First Mover: Bitcoin Hits Record as `Blue Wave’ and `Kimchi Premium’ Look Bullish

Bitcoin (BTC) rose for a second day, hitting a new all-time high of $ 35,751, based on CoinDesk’s Bitcoin price index.

The jump came when the votes were counted from Tuesday’s Georgia state special election to the U.S. Senate, in which Democrats were on the verge of winning two seats, that of President-elect Joe Biden’s party, the upper legislative chamber and the full Control of Congress. A big loser in Georgia was U.S. Senator Kelly Loeffler, a former executive director of the Bakkt cryptocurrency exchange.

A Democratic victory in the other runoff elections in the Senate, in which the votes were cast early Wednesday, would usher in the “blue wave” scenario that cryptocurrency traders have been speculating about 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.

Bitcoin is viewed by a growing number of investors in both the digital asset markets and Wall Street as a potential hedge against currency depreciation.

“We have to expect that fiscal policy is looser than if the Republicans had retained their majority,” wrote Ian Shepherdson, chief economist at forecasting firm Pantheon, in a statement to customers early Wednesday.

In traditional markets, Asian and European stocks rose and US stock futures indicated a higher opening.

Ten-year US Treasury bond yields rose above 1% for the first time since March, possibly due to expectations of increased borrowing by the US government. US crude oil futures surged above $ 50 a barrel as Saudi Arabia agreed to a unilateral production cut of 1 million barrels a day.

Market moves

First Mover has written extensively on the adoption of Bitcoin by U.S. institutional investors, which began in earnest last year as a hedge against currency deterioration amid trillions of dollars of fiscal and monetary stimulus from governments and central banks around the world.

However, a story published Tuesday by CoinDesk’s Muyao Shen is a reminder that the appetite for Bitcoin is strong and geographically diversified, even among retail shoppers.

Shen said what is known in cryptocurrency circles as the “kimchi premium” has returned – a sign of the growing interest in Bitcoin among retail buyers in South Korea.

The Kimchi Premium is the additional price range over global Bitcoin prices that is sometimes seen on Korean cryptocurrency exchanges. It’s named after the popular Korean side dish.

And the premium has hit a successful two-year high, measured by the price differences on the South Korean Upbit exchange and on Binance, the world’s largest cryptocurrency exchange. Kimchi premium recently hit 4.15%, according to real-time data-tracking website, the largest premium since early 2018.

The trading volume on Korean cryptocurrency exchanges has increased.

Source: Shuai Hao / CoinDesk Research

The kimchi premium first appeared in early 2016, according to researchers from the University of Calgary. Between January 2016 and February 2018, the average was 4.73% and peaked in January 2018 at 54.48%.

Jason Kim, chief investment officer of Tokyo-based investment firm Anchor Value, says the South Korean crypto market is lacking in institutional traders, raising awareness among retail customers in the country who use exchanges more often and are more likely to follow fears of missing bull run trends .

“Korean retailers are entering the market after a sharp rise in Bitcoin prices,” Sinhae Lee, partner at Shanghai-based blockchain consultancy Block72, told CoinDesk.

With Bitcoin prices already up 20% in 2021, after quadrupling in 2020 and doubling in 2019, the Kimchi Reward shows that the fear of missing out, often known by the acronym FOMO, is global and broad could.

Read More: Bitcoin Retail FOMO Brings Bunch Of ‘Kimchi Premium’ To South Korea

Bitcoin Watch

Chart of Bitcoin prices next to the chart of 10-year US Treasury bond yields.

Source: TradingView / CoinDesk

Bitcoin, often touted as digital gold, hit new record highs early Wednesday, along with a surge in longer-term US Treasury bond yields, which one expert says may be a sign of impending inflation.

The cryptocurrency hit a new all-time high of $ 35,751, and 10-year treasury returns exceeded 1% for the first time since March 2020, according to data provider TradingView. According to Chris Thomas, Head of Digital Assets at Swissquote Bank, while there is no direct correlation between the two assets, they are increasingly related to investor views on inflation.

Bond markets are often the first to price in inflation and interest rate expectations.

“The recent surge 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 control inflation,” Thomas told CoinDesk. “Of course, if we believe there is inflation, the US dollar will weaken and all assets priced in USD will of course strengthen.”

The dollar index, which tracks the value of the greenback against the majors, has fallen to a new 33-month low of 89.25. However, the oversold currency could pull bids if the surge in government bond yields gains momentum as investors may begin to see value in the higher revenue streams. In this case, Bitcoin could find it difficult to maintain its upward momentum.

Token Watch

XRP (XRP): One of Ripple Labs’ big backers is trying to force preferred stock redemption after US SEC claims XRP tokens were improperly sold, Bloomberg reports, while plans to stop trading tokens next week .

Stellar (XLM): The payment-centric blockchain’s native cryptocurrency is rising to a 2-year high, reportedly driven by the recent troubles of rival XRP and its potential role in central bank digital currency development.

Litecoin (LTC): Grayscale’s Digital Large Cap Fund is reallocating proceeds from XRP liquidations along with Bitcoin and Bitcoin Cash (BCH) to Litecoin.

Wrapped bitcoin (wBTC): BitGo starts the tokenized version of Bitcoin in the Tron blockchain together with the packaged ether (wETH).

What is hot?

The legendary investor Bill Miller trolls the billionaire Warren Buffett over the Bitcoin remark “rat poison” (CoinDesk)

According to Coinbase, the institutional trading arm has partnered with money manager One River to “invest an undisclosed amount in digital assets, resulting in one of the largest digital asset deals in history (Coinbase).

CoinDesk is acquiring cryptocurrency analysis company TradeBlock for an undisclosed amount to capitalize on investor demand for price indices and data-driven products (WSJ).

The UK’s ban on retail cryptocurrency derivatives goes into effect Wednesday (CoinDesk).

Origin brings back interest-bearing OUSD stablecoin after USD 7 million hack (CoinDesk)

According to CoinShares, digital asset manager, XBT Provider’s exchange-traded product line hit record trading volumes (Coinshares) on Monday.

Swedish bankers fear that the central bank’s proposed digital currency “e-krona” could scoop up deposits (Reuters)

The investment returns of the Ethereum ecosystem are between 4.6% and 16% compared to 0.9% for 10-year US Treasuries, writes David Hoffman, co-founder of Bankless, in his statement (CoinDesk Opinion).


The latest on economics and traditional finance

The consequences of Covid-19 could mean a “lost decade” for the global economy, says the World Bank (WSJ).

The second round of US economic reviews, about $ 112 billion out of the total estimated cost of $ 165 billion, has already hit household bank accounts (WSJ).

The world’s largest economies, with record debts, have a debt bill of $ 13 billion due (Bloomberg).

U.S. Business Chapter 11 bankruptcy filings rose 29% last year as coronavirus pandemic and related lockdowns hurt revenue; Individual signups could increase as the Mortgage Forbearance programs and Coronavirus Relief (WSJ) expire.

“If the interest payments on the debts themselves are largely determined by the policymakers, they cannot be a good canary in the coal mine” (WSJ)

Washington Post columnist Katrina vanden Heuvel argues that the incoming US presidential administration may push for the government to play a role in solving US $ 4.1 billion in non-home debt (Washington Post)

Almost a quarter of the residential units in the Frank Gehry-designed skyscraper in Lower Manhattan became empty during the Covid pandemic, resulting in rental concessions (WSJ).

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