2020 will forever be a year that no one will ever forget, and for multiple reasons. We had the global outbreak of Covid-19, the U.S. experienced record high unemployment levels, we saw riots in almost every state, we printed 22% of our money supply, we had a very controversial presidential election, and much more. But for the purposes of this article I’m here to discuss how Bitcoin (BTC) out performed every major asset class this year, future price projections, and the role I see BTC playing in the years and decades to come.
Before we get started, here are a few facts about BTC and cryptocurrencies: Cryptocurrencies as an asset class, have generated the highest investment returns (in terms of percentage gains) out of any asset in history. BTC is the best performing asset of the last decade (No matter when you bought BTC, 98% of its investors are in profit). This year, BTC out performed the NASDAQ, the S&P 500, gold, the bond and treasury markets, and every other asset class you can think of. BTC was also the first market to recover from the March crash (even beating gold). And while the world is going through a quantitative easing, BTC just experienced its third halving, resulting in a quantitative tightening, as BTC is becoming more scarce by the day.
The talks of BTC and digital assets being a legitimate asset class are no longer happening. Wall Street and other large financial institutions have finally figured out how to make money with cryptocurrencies, which resulted in them changing the narrative from negative to positive. If you remember a few years back, you wouldn't have been able to find many credible figures from finance 1.0 saying any good about BTC and cryptocurrencies. For example, Jamie Dimon (CEO of JP Morgan Chase Bank, the largest bank in the U.S.) was on record in 2017 calling Bitcoin (BTC) a scam, fraud, worthless, stating that he had no interest in it, and even went as far as saying, “the run-up will end badly,” and that “stupid” buyers (including his daughter) would “pay the price.” And, he predicted, governments will eventually shut bitcoin down.
Fast forward, now Jamie Dimon regrets his negative comments regarding bitcoin and JP Morgan has officially released their own crypto currency called JPM Coin. This is not surprising at all since BTC and cryptocurrencies threaten to steal customers away from the traditional banking system. It makes sense why CEO’s of large banks were bashing this revolutionary technology in public and buying it by the boatload in private. They know their words have a powerful influence over the masses, so in an effort to keep the prices down, they bad mouth it so that they can accumulate as much as they can before doing a 180 and begin to praise the technology so that they can ride the wave all the way up.
If you’re like some people, you may be thinking, “what if the government bans BTC”. I think that it’s a 99.9% chance that the U.S. will NOT ban BTC, and I’ll give you an easy explanation as to why. Here in the U.S. we pride ourselves on freedom and being the land of opportunity, which is a big reason why people from all over the world desire to move here to achieve their goals. If the U.S. enforces regulations on crypto to make it illegal here, they know that people will just move out of the country since the crypto market is a global playing field. If that happens, the U.S. will no longer be “The land of opportunity” and will begin to fall behind as a country, which is the last thing they want to do.
As for my future predictions, all signs are bullish for crypto. The international stock exchange, Nasdaq, the country of Switzerland and more are all forming regulations around crypto. Federal U.S. Banks can now legally custody crypto assets (and charge astronomical fees for doing so). Paypal and Venmo officially announced that they will be allowing their customers to buy and sell crypto within their apps. And probably the most bullish sign of all, public and private companies have been buying BTC in large amounts with leftover cash on their balance sheets, treating BTC as a treasury reserve asset to hedge against inflation. Given the game theoretical implications behind this corporate buying, pretty soon, it’s going to be financially irresponsible for a company to not have at least 1-5% of BTC in their portfolio, resulting in other large corporations following suit. I should also note that there is 900 BTC mined per day, and Square and Paypal are buying them up immediately as they’re mined (70% Paypal 30% Square).
Let’s also look at some on-chain data. There are nine BTC charts already at an all-time high, which is a big sign that this bull rally is a lot different from 2017. This bull rally is being led by large institutions instead of the speculative retail investor crowd. First, wallet addresses holding $1, $10, $100, and $1000 are at an all time high which shows how much more dispersed BTC is becoming among retail investors. CME BTC futures total open interest and volume are at an all time high which shows that institutional investors are interested in getting involved with BTC. Realized capitalization, BTC priced in Turkish Lira, BTC held by Grayscale Bitcoin Trust, stable coin free float levels, transfers on Silvergate’s Exchange Network, crypto-native credit, and BTC options open interest levels are also at all time highs. These are all strong signals of a major BTC price explosion in the near and long-term future.
I think BTC will continue to hover around 18k-20k until christmas time, where I expect a holiday correction to maybe 15k. Come January, I think BTC will be off to the moon and the stars. I’m conservatively predicting that by the end of 2021, BTC will be worth at least 70k per coin. But I don’t think the party stops there. Given that Millennials -the first generation to grow up with technology at their fingertips- are set to inherit as much as $68 trillion in the next decade (the largest wealth transfer in history). Many studies show why it’s easy to assume that a large majority of that capital will find its way towards digital assets. As usual I’ll end this article with one of my favorite quotes as it pertains to this subject, “ There is no better weapon than the prepared mind”.