Bitcoin Crosses $27,000 as FOMO Drives the Crypto Market December 27, 2020 December 27, 2020 Kelly Cromley http://1AZFjzw2#Nwf63pYaMWq#xIY
Bitcoin NewsDecember 27, 2020 by Kelly Cromley

Bitcoin Crosses $27,000 as FOMO Drives the Crypto Market

Bitcoin investors have received another Christmas present in 2020. Since last week, the price of Bitcoin has increased from about $24,200 to $28,335 in three step-by-step rallies.

The sharp surge began after Bitcoin broke above the psychological level of $20,000 on December 16. That level remained as a solid resistance since December 2017.

The Christmas rally witnessed Bitcoin eclipsing both Walmart and Visa to turn into 11th biggest asset by market cap (barring silver, gold, etc.), as per data provided by Asset Dash.

Bitcoin was trading at $27,191 at the time of writing this article, reflecting a market cap of $507.88 billion, ranking just below billionaire investor Warren Buffett founded Berkshire Hathaway ($530 billion).

The numero uno crypto is just two places below the market cap of Taiwan Semiconductor Mfg., which has a market cap of $550 billion. The ranking was provided by Asset Dash. Apple continues to remain in the first place with a market cap of $2.243 trillion, while Microsoft is in the second place with a market cap of $1.684 billion.

Adam Back, CEO of Blockstream, tweeted that the rally is now led by retail investors, instead of institutions. The advocate of Bitcoin justified his stance by stating that institutions do not remain active during Christmas holidays. So, the likely reason could be FOMO (fear of missing out):

On the contrary, there are several analysts who assign the Bitcoin rally to fresh institutional investors who begin to take an exposure in cryptomarket, and Bitcoin in particular. Following the entry of Square and MicroStrategy, several institutions are toeing the line. Earlier this month, Anthony Scaramucci’s Skybridge Capital unveiled a Bitcoin fund with a starting capital of $25 million.

Likewise, MassMutual has entered the market with a starting investment of $100 million. Notably, last month, Guggenheim has set aside 10% of its macro fund, worth $5 billion, for investment in crypto industry.

Furthermore, international monetary rules and specifically, the US Fed is also playing a major part in Bitcoin’s upswing. Across the globe, central banks have resorted to money printing to remove the negative effect of the pandemic.

Earlier this month, the US Fed choose to carry on with bond purchases for a minimum of $120 billion per month as the US President Donald Trump is trying to get the Congress endorse even a bigger aid package to permit for stimulus payments. The hypothesis calling Bitcoin as a hedge against inflation and devaluation of physical currencies has never been so appropriate and is gaining acceptance.

Nevertheless, a third criteria that is frequently overlooked in 2020 is halving event. Bitcoin reward was reduced by 50% to 6.25 BTC per block, paving way for a drop in liquidity. Added to this is the accelerated purchases made by PayPal and Grayscale.

At this point in time, Grayscale and customers of PayPal, on average, are buying more Bitcoin than released in the market. That continues to evaporate liquidity at a rapid pace.

AuthorKelly Cromley

Kelly is our in house crytpto researcher, delving into the stories which matter from blockchains being used in the real world to new ico coming out.