Bitcoin stands out from the crowd? Bitcoin reaches $20,000 per coin, beware of the strong dollar in the future

With 15 days left until the end of 2020, Bitcoin finally broke through $20,000 per coin.

So far, Bitcoin has accumulated a year-to-date increase of more than 170%, nearly four times higher than its bottom this year. Horizontally, Bitcoin is undoubtedly the best performing asset among all types of assets this year.

Last night, Bitcoin performed exceptionally well. Before the Fed's interest rate decision was announced, the U.S. dollar continued to fall, hitting a new low in two and a half years. The three major U.S. stock indexes rose and fell, with the Dow Jones Industrial Average falling at one point, while spot gold was still in a state of volatility.

Overseas institutions continue to buy coins, and Bitcoin's positive effects have recently emerged

Although Bitcoin has been volatile in the first half of December, the positive news for Bitcoin has not stopped.

Last week, Microstrategy announced the completion of the issuance of 650 million convertible bonds, which it plans to use to invest in Bitcoin, and DBS Bank officially announced its entry into digital asset exchanges to provide services for institutional investors and qualified investors. The market reacted slowly, and Bitcoin rebounded above $19,000 per coin over the weekend and fluctuated between $19,000 and $20,000 per coin.

On Wednesday night Beijing time, the Federal Reserve's interest rate decision was imminent. Bitcoin welcomed multiple positive factors, and Bitcoin finally broke through $20,000 per coin under the stimulation of many positive factors.

On the same day, Bank of America/Bank of America Securities released the "Global Fund Manager Survey" conducted on fund managers this month. The results showed that the top three most popular transactions were: long technology stocks, short the US dollar, and long Bitcoin.

In addition, on Wednesday evening Beijing time, the United States released the October International Capital Flows Report (TIC). The report showed that Japan, China, and South Korea all sold U.S. Treasuries, with a total sales of $18.5 billion (about 121 billion yuan). Among them, Japan sold $6.7 billion, which was a reduction for three consecutive months; China sold $7.7 billion that month, which was a five-month selling of U.S. Treasuries, and the U.S. Treasuries holdings hit a four-year low; South Korea sold $4.1 billion.

Stephen Roach, former chairman of Morgan Stanley Asia and senior fellow at Yale University, predicts that the US dollar will fall by 35% in the future, and the shrinking dollar will reduce the attractiveness of US bonds.

Against the backdrop of low global interest rates, Bitcoin's growth this year has attracted the attention of professional investors.

Guggenheim Partners LLC is one of the institutional investors focusing on cryptocurrencies, retaining the right to invest in Grayscale Bitcoin Trust for its $5.3 billion Macro Opportunities Fund, which aims to achieve total returns through fixed income and other debt and equity securities. According to Bloomberg on December 16, Guggenheim Chief Investment Officer Scott Minerd believes that Bitcoin should be worth $400,000.

In addition, according to the latest news from Bloomberg, a new fund supported by billionaire Alan Howard plans to buy BTC and ETH, while Canadian wealth management company CI Financial completed a $72 million Bitcoin fund IPO. According to NewsWire, Galaxy Digital Capital Management, a well-known digital asset management company, will serve as an advisor to the CI Galaxy Bitcoin Fund managed by CI Global Asset Management, and the Bitcoin Trust under Grayscale Investments, a subsidiary of Galaxy Digital Capital, is well-known in the cryptocurrency circle for its "in-and-out" whales.

JPMorgan says Bitcoin is included in asset allocation and warns of a strong dollar and risky assets

Against this backdrop, Bitcoin hit a record high. It is worth noting that after the Fed’s interest rate decision was announced, the U.S. dollar experienced a brief and significant rebound. If the U.S. dollar shows clear signs of strengthening, we need to be wary of the impact it will have on risky assets.

So will Bitcoin, like other risky assets, have a certain correlation with the US dollar index?

JPMorgan Chase said in a research report that MassMutual's recent purchase of Bitcoin shows potential additional institutional demand, which is another milestone in the adoption of Bitcoin by institutional investors. The report said that if family offices, insurance companies and pension funds decide to allocate a small portion of their funds to cryptocurrencies, it will lead to huge demand. It is expected that in the future, financial services companies in the United States, the European Union, Japan and the United Kingdom will allocate at least 1% of their assets to Bitcoin, and the demand for Bitcoin will reach 600 billion US dollars.

According to Yahoo Finance on December 16, Randy Frederick, vice president of trading and derivatives at Charles Schwab, believes that Bitcoin has now become a mainstream investment, but he also said that Bitcoin is more like a "precious metal."

It is worth noting that the British investment management company Ruffler Multi-Strategy Fund allocated 2.5% of its portfolio to Bitcoin in November. Frederick said that getting the support of successful and experienced hedge fund managers would be of great help to Bitcoin.

It can be imagined that if Bitcoin is included in the scope of global asset allocation and becomes mainstream, asset rotation will have to be considered.

According to the decision of the last FOMC meeting of the Federal Reserve this year, the benchmark interest rate remained unchanged at a historical low of nearly 0, and the forecast for the US real GDP in 2020 was raised to a contraction of -2.4%. At the same time, the Federal Reserve stated in its decision statement that it will continue to purchase at least $120 billion in bonds each month until substantial progress is made in the dual goals of maximizing employment and price stability. In addition, with Christmas approaching, the market expects that the US fiscal stimulus plan will be difficult to come out this year.