In November crypto continued its strong Q4 with bitcoin setting a new all-time high of ~ $ 19,783 on November 30th (Table 1). For the year bitcoin is now up 173%.
For the third time this year Ethereum (ETH) showed monthly earnings of 57%. The other months when this happened were April and July, with June being the best month this year for $ ETH at + 70%.
Table 1: Price Comparison: Bitcoin, Ethereum, Gold, US Equity, US Dated Treasuries, US Dollar (Change%)
November was a remarkable month for bitcoin and crypto as a whole, with positive developments in particular coming from Wall Street and the adoption of institutional investors. Counterfeit hedge fund manager Stan Druckenmiller publicly disclosed for the first time that he now owns bitcoin, while longtime bitcoin fund founder Ray Dalio, founder of the world’s largest hedge fund, acknowledges he may be “missing something” with its traditional bearish bitcoin stance.
What happens with gold?
One potentially significant longer-term development we will be watching was the November difference between the price of bitcoin and gold, which dropped -5% for the month. There is some discussion that gold investors may be rotating into bitcoin, and the November outflows of Gold ETFs offer potential evidence of this. Rick Rieder, BlackRock’s Chief Investment Officer, interviewed CNBC on November 20 where he suggested bitcoin could replace gold.
The downward movement in gold in November was particularly impressive given that the US dollar resumed its 2020 slide to hit a year-and-a-half low and inflation concerns persist, driven by growing calls for fiscal stimulus more remarkable.
We have argued that gold and bitcoin can be considered complementary, and Blockchain.com recently launched wrapped Gold (wDGLD). The total market value of all gold is approximately $ 10 trillion, or over 20x the size of bitcoin’s market value (~ $ 350 billion). Any continued move by gold investors to diversify their hard-assets portfolio into bitcoin should provide strong support for further valuing bitcoin prices.
Long-dated US Treasuries gained + 2% and are now outperforming gold for 2020 (+ 18% compared to + 17%, respectively), while equities reverse losses October to gain 11% for the month and are up 12% YTD.
All in all, 2020 is arguably the best year of crypto yet on many levels. Unsurprisingly, three of the best 5 months in history are now on average for crypto prices from 2020 (Figure 1).
Figure 1: The Top 5 Months by Average Daily Bitcoin Price