Bitcoin has breached the tough hurdle of $19,500 and jumped to two-week highs on Wednesday.
The leading cryptocurrency by market value reached as high as $19,874 during the European trading hours. That’s the highest level since Dec. 1, when bitcoin hit its all-time high of $19,920, according to CoinDesk 20 data.
It remains to be seen if bitcoin can hold ground above $19,500. The cryptocurrency has failed multiple times to establish a foothold above that level since Nov. 22, courtesy of profit-taking by some investors. Forcing the much-anticipated breakout above the psychological hurdle of $20,000 may be an uphill task for the bulls in the short run because there are still large sell orders on the road to $20,000, as discussed Tuesday.
That said, the long-term bullish case for bitcoin, a widely touted hedge against fiat currency devaluation and a store of value asset, continues to strengthen with observers predicting a deeper dollar decline in 2021 and a rising global stockpile of negative-yielding bonds.
French multinational investment bank and financial services company Societe Generale now predicts a 5% fall for the Dollar Index (DXY) in 2021 and more losses in the following year, according to efxdata.com. Other prominent investment banks such as Morgan Stanley, Goldman Sachs and JPMorgan also expect the greenback to continue losing ground next year.
The Dollar Index, which tracks the greenback’s value against major currencies, is hovering at a 32-month low of 90.20 at press time. The global reserve currency has declined by 6.5% this year, mainly due to Federal Reserve’s money-supply boosting policies aimed to counter the coronavirus-induced economic slowdown.
Bitcoin has consistently moved in the opposite direction to the dollar index this year. Prominent public-listed companies such as the business intelligence firm MicroStrategy have adopted bitcoin as a reserve asset as protection against the dropping dollar.
Also read: Worsening US Dollar, Inflation Metrics Bode Well for Bitcoin’s Continued Rally
“What we’re trying to do is preserve our treasury. The purchasing power of cash is debasing rapidly,” Michael Saylor, CEO of Nasdaq-listed MicroStrategy, told CoinDesk last month while explaining the rationale behind the firm’s bitcoin purchases. The cryptocurrency is a better store-of-value asset than gold, he said.