Cryptocurrency continues to make waves as the strange year that was 2020 comes to a close.  The Wall Street Journal today covered the rally indicating it has outlasted that of 2017 as the value of Bitcoin crossed the $20,000 threshold last week and extended to $23k plus heading into the Christmas holiday giving coin holders a fiscal boost.  The article dives into some of the reasons that this bull run feels different from 2017.  Some of the key differences include:

  • Corporations investing in cryptocurrency lend credibility to the investment vehicle
  • Transactions below $1,000 are increasing indicating acceptance by a wider audience of investors.  Nearly double that of 2017.

Time will tell as the 2017 rally was followed by a crash that extended for just a few days under 3 years before it recovered its value.

A key difference the article does not address is that of the policy of Quantitative Easing (QE) essentially leaving cash a negative yielding asset over time.  Additionally, the practice of fiat currencies continuing to increase their circulation as governments print new money can only devalue their currencies over the long haul.  The well documented scarcity rules for mining Bitcoin rule out the devaluation of that currency due to a market flood of the currency and without a central authority, the value is completely market driven.

While no bull extends forever, the volatility of Bitcoin is likely to flatten somewhat given the investor trends and demand burgeoned by the broader cryptocurrency trading trends of 2020.

Enjoy the Wall Street Journal article here.