Bitcoin and Stock Markets Hit All-Time Record Highs for 2nd Week in a Row
Stunning investors and Bitcoin enthusiasts, both Bitcoin and US stock market values hit all-time highs for two consecutive weeks. On October 20, 2017, Bitcoin’s price punctured the $6,000 USD mark. Simultaneously, the Dow Jones Industrial Average set a new record high of more than 23,328 points.
Impressive Record-Setting Two Weeks for Bitcoin and Global Stock Markets
For two weeks in a row, both the US stock market and Bitcoin’s price, almost in sync, displayed spectacularly bullish sentiments.
During the week ending on October 13, 2017, the cryptocurrency broke through the $5,800 USD mark, thus setting a new record high. At the same time, global stock market indexes surged significantly, also reaching record highs.
Then during the week ending on October 20, 2017, Bitcoin and the US stock market once again closed at values never-before reached.
In the same period, Japanese stocks rose to new highs, sustaining a 13-day trend of price increases. Thus, as reported by the Financial Times, “Nikkei 225 notches up longest winning streak in almost 30 years.”
Moreover, despite the Catalonia-Spain dispute, the European STOXX 600 index rose by 0.26 percent.
Bitcoin Market-Cap Surpasses $101 Billion USD
Investors continue to bet on Bitcoin’s potential. Indeed, many of them are so optimistic, that they believe that Bitcoin will surpass the $10,000 USD mark shortly.
Consequently, in defiance of Chinese restrictions on cryptocurrencies, and disparaging comments issued by influential bankers, Bitcoin’s trajectory has shown impressive gains, more than any other financial asset.
As Reuters reports:
The original virtual currency has gained over 500 percent this year, more than any other tradable asset class.
As of this writing, Bitcoin capitalization has hit a record high of over $101 billion USD.
Why Are Bitcoin and Stock Market Prices Soaring?
Certainly, the correlation observed in the surge of both the stock market and Bitcoin’s price does not imply causation. Therefore, analysts provide arguments to explain the rise of each one distinctly.
For example, some experts suggest that the boost in Bitcoin prices is due to rising hopes that the Chinese government will eventually reverse or relax the restrictions it imposed on the cryptocurrencies a few months ago.
In this regard, Reuters quoted Charles Hayter, co-founder and data analyst at Cryptocompare, as saying that he “hopes that China will soften its regulatory stance on crypto-currencies helped bitcoin’s cause.”
Other experts attribute Bitcoin’s surge to the upcoming hard forks of its blockchain. For many, the period leading up to these events represents a buying opportunity. The implementation of the first hard fork is scheduled to occur on October 25, 2017 with a subsequent fork occuring sometime in November.
Previously, a hard fork occurred in August 2017, and it boosted Bitcoin holders’ gains. Now, Bitcoin enthusiasts are hopeful that this new hard fork will also push Bitcoin to higher prices.
On the other hand, regarding the stock market’s record-breaking data, analysts concur that one of the main reasons is due to rising hopes of a tax reform in the US that would lower corporate taxes.
In effect, on October 19, 2017, the US Senate passed a fiscal 2018 budget resolution that would facilitate the enactment of President Donald Trump’s promised tax cuts.
The Senate Resolution states:
The FY 2018 Budget Resolution provides a path to balance by restraining federal spending, reducing tax burdens, and boosting economic growth.
But be aware! Regardless of the validity of the factors pushing Bitcoin and the stock market’s value higher, cryptocurrency enthusiasts and investors should be cautious and not fall under the spell of irrational exuberance.
What are your thoughts about the relationship between Bitcoin and world financial markets? Let us know in the comments below.
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