For the first time in 4 weeks, Bitcoin managed to step over the resistance of $50,000 on Tuesday's session, spurring talks among investors that this may be the beginning of a new uptrend that may well continue in the future.
In September, Bitcoin was in demand only among the sellers, who managed to push it below $40,000 amid a massive sell-off of risky assets. However, the downtrend didn't develop any further. Market participants revised their attitude towards bitcoin due to the continuing interest in this cryptocurrency coming from institutional investors, who not only didn't dump it when it tested its local minimums but used lower prices to build up their "long" positions.
Commercial banks and financial institutions develop innovative services based on blockchain to satisfy the growing investor demand, which also supports bitcoin. On Tuesday, U.S. Bancorp announced the launch of a cryptocurrency custody service for institutional managers who have private funds in the U.S. and the Cayman Islands. On Monday, Bank of America published its first research on cryptocurrencies, noting that this asset class has a big future. It is worth noting that Bank of America is encouraging its clients to consider digital assets as a promising investment option.
Additional interest in Bitcoin is being fueled by growing concerns about a potential U.S. default. Traders are closely watching debt ceiling negotiations in Congress. Last week, Treasury Secretary Janet Yellen urged Congress to raise the national debt ceiling or suspend the U.S. borrowing limit by Oct. 18. Otherwise, the authorities will be forced to freeze payments to federal employees, Medicare benefits, military salaries, social security checks and more, which will affect millions of Americans. In addition, the Treasury Department's inability to meet its obligations for the first time in history will have catastrophic consequences for the financial markets. Experts predict that in this scenario, the dollar will lose its reserve currency status, which will trigger a massive global cash flow redistribution.
The uncertainty around China's largest property developer, Evergrande (OTC:EGRNY), which has accumulated $300 billion in debt, poses more risks for the traditional financial system. Many experts believe that the potential bankruptcy of this developer may cause a new financial crisis. Investors faced with huge losses from investing in traditional financial instruments will seriously consider adding cryptocurrencies to their portfolios. Given the persisting global risks, we recommend diversifying your investments and adding digital assets, including Bitcoin, especially now that it's still expected to grow to the $100,000 mark.