Bitcoin Tops $20,000 For the First Time

Bitcoin Tops $20,000 For the First Time

The price of Bitcoin topped $20,000 for the first time on 16th December, 2020, minutes after a surprisingly weak U.S. retail sales report encouraged further speculation on aggressive reflationary policies from the new administration and Federal Reserve next year.

By 8:48 AM ET (1348 GMT), the world's most valuable digital currency was trading at $20,283.49 on the Bitfinex exchange, a gain of 4.8% on the day.

Bitcoin had been steady just below the $20,000 level for most of the last three weeks, as the progress of vaccines to treat Covid-19 through the authorization process encouraged belief that a recovery, and higher returns on fiat currencies, were now pre-programmed for 2021. However, the spread of the coronavirus through the U.S. and Europe has led to wider and stricter lockdowns, gradually raising the pressure for more stimulus - something that investors in crypto prefer to style as currency debasement.

The move happened after the Commerce Department said U.S. retail sales fell by 1.1% in November, their first decline in six months and the most concrete sign yet that the ongoing weakness of the labor market is eating into household spending. Initial jobless claims rose steeply last week to 853,000, their highest in three months, sparking fears that net job growth may have ground to a halt.

In addition to the economic data, the U.S. Treasury also published a report accusing Switzerland and Vietnam of being currency manipulators, something that could be seen as a prelude to official intervention to weaken the dollar. Although it has already backed off substantially from its peak earlier in the year, analysts say that the dollar's fundamentals - specifically its massive fiscal and current account deficits - would easily justify a further drop.

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