Bitcoin continues to break new records to settle at $23,000

Mohammed Abdelkhalik
December 17, 2020

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Bitcoin Market Overview

Bitcoin is leading the headlines again with its stunning rise after it broke through the $23,000 level strongly and does not seem to be stopping, making it among the best performing assets for this year, with its gains exceeding 220%.

Bitcoin rose by more than 19% during the past 24 hours, to reach the level of $ 23,600, and over the past seven days, it has achieved gains of about 27%.

It is not uncommon for a one-year leading asset to lose its leadership position the following year, so some market watchers believe that more is on the way for Bitcoin, and it is likely to see another record year in 2021 as prices are expected to rise 50% and possibly double with their momentum.

Institutional investment is a strong supporter of Bitcoin

Over the course of this year, the institutional investment in the leading cryptocurrency was huge, which greatly contributed to the increase in the value of Bitcoin, as bitcoin trading platforms and major investors were interested in looking for ways to protect against the risk of future inflation, which rose under the influence of the Coronavirus pandemic that changed our lives in many ways and resulted in Economic crisis, at the same time cryptocurrencies were able to withstand the turmoil.

Bitcoin to USD chart - 18th December 2020

Bitcoin is sometimes referred to as “digital gold”, as proponents point out that it can be a good safe investment based on the similarity to a lot of gold traits such as scarcity and relative valuation, and at the same time it has a low value in terms of transactions, however, the cryptocurrency is currently tilted. To trading near-stock markets that are characterized by their huge volatility that makes investors either make or crush huge fortunes.

It is natural that we will soon witness some decline in prices and more volatility, as traders will sell bitcoin at record high prices because the market is heavily influenced by so-called “whales”, which are large investors who own a lot of digital currency and thus can have a significant impact on prices when buying. Or sell.

Optimism tinged with caution

Exactly three years have passed since Bitcoin set its all-time high back in mid-December 2017 at less than $ 20,000, most of the investors in the market that made this rally at that time now have an enjoyable but worrying experience because that’s the same time it started. Currency decline, which later brought the crypto market into a dark tunnel.
In spite of this, 2020 gains cannot be compared to 2017, as there are some differences this time that makes us not expect the same subsequent events, in 2017 the emergence of institutional investors in the market led to sharp selling as they had the opportunity to open short deals, this time capital. The big one created the conditions for a market boom, moreover, the bitcoin rally itself took off from a much higher point, doubling the price since September, while three years ago it rose 5.5 times during the same timeframe.

Comparing the upward spiral of 2017 and 2020, December may have a special significance for Bitcoin, and other than this coincidence they differ greatly in terms of institutional demand and adoption levels, there is also a massive influx of positive statements from celebrities and prominent personalities that helped spur capital inflows such as What we saw in 2017.

But the main difference between the continuous rally and what we saw in 2017 is that institutions are now the main force supporting the rise of the cryptocurrency.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.