Update (1115ET): Well that escalated quickly... Bitcoin has just topped $54k...
By the time it takes to write $54,000 it will be $55,000— zerohedge (@zerohedge) February 19, 2021
This morning's surge in Bitcoin has elevated the 'rat-poison-squared' cryptocurrency above the $1 trillion market cap level.
This makes it the 8th largest 'asset' in the world...overtaking Tesla and Tencent (and well above Berkshire Hathaway)...
What's better than 'three commas'?
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Another week, another attempt by JPMorgan to bash bitcoin.
In what is now the bank's 5th attempt to talk down the cryptocurrency (we discussed the 4th one here, and see here for failed attempt #1, attempts #2, and attempt #3), desperate JPM analysts - failing to find any original negatives - resorted to the oldest trick in the FUD book, bringing up the now discredited notion that tether somehow is the dominant price setter for bitcoin, writing that the bitcoin market could face severe liquidity shock if traders were to lose faith in Tether, a stablecoin widely used to fund cryptocurrency purchases.
“If any issues arise that could affect the willingness or ability of both domestic and foreign investors to use USDT (+0.03%), the most likely result would be a severe liquidity shock to the broader cryptocurrency market, which could be amplified by its disproportionate impact on HFT [high-frequency trading]-style market makers which dominate the flow,” JPMorgan analysts wrote in a 86-page report published Thursday.
They then raised the panic level to 11, adding that "a sudden loss of confidence in Tether could end up triggering the crypto version of a bank run, destabilizing exchanges and causing a panic drop in bitcoin’s price. A bank run occurs when many depositors withdraw their money at the same time over concerns of the bank’s solvency."
This, of course, is false: as we explained before Tether demand does indeed supports bitcoin; and no, Tether is not some fiat that is created out of thin air (like USD). Instead, tether is how Chinese circumvent the great firewall. As long as there is capital flight out of China, tether will be bought... as will Bitcoin.
Having learned to ignore all the desperate attempts to hammer bitcoin prices (just so its prop traders can buy in), the market instead bid up the cryptocurrency to a new all time high, with XBT rising to a new all time high of $53,263 earlier today...
... with traders instead focusing on Elon Musk's defense of Tesla’s $1.5 billion Bitcoin investment on Twitter, calling the cryptocurrency a “less dumb” version of cash. “Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company,” Musk wrote, adding that Tesla’s decision to buy Bitcoin doesn’t directly reflect his opinion.
Tesla’s action is not directly reflective of my opinion. Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company.— Elon Musk (@elonmusk) February 19, 2021
“When fiat currency has negative real interest, only a fool wouldn’t look elsewhere,” Musk said referring to sub-zero real returns on cash caused by - who else - the Fed. “Bitcoin is almost as bs as fiat money. The key word is ‘almost.'" Bingo.
To be clear, I am *not* an investor, I am an engineer. I don’t even own any publicly traded stock besides Tesla.— Elon Musk (@elonmusk) February 19, 2021
However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.
Bitcoin is almost as bs as fiat money. The key word is “almost”.
Musk’s tweets were in response to remarks by Binance Holdings’s chief Changpeng Zhao. In a Bloomberg Television interview, Zhao wondered why Tesla bought Bitcoin if he’s so “gung-ho” on Dogecoin. Musk said he’s an engineer, not an investor, and doesn’t own any publicly traded stock besides Tesla.
Musk’s comments of course sum up the big issues facing central banks - and markets - this year. With trillions in newly created cash being pumped into the financial system from governments fighting the pandemic and sloshing around, investors are increasingly worried about inflation and looking for alternative places to put their money. Hence Bitcoin at $53,000.
Meanwhile, showing just how much demand there is for bitcoin, Bloomberg's Eric Balchunas observes that on the first day of trading of Canada's brand new Bitcoin ETF, the BTCC, it was "the most traded ETF in the country on its FIRST DAY. I've never seen that. It would be like an ETF here trading more than $SPY on its first day. And this is just the CAD class, USD class was 11th most traded."
This is just wild. The Canada Bitcoin ETF was the most traded ETF in the country on its FIRST DAY. I've never seen that. It would be like an ETF here trading more than $SPY on its first day. And this is just the CAD class, USD class was 11th most traded. pic.twitter.com/NBpo0uFzZD— Eric Balchunas (@EricBalchunas) February 19, 2021
Translation: bitcoin $100K is coming.