New multi-year highs are fast becoming a dull headline. Bitcoin is going up, it’s almost becoming a given, which in turn, leads to more funds flowing into BTC. In yesterday’s report, we delved into rotations within the capital pool. Today, just to help drive home the message, Altcoins have under-performed as Bitcoin has marched on to new highs — the rotation into Bitcoin from alts is happening once again.
The flow of capital in traditional finance, as a rule of thumb, works like this: Risk off, money flows from stocks to bonds, and risk on: Money flow from bonds to stocks. It’s a simple model. Everything good in the economy? Great, let’s buy stocks and leave the low yielding bonds to a smaller percentage of our portfolios. Only, money is now so cheap that bonds no longer pay you a return on your capital investment. They now charge you for the pleasure of assuming the risk on their debt. That, in a word, is madness. But there we are, ‘money printer go brrrr’, bonds going to negative yields, and stocks going up because no one really likes to lose money on purpose, so they decide stocks are worth the gamble.
2020 has been a phenomenal year for crypto so far, with bitcoin overtaking gold as the year’s top investment. Paypal’s cryptocurrency announcement this month resulted in bitcoin passing the $12,000 mark. On top of this, U.S. Bitcoin (BTC) Exchange Traded Funds (ETFs) may finally become a reality following a milestone announcement out of the US last week.