Santa Claus came and brought us many presents. Christmas saw big gains. But not just for Bitcoin. Wall Street celebrated with us amid widespread optimism, a product of incentives and the prospect of further stimulus over the next year. Celebrate the financial markets.
Merry Christmas and a Happy New Year!
Now let’s talk about the week’s most popular crypto news.
For some strange reason, many find no causality between the dollar’s liquidity and the rise in the price of bitcoin. The most important pair in this market is the dollar-bitcoin pair. In rhetoric, however, the dollar is portrayed as an opponent. In other words, Bitcoin is presented as an isolated and self-sufficient entity. “Checks match high levels.” I mean, for some analysts, it’s all a big coincidence. It seems that liquidity injections are not the cause of anything. And the rising price of assets (stocks, bitcoin) has nothing to do with the abundance of dollars in the economy.
In addition, things are presented in the tone of a conspiracy theory. That said, Bitcoin is rising because the economy is spiraling out of control due to mismanagement by the Federal Reserve. People are buying Bitcoin to escape the system crash. However, the use of the word “stimulus” is extremely illuminating. The impulses are aimed precisely at stimulating the economy with liquidity. It is not a coincidence. It is cause. And it’s not a happy coincidence. That was exactly what was wanted. Some always put together an entire novel on the subject because of ideological confusion. Wall Street, on the other hand, does not have these complexes. The appeal is celebrated on Wall Street. And everyone understands the impact of liquidity on asset prices. In other words, thanks to the monetary authorities for injecting liquidity. As simple as that.
The most radical libertarian bitcoiners condemn all injections of liquidity for advocating a tough monetary system. In such a system, assets are devalued and the currency rises. In a fiat currency system like ours, deflation is fought with injections of liquidity. This is how the economy grows. In other words, the BTC / dollar pair is made up of two parts. Bitcoin is essentially an exchange rate. The price of Bitcoin is rising in large part due to demand. Liquidity injections increase demand. Therefore, the price of Bitcoin can increase. It’s not just Bitcoin, though. The price of other financial assets also increases. I repeat: it is not a coincidence. The phenomenon is a little more complex. If we stop denying the subject just to promote an ideology, we will understand the process much better.
I am not aware of all legal aspects between a security and a cryptocurrency. However, You don’t have to be a legal genius to know XRP is a security. It’s not a secret to anyone The company Ripple has used XRP as a financing instrument. You created the currency. You sell the currency. And they take the money from those sales to fund their business. Sounds like courage to me. howeverSince this is an unspoken value, management does not feel the least bit morally responsible to XRP investors. Obviously there is no right to vote. But it’s not just that. The company does not feel responsible for the price. In fact, with its massive sales in the middle of a bear market, Ripple has always been the main cause of the XRP price debacle.
I speculate that because of the constant complaints from XRP investors and the company’s shameless and irresponsible comments on complaints from the XRP community, the SEC started Ripple. Now the SEC wants to cut off a head in the crypto world to display a trophy, and Ripple has made it very easy for them. There are several cryptos that I think are securities as well. But Ripple won the award because the current management abused its freedoms.
The inevitable is yet to come. The myth of the uncensored coin. Sooner or later this proposal will become law. If a company wants to operate legally in the United States, it must adhere to certain rules. AND These rules will certainly include censorship of “dirty bitcoins”. It won’t be the end of the world, because the banking system works according to similar rules and “dirty” money always finds its way into the system. However, it is the end of a myth. Gold is objectionable. Cash is objectionable. In fact, anything transferable can be confiscated, stolen, or censored. Denying it isn’t very helpful.
This is the importance of custody services. In a way, they are safe behavior. Especially for institutions that handle other people’s money. Properly registered intermediaries are essential. Ultimately, this news is good. This means maturity in the form of more credibility, reliability and legality. Which in turn means more investors.
Of course, the lack of liquidity in the Bitcoin market is largely responsible for its volatility. For one, Bitcoin is a relatively small market. But it’s smaller than we think because it’s a fragmented market. We speak of a market capitalization. However, unlike a company with a similar capitalization, the Bitcoin volume is distributed on many independent exchanges. Which means that high interest causes big hikes. And panic causes great losses.
Knowing whether a speculative asset (with no intrinsic value) is “overvalued” or not is certainly very difficult. Especially in times of cheap money. If you look at the gross domestic product of the United States and the world, everything seems overrated these days. The point is there is money and enthusiasm. As long as these two variables are present, Bitcoin will continue to rise. “Undervalued” and “Overrated” are very relative concepts and, in the case of Bitcoin, very subjective.
The price of gold hasn’t risen because governments aren’t buying. And they don’t buy because they are too busy weakening their currencies to create jobs. Once we have full employment and inflation starts to rise, governments will change their strategy and buy gold again.
The case of Bitcoin is completely different in this regard. Bitcoin is on the rise due to the speculative hype from institutional investors full of cheap money (thanks to the FED). Of course, Bitcoin now has the main role. Bitcoin and Wall Street. Gold is a different matter now.
The $ 20K is our current support. And the good news is that we’re pretty far from him. Every day that goes by is strength for this support. Defining a cap is much more difficult. From the roundness of the numbers, you could say that $ 30,000, $ 40,000, and $ 50,000 are the next targets. The tricky thing is to suggest a date. Because the current enthusiasm is so great that the hike exceeded our expectations. Many of us were expecting a long consolidation period of around $ 20,000 by the end of the year. And after breaking that barrier, at least a break of nearly $ 21,000. However, Bitcoin has wings and flew. Which means that anything can happen here.