Just a day after passing $50,000 for the first time pushing upward to a new all-time high above $51,000 Bitcoin momentum carried through overnight. senior market analyst for the foreign exchange broker OANDA, Craig Erlam wrote in an email that the gain was not exactly soaring for him as it has with other major breakouts another 3% gain isn’t enough according to him to be sniffed at.
Investors were focused on the recent rise in the U.S in traditional market. As the economy makes a fuller recovery bond traders are growing more concerned about future inflation taken as a sign as the Treasury yields to a 12-month high around 1.3%. The investors want the extra income as compensation for the extra risk as bond yields sometimes rise when there’s a greater chance of inflation.
For faster inflation and a reduction in the U.S. dollar’s purchasing power bitcoin has become a popular way for many big investors to bet as its also a key focus for cryptocurrency traders. Contributing to inflation gasoline prices will be driven up because of the winter storm hitting the (usually warm) state of Texas is a fresh concern this week. Near highs not seen in more than a year Crude oil has been held at over $60 a barrel.
Should you invest in Bitcoin?
President Joe Biden’s push for a $1.9 trillion stimulus plan, which would likely have to be financed through extra borrowing has been given because some investors also see the potential for a growing supply of U.S. Treasury bonds. Since more investors have to be enticed to buy the securities an increase in the supply of bonds causes yields to rise theoretically. Head of trading at BlockTower Capital, Avi Felman told Coindesk that while potentially a sign of heightened inflation fears as all the things being equal could make bitcoin incrementally less attractive on a relative basis compared with bonds and if real yields rise Momentum funds who bought bitcoin as a hedge against inflation might sell. The Federal Reserve could be prompted to expand its monetary stimulus as a result of rise in yields on the other hand. To help keep interest rates low $120 billion of bonds a month for most of the past year has been bought by the U.S. central bank.
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