Bitcoin hits record, USD weakness returns

Bitcoin eyes USD20,000

Bitcoin investors are confidently laughing at skeptics that call the latest rally another Dutch tulip mania-type event, citing this time is different and filled with long-term bullish institutional bets.  After the Thanksgiving slump which almost tested the USD16,000 level, Bitcoin has steadily rallied back above the USD19,000 level and has hit an all-time high as interest grows and macro arguments seem bulletproof in the short-term.  Monetary and fiscal support will remain elevated in the short-term and that is creating a diversification trade against not just the dollar but for gold as well.

Bitcoin and all the major altcoins are rallying strongly, and it seems the momentum trade is strengthening as mass media outlets embrace crypto coverage.  Bitcoin rallied to an all-time high today and appears poised to take out the USD20,000 level.


US dollar retreats

The euro tentatively tested the 1.20 level as dollar weakness returned as investors begin to price in a Biden administration that will see coordinated monetary and fiscal efforts early next year.  The dollar will become a punching bag over these next few months as the next wave of stimulus gets unleashed.

The euro held onto gains even after ECB President Lagarde noted that the EU fiscal package “shouldn’t be allowed to be delayed significantly.”  Lagarde also reiterated that interest rates will stay low for quite some time.  The uncertainty for Eurozone stimulus is not as great as it is for the US and that should allow it to ride the euro wave until the ECB attempts to talk down their currency.

Risk aversion has somewhat returned and safe-haven flows have helped the dollar pare losses. Investors will be keeping a close eye on this week’s employment releases, which could be the tipping point to make Congress deliver much-needed relief as many unemployment benefits and loan moratoriums expire at year-end. A weak nonfarm payroll release could weigh on the US dollar.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.