The month of November saw Bitcoin reach unexpected highs as it tested $20,000 levels with an average price of $18,000. At just under $20,000 the cryptocurrency hit its highest level in almost three years, since 2018. More institutional investors entered the markets, driving up activity. Near the end of the month, the price of the cryptocurrency slipped as investors tried to cash out on gains made. Shortly after, prices picked up to all-time highs of just under $20,000. As November draws to a close, the cryptocurrency is up by over 37% just this month. It has made gains that are 3x the stock markets’.
Bitcoin Hits All-Time High
Reasons have been thrown around as to how Bitcoin surged to heights reached in November. Greater investor confidence in cryptocurrency markets coupled with loss of faith in traditional markets acted as catalysts, causing a rush to markets by institutional investors.
Coronavirus has created a domino effect that involves the corrosion of traditional markets. Economists predict deeply unsettling economic hardships as many businesses continue to face rising costs which cannot be covered due to the drop in revenue caused by lockdowns.
Losses on stock markets increased as a result of coronavirus negatively impacting different regions, including the US where record numbers of cases were made on a daily basis, with the number of hospitalizations going up by 5%.
Guggenheim Partners for example looked to gain exposure to Bitcoin through Grayscale Bitcoin trust. The organization, (like a growing number of institutional investors in the Bitcoin market) has $275 billion in assets under management.
The investment firm could allocate over $500 million from Macro Opportunities fund to Grayscale’s GBTC. The fund has $5.3 billion in assets under management and a four-star rating based on risk-adjusted returns out of 270 Nontraditional Bond funds.
Ethereum Passes $500 for First Time Since 2018
Meanwhile, the price of Ethereum shot past $500 for the first time since 2018. The price of the cryptocurrency was $130 at the start of the year, rising to $547 in November, which presented a 284% gain in 2020. Several factors have been considered as the main reasons behind the increase in the price of the cryptocurrency:
- A movement of Bitcoin holders to Ethereum holding
- The general bullishness of the market.
- On-chain data showing an increasing number of whales are accumulating ETH.
- The conversion of previously held funds on UNISWAP back into ETH.
The cryptocurrency enjoyed a stellar performance over the month. Unfortunately the excitement was cut short as investors took profits, causing the cryptocurrency value to drop sharply by $2,000.
Predictions Made on the Digital Euro
Germany’s finance minister has called for quicker development of digital euro. Reports by Reuters reveal that finance minister Olaf Scholz wants the ECB to move faster with its decisions. The finance minister is also a known critic of cryptocurrency especially private digital currencies.
When speaking at an online conference on the future of payments in Europe, Scholz stated that most businesses and consumers in the region were beginning to demand for digital money.
“On the digital euro, I think we should work very hard. It is nothing where we should wait and see. [We] should be able to decide at any time that now we should do something with a digital euro.”
Recently, central bankers stated that it could take five years for a digital euro to be launched. Central bankers have agreed that even a proof of concept for a digital Euro is five years away. The European Central Bank won’t be making a decision on whether to pursue a digital euro until the middle of 2021. This appears to be a 360 from its estimate of January which was made by its president earlier this month.
The world is a complex place where it’s impossible to fully understand the details of every decision we make. The Bitcoin market is no different. Despite this fact and its inherent challenges, the impossible has been made possible. Welcome to the crypto revolution.