As we enter the last three months of the year, the price of Bitcoin has risen sharply. Is the bull run in Bitcoin just beginning? Newcomers to Bitcoin investing may find the environment bewildering and even frightening. From optimistic fanatics to others who reject Bitcoin as a worthless ponzi scam, opinions on the cryptocurrency range widely. These five macro-trends and data factors can help you decide whether or not Bitcoin is right for you.
THE ADOPTION OF BTC IS INCREASING.
The rate at which people across the world are adopting Bitcoin is increasing. In the popular Blockchain wallet, the number of users continues to increase by millions each month.
There’s more to this tale than simply wallet numbers, however. Compared to retail investors, who are content to leave their Bitcoin with a custodian like Coinbase, Square’s Cash App, or PayPal, the number of individuals having BTC in their personal wallets is dwarfed.
Compared to the same period last year, Square’s (SQ) Bitcoin business income rose 11 times. According to a Square shareholder letter released earlier this year, Bitcoin revenue and gross profit produced by the Cash App in the first quarter of 2021 increased 11 times year over year, according to a Square shareholder letter released earlier this year.
Motivated by Cash App use, PayPal has accelerated its crypto rollout, making it possible for any US PayPal client to buy, sell, and retain BTC, ETH, BCH, or LTC.
Many on-ramps for retail and institutional purchasers are available as the Bitcoin bull market heats up in the fourth quarter, and many holders of other tokens and coins are continuing to swap cryptocurrencies for Bitcoin at the best available rate. A quick coin exchange provider like Swapzone comes in handy at this point.
Demand may lead to even more volatile price fluctuations in the future, as has happened in previous Bitcoin cycles.
In addition, as of this week, anyone may be compensated in Bitcoins. Pay Me in Bitcoin was launched last week in conjunction with Strike. Users of Strike may set any quantity of incoming money to be converted into bitcoin with no cost by using their account and routing details.
Mr. Mallers adds that “Pay Me In Bitcoin enables anybody to convert a part of their salary into bitcoin with no fees, giving them simple access to preserve and build their money while also empowering them economically. Bitcoin, the world’s greatest monetary asset, has allowed us to take a huge step forward in economic emancipation.
At the end of September, Coinbase unveiled a similar service.
The new functionality was announced in a blog post. The first step in understanding Bitcoin, according to Mallers, is to fully grasp the saving dilemma that we are all now confronted with. How does one go about saving money to buy a house? When banks only provide 0.06 percent in retirement savings, how can people be confident they will be able to afford it in retirement?
A whopping 54% of Americans are said to be living paycheck to paycheck.
Seventy percent of Americans have no more than $15,000 in their bank accounts. As a result of central bank inflation, the value of the dollar is quickly eroding and the cost of living is rising.
“You simply can’t save by keeping money,” says Mallers.
Instead, he suggests that you consider investing in Bitcoin, which he calls “the scarcest asset ever created, endlessly divisible, trivially verifiable, and capable of traveling at the speed of light.” Because we designed it to be ideal money, Bitcoin is the best money ever created. It was specifically designed to solve money’s inefficiencies and maximize the currency’s most valuable property: its ability to store value.
Mallers may have a point. Bitcoin, after all, has an average annual return of 100%+, making it one of the greatest saving technologies in history.
Mallers cites this example: investing $50 each week in a savings account over the past three years generated $7,850 in extra buying power, putting the total at $7,190. Your funds have really lost value due to inflation and rising living expenses.
It took the same amount of time to save $50 a week in bitcoin to become $59,000. The figures are self-explanatory.
When it comes to the macro climate, Bitcoin’s value proposition is ideal.
It all started with the Global Financial Crisis of 2009. That’s when bitcoin was created. Amidst bank collapses, government bailouts, and quantitative easing, Bitcoin stealthily entered the wild, where it was disregarded by everyone save a tiny number of idealists..
In 2021, we’ll see a fresh financial catastrophe characterized by historically low interest rates, huge quantitative easing, and out-of-control inflation.
The unique value proposition of Bitcoin, as well as where it fits in the macro context, are becoming more apparent to both people and businesses alike. Paul Tudor Jones, a well-known macro investor, compared Bitcoin to gold’s significance in the 1970s. Tudor BVI revealed why it had between 1% and 2% of its assets in Bitcoin futures contracts during the Great Monetary Inflation.
The virus COVID-19 has sparked a unique worldwide policy reaction, according to Tudor Jones. Even a seasoned investor like myself was taken aback by how quickly it all occurred. Quantitative easing has generated $3.9 trillion in new money only since February (6.6% of world GDP). The Great Monetary Inflation (GMI) is taking place, and it’s unlike anything the industrialized world has ever seen in terms of money growth.
Bitcoin seems to have been created by Satoshi Nakamoto as a response to this problem. Shortly after the Bitcoin white paper was published in 2009, an anonymous Bitcoin developer made a message to an online forum. “The fundamental issue with traditional money is all the confidence that is needed to make it function,” he said. He was right. There must be confidence in the central bank not to debase the currency, but history is littered with instances of that trust being betrayed. Despite the fact that banks must be trusted with our money, they are lending it out in waves of credit bubbles with just a fraction of the money on hand.
According to Raoul Pal, CEO of Real Vision, in May 2020, the scene was prepared for hard assets like Bitcoin and gold to perform well as central banks adopted quantitative easing. As fiat money becomes harder to come by, the Fed’s quantitative easing program comes to an end. The cryptocurrency Bitcoin comes out on top. Technically, fundamentally, fund flow-wise, and plumbing-wise, this is one of the finest asset class setups I’ve ever seen.”
To top it all off, renowned hedge fund manager Stanley Druckenmiller said in mid-May that the U.S. currency was headed for a meltdown because of current Federal Reserve policies and the country’s massive deficit spending. He told CNBC’s Joe Kernen that the dollar would be dethroned as the world’s reserve currency “more likely than not” over the next 15 years. He said that a “crypto-derived ledger system” would be “the most probable successor” for the currency.
There is a striking difference between quantitative easing by central banks and an ever-increasing money supply compared to the quantitative tightening caused by the third halving of Bitcoin’s price. The amount of fiat money in circulation is increasing rapidly, while the scarcity story around Bitcoin is becoming more significant.
Because of this, asset values such as equities, bonds, and real estate have all risen to previously unheard-of heights. Even a 1% reallocation from other asset classes to Bitcoin would result in capital inflows larger than the current market capitalization of the cryptocurrency.
Due to the hardcoded limit of 21 million coins in the Bitcoin protocol, this generates a unique kind of digital scarcity. There is no way to raise supply if demand increases. Existing Bitcoin holders who are ready to sell are the sole source of new supply.
IS IT POSSIBLE THAT THE BTC STOCK-TO-FLOW MODEL WILL STAY IN EFFECT?
Quantifying a good’s scarcity may be done using an investment concept known as ‘stock to flow.’ The entire quantity in circulation is known as the stock, whereas the annual fresh supply is known as the flow.
S2F can be precisely measured since Bitcoin is open-source software with a predetermined supply. As of May 2020, the S2F for Bitcoin will be 56, which is about the same as the S2F for gold. Once Bitcoin’s supply has been halved once more, it will be twice as rare as gold.
The Bitcoin Stock-to-Flow (S2F) model was developed by an anonymous quant trader going by the handle PlanB. He says that when Bitcoin becomes scarcer, its value will rise. As a result, PlanB’s initial model has been transformed into a cross-asset pricing model. If the model holds, the Bitcoin price may hit $288k in this cycle, according to this model’s forecast. Given the huge potential returns, even if it doesn’t, maybe it’s a good idea to keep a little quantity of Bitcoin on hand just in case?
TODAY, BTC IS THE BEST INVESTMENT POSSIBLE.
Bitcoin is up 60% so far this year, making it the top-performing asset in the world when compared to all other asset classes combined. Although China’s crackdown on Bitcoin in September created a torrid storm of fear, the commodity has since survived the storm and returned to bullishness in October. October, a typically good month for Bitcoin, began with a 15% increase in five days. It is expected to rise by 60% by 2021. So, compared to other asset classes like equities, bonds, and gold, it’s well ahead.
When compared to the previous 365 days of Bitcoin’s performance, the excellent performance in 2021 is nothing to brag about. Bitcoin has risen 402 percent in the last year alone, far outpacing gold and stocks, which appear to be stationary in comparison.
Short-term volatility is nothing new for Bitcoin, but over the long run, its value has skyrocketed. This tendency is likely to continue as new investors place their money in Bitcoin.
MicroStrategy CEO Michael Saylor believes that long-term performance shows “since Bitcoin is the most extensively used cryptocurrency in the world, it’s a safe haven for wealth and an excellent investment. Accordingly, MicroStrategy made Bitcoin the primary holding in their treasury reserve strategy after recognizing it as a genuine financial asset that may outperform cash.”
In October 2020, Square, the payment platform, followed MicroStrategy’s example and revealed that it had invested $50 million in Bitcoin, purchasing a total of 4,709 of the digital currency. Square estimates that the investment is equivalent to 1% of the company’s overall assets. Square said that it purchased Bitcoin because it “has the potential to be a more ubiquitous currency in the future and an instrument of economic empowerment that offers a means for the globe to participate in a global monetary system.”
Tesla announced in early February that it had invested $1.5 billion in Bitcoin as part of its corporate treasury strategy when it filed with the SEC on February 8th. To better diversify and optimize our financial returns, we made this acquisition to provide Tesla a little more freedom.”
Tesla’s Bitcoin bet backfired seven months later. Tesla is the proud owner of roughly $2.6 billion worth of Bitcoin (BTC). This is an increase of 68%, or $1.1 billion, above the price paid by the automaker in February. Such a strong return may encourage other businesses to follow suit.
THE INTRODUCTION OF BITCOIN EXCHANGE-TRADED FUNDS (ETFS).
The ProShares Bitcoin Strategy ETF, the first U.S. exchange-traded fund tied to Bitcoin, debuted on Tuesday, marking a watershed event in the crypto sector.
It rose as much as 5.4 percent to $42.15 before reversing some of its gains. A Bitcoin-centric exchange-traded fund has been long overdue, as many in the crypto community and Wall Street have advocated for years. It was filed under mutual fund regulations, which, according to SEC Chairman Gary Gensler, offer “substantial investor protections” and are based on futures contracts. “
According to Bloomberg’s calculations, 6.4 million BITO shares worth $264 million were traded in the first 20 minutes of the stock’s trading debut.
In terms of actual money, the digital currency Bitcoin has risen 3.1 percent since its April record high of just under $65,000.
“It’s been an extremely optimistic week — particularly around the ETF, there has been a lot of good emotion.” “FTX’s chief executive officer, Sam Bankman-Fried, told Business Insider by phone.
No one is advising novice investors to put all of their money into Bitcoin immediately. But just 1% to 5% of your total assets should be allocated to Bitcoin. I think that’s a wise decision on your part.
SUMMARY
These five macro-trends and data factors can help you decide whether or not Bitcoin is right for you.
Compared to the same period last year, Square’s (SQ) Bitcoin business income rose 11 times.
Motivated by Cash App use, PayPal has accelerated its crypto rollout, making it possible for any US PayPal client to buy, sell, and retain BTC, ETH, BCH, or LTC. Many on-ramps for retail and institutional purchasers are available as the Bitcoin bull market heats up in the fourth quarter, and many holders of other tokens and coins are continuing to swap cryptocurrencies for Bitcoin at the best available rate.
Pay Me in Bitcoin was launched last week in conjunction with Strike.
Bitcoin has risen 3.1 percent from its April record highs of little under $65,000. No one is advising novice investors to put all of their money into Bitcoin immediately. But just 1% to 5% of your whole assets should be allocated to Bitcoin.
