Bitcoin (BTC) price again surpassed $ 19,000 after a major weekend rally. Coincidentally, negative-yielding debt volume reached an all-time high of $ 18.4 trillion. In recent months, institutions and high net worth investors have increasingly invested in Bitcoin as an inflation protection. With this trend in mind, macro and market analysts identify record global debt as a catalyst for BTC.
Bitcoin is rising despite the dollar’s recovery
According to analyst Joseph Young, there are three basic factors that can have a direct impact on Bitcoin’s price in the short term. These; US incentives are the US Dollar Index (DXY) and negative-yielding global debt. If the US approves a new stimulus package in the near term, it could cause risky assets to recover, which could benefit BTC. But DXY is on the rise due to the optimism surrounding the vaccine news and the drop in election risk. When the DXY rises, alternative value storages like gold and Bitcoin run the risk of retraction when marketing assets against the dollar.
So if the dollar’s value rises, the value of Bitcoin and gold against the dollar will naturally decrease. Over the past few days, Bitcoin has been increasing despite the dollar’s recovery. This trend shows that positive macro factors such as growth in negative-yielding debt outweigh potential risks.
Holger Zschaepitz, a market analyst at Welt, stressed that institutional interest in Bitcoin has increased as a result of the growth of negative-yielding debt. He used the following expressions:
“AS THE GLOBAL VOLUME OF NEGATIVE RETURN DEBT REACHED A NEW RECORD OF 18.4 TRILLION DOLLARS AND AS CORPORATE INTEREST INCREASED, BITCOIN RISE AGAIN TO US $ 19,000. LIFE INSURANCE GIANT MASSMUTUAL HAS ALREADY ANNOUNCED THE INVESTMENT OF 100 MILLION DOLLARS IN BITCOIN FOR ITS GENERAL FUND. ”
According to Young, the increase in institutional Bitcoin demand is evident in various markets. For example, the open positions of the CME Bitcoin futures market surpassed Binance, making it the second largest market in the global market. Since the CME Bitcoin futures market is primarily designed for accredited and institutional investors, this shows that the trading activities of institutions in the Bitcoin market are growing.
According to the analyst, Bitcoin is at a critical point where it must surpass its all-time high of $ 20,000 to see a wider rally. From November to December, there were large sell orders of around $ 20,000, causing BTC to consistently reject its all-time high.
In the near term, the key to Bitcoin is to surpass $ 20,000 with strong volume and break the stacked sell-side pressure, analyst said.