Money kept flowing into the Bitcoin market as prospects of its global adoption improved further against a weakening macroeconomic outlook.
On Tuesday, the world’s leading cryptocurrency established yet another year-to-date high, this time hitting $13,498, following a sharp 3 percent jump. The said upside move occurred shortly after DBS Bank Ltd, Singapore’s leading banking firm, announced that it is launching a cryptocurrency exchange.
Dubbed as DBS Digital Exchange, the platform intends to offer trading services “from fiat currencies to the top digital currencies in circulation.”
They include Bitcoin, Bitcoin Cash, Ether, and Ripple Labs’ XRP. DBS Digital Exchange will also offer crypto custody solutions, catering to institutional investors that have stayed away from the cryptocurrency market over its lack of insured custodianships.
“To keep customers’ digital assets safe, DBS Bank has deployed DBS Digital Custody, an institutional-grade custody solution specially tailored for safekeeping digital assets,” the bank wrote on its website.
The announcement ensured further growth of Bitcoin, an asset that earlier received criticism for its alleged use in money laundering, terrorist financing, and other illegal financial activities. After facing further accusations of being a “Ponzi scheme” and a “bubble” – interestingly by one of the top executives at DBS Bank, as well – the cryptocurrency came on its own after the March 2020’s global market crash.
Bitcoin emerged as a safe-haven asset to investors who were looking to deviate their investments from poor-yielding government bonds and a devaluating US dollar. As the Federal Reserve and the US government together dispatched a $3 trillion coronavirus relief, much of its liquidity – apparently – entered the Bitcoin market.
“The Fed’s balance sheet has expanded by 75% since the start of the year,” said Anthony Pompliano, the co-founder of Morgan Creek Digital, in his investment letter to clients. “The average investor fears inflation right now, regardless of whether we actually see that inflation or not.”
“This fear has driven significant capital flows into inflation-hedge assets (Gold, Bitcoin, Real estate, etc),” he added.
Bitcoin to $14K?
As of Tuesday, Bitcoin was trading 250 percent above its mid-March nadir of $3,858. And after DBS’s foray into the cryptocurrency sector, analysts believe the Bitcoin rally to extend further.
Raoul Pal, the founder/CEO of Global Macro Investor, said the cryptocurrency has only two crucial resistances left to conquer, based on its historical price trends. The first of these ceilings is at $14,000 while the other is at $20,000, a record high.
“I fully expect new all-time highs by early next year at the latest,” Mr. Pal noted.
Technically, Bitcoin was now trading inside an overbought zone, as alerted by its Relative Strength Indicator. That might lead the cryptocurrency in a correction/consolidation spree. Nevertheless, holding a floor above $13,000 would keep its long-term bullish targets in view.