, Bitcoin was up more than 300% – a tremendous performance. However, it still feels like it did not mature enough as the volatility makes it difficult to be accepted by long-term institutional investors.

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