Bitcoin (BTC-USD) has quietly staged an impressive rally this year. We’re watching on an ongoing breakout as the price of Bitcoin has climbed above the important $12,000 level which represented an important technical resistance level. At the current price of $12,729, Bitcoin is now approaching the highest daily closing price since early 2018, and up by more than 75% year to date.
We believe the market dynamics are extremely bullish supporting continued momentum in the broader cryptocurrency space. In many ways, the volatile trading environment for Bitcoin in recent years has been positive bringing greater scrutiny to the emerging asset class and helping to consolidate long-term support. Indications are that institutional investors are taking Bitcoin and cryptocurrencies seriously driving inflows into the segment.
Our bullish case for Bitcoin draws a lot of similarities to the themes supporting higher prices in gold (GLD) and precious metals. Simply, as an alternative to traditional fiat currencies, Bitcoin benefits as a store of value against the unprecedented wave of aggressive quantitative easing and dovish monetary policies by global Central Banks which have flooded the market with liquidity. The low interest-rate environment coupled with significant ongoing macro uncertainties supports the demand for an asset with constrained supplies.
Bitcoin as the first and largest cryptocurrency can be seen as the “gold” of asset class where a rising tide can lift all other “altcoins”. We expect Ethereum (ETH-USD), Ripple (XRP-USD), Litecoin (LTC-USD), and Tether (USDT-USD) among others to all benefit from the similar dynamics.
There have been several positive headlines supporting sentiment towards the segment, including reports that PayPal Holdings Inc. (PYPL) will accept cryptocurrencies as payments starting in 2021. As one of the largest payment service providers, PayPal opening the door for cryptocurrencies supports more mainstream adoption.
Separately, indications that the SEC continues to look into approving a “Bitcoin ETF” like the pending Winklevoss Bitcoin Trust ETF (COIN) or VanEck SolidX Bitcoin Trust ETF (XBTC) further add legitimacy to the crypto space. More importantly, the adoption of underlying blockchain technologies and distributed ledger concepts across various sectors support positive sentiment. Overall, the long-term outlook is improving and we believe cryptocurrencies are here to stay and prices can climb higher.
How to Trade Bitcoin with Stocks
While the SEC is still debating the approval of Bitcoin and cryptocurrency exchange-trade-funds, existing alternatives in the market include a series of funds sponsored by Grayscale Investments LLC. The Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (OTCQX:ETHE) are two of the largest examples with a structure more closely related to a closed-end fund and trade over-the-counter.
(Source: Seeking Alpha)
While GBTC and ETHE invest directly in Bitcoin and…