Bitcoin surge analysis from Binance Australia
Since mid-October, the Bitcoin price has been rapidly climbing from AUD 15.5k to its current price of more than ~AUD 26k. Thanks to inflation, bitcoin has reached record highs of more than AUD $27k on 1 December 2020, surpassing 2017’s all-time high (ATH) of $26.5k.
We can draw from several factors to contextualise and partially explain the rally of Bitcoin. However, none of these factors will fully explain the past price development on their own – let alone allow for any forecast about Bitcoin’s future price.
Most importantly, Bitcoin is widely perceived to be a hedge against inflation. It is plausible to assume that governments will follow the calls of institutions such as the IMF and continue to provide economic relief for COVID-19 scarred economies. Such policy action would, however, come at the danger of further increasing inflation and thus increase the flight into safe-haven assets.
This flight into safe-haven assets already seems to be on its way, with gold currently yielding 23% year-to-date. Its perceived digital equivalent, Bitcoin, is seeing a similar, yet very pronounced trend with YTD returns of ~248%. Besides outspoken institutions such as Michael Saylor’s MicroStrategy, several institutions have been quietly adding Bitcoin to their balance sheets.
The often-times overlooked supply factors play, however, an equally important role in explaining or enabling the recent Bitcoin rally. These endogenous factors describe the market-internal developments, such as market infrastructure and regulation and the available financial products and services.
- Over the last three years, an increasing regulatory certainty enabled the entrance of licensed custodians, which are now at the center of a prime brokerage industry and are absolutely crucial in enabling companies to hold Bitcoin. Grayscale Bitcoin Trust, for example, now holds 515k BTC in their trust and is rapidly growing (i.e. +25k BTC over the last 14 days).
- The process of entering the market is streamlined as various on-ramps with support for a broad range of currencies and generally improved UI/ UX are now readily available.
- Similarly, pricing is now benefitting from a deep futures and derivatives market that is shared across various market participants. Bitcoin’s open interest (composed of both futures and perpetual contracts) recently reached its ATH and is above $6 bn.
- Highly liquid assets (i.e. stablecoins), large OTC desks, several licensed exchange platforms and even decentralised exchanges with guaranteed match-making (e.g. Uniswap with BTC tokens on Ethereum) are all in place to give investors the ability to access Bitcoin and liquidate their positions if required.
Put simply, the market ecosystem and its plumbing matured over the last three years. Now, that increased macroeconomic uncertainty might have driven people and institutions to take a second look at Bitcoin and the whole crypto ecosystem, the picture is a different one.
It is possible for companies to be compliant with local jurisdictions and own bitcoins. It is possible to construct complex positions via derivatives. It is now possible to access deep liquidity, both on-chain and via OTC desks and have high-quality, up-to-date on-chain data. Many of the factors an investor might be looking for in an emergent market are thus now present and will support the ecosystem going forward.
How can Australian Bitcoin users take advantage of the current market?
With demand for bitcoin surging and the market expected to continue to grow, there has never been a better time for crypto-curious members of the public to start trading.
Some Australians choose to use bitcoin as an alternative savings account, some see it as part of a well hedged asset portfolio, some use it as a currency. At Binance Australia, they believe crypto becoming more mainstream is inevitable as the world continues to progress digitally.
Join them at Binance Australia, a Brisbane based digital currency exchange. Binance Australia has the lowest trading fees in the industry, and the best liquidity in the cryptocurrency trading space. Plus we have 24/7 customer support.
Binance Australia is currently registered with AUSTRAC as a digital currency exchange and is compliant with all Australian standards.
They’re more than just a trading platform, they pride themselves on being a stepping stone that provides education and support for new users in the world of cryptocurrency.
If you’re a new user:
Getting started buying and selling cryptocurrencies has never been easier! To sign up to the Binance Australia platform, new users just have to go to www.binance.com/au, create an account and get their identity verified, selecting Australia as their country.
Australian users can sign up for Binance Australia to buy and sell cryptocurrency with AUD. Binance Australia enables AUD deposits via PayID/Osko directly in the Binance app, so there is no need to use any other exchange providers to trade in Australian dollars on our platform. There are also no fees for AUD deposits or withdrawals.
Want to know more about the world of cryptocurrency? Visit Binance Academy to deep dive into the world of digital assets.