Bitcoin (BTC) rose for a second day, surging to a new all-time high price of $35,751, according to CoinDeskâ€™s Bitcoin Price Index.Â
The jump came as votes were tallied from Tuesdayâ€™s special U.S. Senate runoff elections in the state of Georgia, where Democrats appeared on the cusp of gaining two seats that would deliver President-elect Joe Bidenâ€™s party the upper legislative chamber and full control of Congress.Â A big loser in Georgia was U.S. Senator Kelly Loeffler, a former CEO of the Bakkt cryptocurrency exchange.
A Democratic win in the other Senate runoff election, which isÂ where the votes were leaning early Wednesday, would usher in the â€œBlue Waveâ€� scenario that cryptocurrency traders have been speculating over for months. Biden has pledged to increase government spending, which could lead to higher inflation as well as additional bond purchases (money printing) from the Federal Reserve.Â
Bitcoin is viewed as a potential hedge against currency debasement by aÂ growing number of investorsÂ in both digital-asset markets and on Wall Street.Â
â€œWe have to expect fiscal policy to be looser than if Republicans had kept their majority,â€� Ian Shepherdson, chief economist with the forecasting firm Pantheon, wrote early Wednesday in a note to clients.Â
InÂ traditional markets, Asian and European shares rose and U.S. stock futures pointed to a higher open.Â
U.S. 10-year Treasury bond yields haveÂ climbed above 1%Â for the first time since March, potentially on expectation of increased borrowing by the American government. U.S. crude oil futures rose above $50 a barrel asÂ Saudi Arabia agreed to a unilateral production cutÂ of 1 million barrels a day.Â Â
First Mover has writtenÂ extensivelyÂ about bitcoinâ€™s embrace by U.S. institutional investors, beginning in earnest last year, as a hedge against currency debasement in the face of trillions of dollars of fiscal and monetary stimulus from governments and central banks around the world.Â
But aÂ story published Tuesday by CoinDeskâ€™s Muyao ShenÂ offers a reminder that the appetite for bitcoin is also strong among retail buyers, and is geographically diversified.Â
According to Shen, whatâ€™s known in cryptocurrency circles as the â€œkimchi premiumâ€� has returned â€“ seen as a sign of surging interest in bitcoin from retail buyers in South Korea.
The kimchi premium is the extra price margin over global bitcoin prices that is sometimes witnessed on Korean cryptocurrency exchanges. Itâ€™s named for the popular Korean pickled side dish.
And the premium has hit a two-year high, as quantified by the difference in prices on South Koreanâ€™s Upbit exchange and Binance, the worldâ€™s largest cryptocurrency exchange. The kimchi premium recently hit 4.15%, according to real-time exchange data-tracking siteÂ scolkg.com, the biggest mark-upÂ since early 2018.
The kimchi premium first appeared in early 2016, according toÂ researchers at the University of Calgary. Between January 2016 and February 2018, it averaged at 4.73% and reached its highest at 54.48% in January 2018.
Jason Kim, chief investment officer of the Tokyo-headquartered investment firm Anchor Value, says thereâ€™s a lack of institutional traders in South Koreaâ€™s crypto market, which elevates the prominence of retail customers in the country who use exchanges more frequently and tend to follow â€œfear of missing outâ€� trends during bull runs.
â€œKorean retailers are entering the market after seeing a strong price increase of bitcoin,â€� Sinhae Lee, partner of Shanghai-based blockchain consulting firm Block72, told CoinDesk.Â
With bitcoin prices up 20% already in 2021, after quadrupling in 2020 and doubling in 2019, the kimchi premium shows that the fear of missing out, often known by the acronym FOMO, might be global and broad-based.Â
Bitcoin, often touted as digital gold, jumped to fresh record highs early Wednesday alongside an uptick in longer-duration U.S. Treasury-bond yields, potentially a sign of looming inflation, according to one expert.
The cryptocurrency printed a new all-time high of $35,751 and the yield on 10-year Treasurys crossed above 1% for the first time since March 2020, according to data provider TradingView.Â While there is no direct correlation between the two assets, theyâ€™re both increasingly linked to investor views on inflation, according to Chris Thomas, head of digital assets at Swissquote Bank.
Bond markets are often the first to price in expectations of inflation and interest rates.Â
â€œThe latest rise in yields could be an indication that interest rates may need to rise slightly in the future because the economy is in better shape, and to help control inflation,â€� Thomas told CoinDesk. â€œNaturally, if we think there is inflation, then the U.S. dollar will weaken, and all assets priced in USD will naturally strengthen.â€�
The dollar index, which tracks the greenbackâ€™s value against majors, has declined to a fresh 33-month low of 89.25. However, the oversold currency could draw bids if the ascent in Treasury yields gathers pace, since investors might begin to see value in the higher income stream. In that case, bitcoin may have a tough time maintaining its bullish momentum.
XRPÂ (XRP): One of Ripple Labsâ€™ big financial backers seeks toÂ force preferred-stock redemptionÂ after U.S. SEC claims XRP tokens were sold improperly,Â Bloomberg reports, while Blockchain.com plans toÂ halt trading in the tokens next week.Â
StellarÂ (XLM): Payments-focused blockchainâ€™s native cryptocurrencyÂ surges to 2-year high, reportedly due to rival XRPâ€™s recent woes and its potential role in the development of central-bank digital currencies.Â Â
Legendary investor Bill Miller trolls billionaire Warren Buffett over â€œrat poisonâ€� bitcoin remark (CoinDesk)Â
Coinbase says institutional trading arm worked with money manager One River to â€œinvest an undisclosed amount in digital assets, resulting in one of the largest digital asset trades in history (Coinbase)
CoinDesk acquires cryptocurrency analysis firm TradeBlock for undisclosed sum in bid to capitalize on investor demand for price indexes, data-driven products (WSJ)Â
U.K. ban on retail trading of cryptocurrency derivatives takes effect Wednesday (CoinDesk)
Origin brings back interest-earning OUSD stablecoin following $7M hack (CoinDesk)
Digital-asset manager CoinShares says XBT Provider line of exchange-traded products reached record trading volumes on Monday (Coinshares)Â
Swedish bankers worry proposed central-bank digital currency â€œe-kronaâ€� could siphon away deposits (Reuters)Â Â
Ethereum ecosystem investment yields range from 4.6% to 16%, versus 0.9% on 10-year U.S. Treasury bonds, Bankless co-founder David Hoffman writes in op-ed (CoinDesk Opinion)Â
The latest on the economy and traditional finance
Second round of U.S. stimulus checks, some $112B out of total estimated cost of $165B, have already reached household bank accounts (WSJ)
Worldâ€™s biggest economies shouldering record debt burdens have $13T debt bill coming due (Bloomberg)Â
U.S. business Chapter 11 bankruptcy filings rose 29% last year as the coronavirus pandemic and related lockdowns crimped revenue; individual filings could increase with expiration of mortgage-forbearance programs and coronavirus relief (WSJ)
â€œIf interest payments on the debt are themselves broadly determined by policy makers, they canâ€™t be a good canary in the coal mine.â€� (WSJ)
Washington Post columnist Katrina vanden Heuvel argues that incoming U.S. presidential administration could push for government to play a role in resolving American householdsâ€™ $4.1T in non-housing debt (Washington Post)Â
Nearly one-quarter of units in Frank Gehry-designed high-rise apartment building in Lower Manhattan became vacant during COVID pandemic, leading to rent concessions (WSJ)
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