Bitcoin approaches $21,000 after clear break above ATH

Although we had broken the all-time high in Bitcoin futures on both the last day of November and the first day of December both of these higher highs barely beat out the previous highs from 2017 and were only achieved on an intra-day basis. Today however there was a clear and decisive break-out taking Bitcoin to all new territory. This move came hours before the Fed statement and press conference held by Chairman Powell in which he underscored that the Fed will remain accommodative keeping interest rates near zero until the economic data shows signs of further recovery.

This announcement to stay the course on the current monetary policy came with an urge for congress to enact some sort of fiscal stimulus for the Americans hardest hit by the current pandemic. Most traders had expected this as the overall outcome from the Fed statement and as such had weighted their portfolios heavy in assets traded against the U.S. dollar such as the precious metals and Bitcoin.

As of 4:30 PM EST, Bitcoin futures traded on the CME are fixed at $20,905 per coin after gaining $1,345 or 6.88% on the day. As noted previously this break to new all-time highs is much different than the one witnessed a few weeks ago in that it is much clearer cut and reveals the real driver of this legendary rally in BTC, and that driver is a run of capital out of the weakening U.S. dollar.

Our first chart clearly illustrates this river of capital running from the dollar and into Bitcoin. Notice how the dollar spiked as Bitcoin plunged in March of this year and since that point, the negative correlation between the two has been extremely evident. The chart also shows how the U.S. dollar-priced in a percentage scale on the left from its ATH is down approximately 13% from its highs at around 104. BTC which is also scaled in percentage compared to its all-time highs on the right is around 15% higher from its previous high reached in 2017.

We expect this trend to continue into the first half of 2021 and as such Bitcoin will continue its ascent.