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 a monthly gain of 57%. The other months when this happened were April and July, with June the best month this year for $ETH at +70%.
Table 1: Price Comparison: Bitcoin, Ethereum, Gold, US Equities, Long-dated US Treasuries, US Dollar (% Change)
November was an extraordinary month for bitcoin and crypto as a whole, with positive developments in particular coming from Wall Street and institutional investor adoption. Fabled hedge fund manager Stan Druckenmiller publicly disclosed for the first time that he now owned bitcoin, while longtime bitcoin skeptic Ray Dalio, founder of the world’s largest hedge fund, acknowledged that he “might be missing something” with his traditionally bearish bitcoin stance.
What’s going on with gold?
One potentially significant longer-term development we will be watching was the divergence in November 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 outflows in November from Gold ETFs offer potential evidence of this. BlackRock Chief Investment Officer Rick Rieder gave an interview on CNBC on the 20th November where he suggested bitcoin could replace gold.
The downward move in gold in November was particularly striking given that the US dollar resumed its 2020 slide to hit a two and a half year low and inflation concerns continue, fueled by growing calls for more extraordinary fiscal stimulus.
We have argued that gold and bitcoin can be viewed as 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 the market value of bitcoin (~$350 billion). Any sustained move by gold investors to diversify their hard asset portfolio into bitcoin should provide strong support for further bitcoin price appreciation.
Long-dated US Treasuries gained +2% and are now outperforming gold for 2020 (+18% vs +17%, respectively), while equities reversed October’s losses to gain 11% for the month and are up 12% YTD.
Overall, 2020 is shaping up to be arguably crypto’s best year yet on a number of levels. It is not surprising to see that three of the top-5 best months in history for average crypto prices are now from 2020 (Figure 1).
Figure 1: Top-5 Months by Average Daily Bitcoin Price
