First Mover: It Might Be Getting ‘Silly’ as Bitcoin Passes $39K, $40K, $41K

First Mover: It Might Be Getting ‘Silly’ as Bitcoin Passes $39K, $40K, $41K
Less than a day after passing $40,000 for the first time, bitcoin has surged to a new all-time high above $41,000.
(Creative Commons, modified by CoinDesk)

 momentum showed few signs of slowing on Friday, as prices  after blowing through $40,000 for the first time. 

In , Asian and European shares rose and U.S. stock futures pointed to a higher open, as investors bet that a dismal  expected early Friday from the Labor Department on the December employment situation would strengthen the case for additional economic stimulus. Gold weakened 1.1% to $1,893 an ounce. 

Yields on 10-year U.S. Treasury notes , as traders focused on the potential for faster inflation under a U.S. government controlled by President-elect Joe Biden’s Democratic party, according to the Wall Street Journal.    

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Bitcoin has climbed more than 40% in the first eight days of 2021 – after a quadrupling in 2020 and doubling in 2019 – and some analysts are turning wary.  

“We are very much in speculative bubble territory now, and while I don’t think it’s done, it’s becoming increasingly likely that it’s going to get messy,” Craig Erlam, senior market analyst for the London-based foreign-exchange broker Oanda, wrote in an email. “I previously said I wouldn’t be surprised to see $50,000 before the end of the month and I’m now thinking that was too conservative. The last $10,000 move only took four days. It’s getting silly now.”

First Mover reached out to investors, analysts, executives and one finance professor for their views on whether a correction might be in the future. TL;DR: Yes. Here’s what they said:

– Bradley Keoun and Muyao Shen

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U.S. President-elect Joe Biden’s Democratic party narrowly triumphed in the state of Georgia’s special Senate elections earlier this week, wresting control of the upper legislative chamber from outgoing President Donald Trump’s Republicans. With the lower chamber also under Democratic control, Biden and party leaders could have more room  to implement policies.

Analysts at UBS Bank say the unified government houses  the path to more fiscal stimulus. According to an , Biden is considering a two-pronged stimulus effort in the form of $2,000 checks for Americans and a tax and infrastructure spending package worth $3 trillion. The new fiscal stimulus is expected to boost inflation,  and bring more buyers for scare assets such as bitcoin and gold.

Alex Melikhov, CEO and founder of Equilibrium and the EOSDT stablecoin, told CoinDesk that Biden’s stimulus would inject more liquidity into markets and likely fuel further bitcoin price rises.

The leading cryptocurrency is already in a strong bull market, courtesy of the inflation-boosting measures adopted by the Federal Reserve and the U.S. government over the past 10 months to counter the coronavirus-induced slowdown. These measures have pushed institutions to seek investments that offer a hedge against inflation.

Bitcoin prices have risen from $10,000 to record highs  in the past four months, with public-listed companies such as Microstrategy buying bitcoin to preserve the value of their treasury reserves. That trend could gather pace, as , with Biden’s additional fiscal stimulus and the Federal Reserve’s continued easing.

“The Biden stimulus may add an extra jolt to bitcoin’s price, but nothing more than pushing along a barreling freight train,” Jehan Chu, managing partner at Hong Kong-based crypto investment firm Kenetic Capital, told CoinDesk.

– Omkar Godbole

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65K comments and counting: Crypto industry fights ‘arbitrary’ Treasury rule ()

Bitcoin “rich list” rebounds to all-time high () 

climbs back up crypto rankings with near 50% rise () 

Grayscale, provider of bitcoin trust, promotes Sonnenshein to CEO, plans to double staff in 2021, sees interest from pension funds and endowments (, ) 

BitMEX exchange says all users are now verified, months after U.S. prosecutors, regulators bring charges against principals over unregistered trading () 

December jobs report from U.S. Labor Department is projected to show that the unemployment rate increased for the first time in eight months; economists see nonfarm payrolls growing by 50,000; report from Labor Department is due at 8:30 NY time (13:30 UTC) (). 

Blackstone’s Byron Wien predicts yields on 10-year U.S. Treasury notes will climb to 2%, from just over 1% now, as Federal Reserve maintains accommodative monetary policies ()  

U.S. Treasury Department launches $25B emergency rental-assistance program ()

Grayscale CEO Says Crypto Interest Is Rising From Pension, Endowment Funds

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