Why Was Bitcoin at $30k This Morning?
Is this the same hype that drove the 2017 bubble? I think not.
If you are watching the charts, then you know that Bitcoin hit a new all time high on December 16th. When we woke up this morning, we saw that Bitcoin is even higher. $30,000 CAD per Bitcoin. This has been a wild three years since Bitcoin's last all time high in 2017. Many are wondering (and asking us), is this bull run different than the one in 2017? Can Bitcoin sustain these new price levels? How high can Bitcoin reasonably go in the near future? This is the email that answers those questions.
What is Driving the Price of BTC Up?
There are a variety of factors that are influencing this massive price bump. Bitcoin certainly seems unshackled after breaking its previous all-time-high (ATH). It is important to know, or at least speculate on what is behind this price rise. In our estimation, institutional investment is the number one driving factor behind this wall of money entering the Bitcoin space. That being said, the price would crumble in the absence of what the cryptosphere knows as the "HODLers of last resort". That is, the wide collection of individuals and businesses that will "never sell their bitcoin". This includes Michael Saylor and MicroStrategy, who've continuously increased their bitcoin position. (read case study here).
We would be remiss if we didn't mention Bitcoin's stock to flow ratio. Companies like Square, MicroStrategy, and GreyScale are sucking Bitcoin out of the market faster than the miners can produce it. For reference, 900 Bitcoin are minted every day, and these companies have been buying thousands upon thousands every month since mid 2020. The price we're seeing is a result of a reduced market supply and consistently increasing demand in new institutional players.
Is 2020 any different than the 2017 bubble?
The 2017 crypto bubble was massively driven by hype. One way we can get a pulse on how much hype is behind this bull run is by looking at Google Trends.
As you can see, many people were learning about Bitcoin for the first time in 2017. This is where a massive amount of people began their crypto journey. Maybe they didn't invest right away, but at least it was on their radar. This current bull run is a byproduct of the exposure that bitcoin gained in 2017. To put it simply, this 2020 bull run is indicating that the market is maturing.
Are These new Prices Sustainable?
Not only is this new all time high sustainable for Bitcoin, but it will go on to post new ATH's (Average Time High's) for the next 8 months. That is not to say there won't be the occasional correction of significant percentage points. As Bitcoin makes its ascent to $100k / BTC, it is inevitable that it'll have several significant drops along the way. So the prices are sustainable in the sense that we can be confident that $10k, $15k, and perhaps even $20k Bitcoin is far behind us.
How High Can We Go?
We're targeting $100k USD per Bitcoin by August 2021. This is based on Bitcoin's stock to flow ratio chart. This is not a prediction, nor a recommendation to invest. It is simply a number from a model that has thus far been accurate at tracking the price of bitcoin over time. It is useful to ask questions about the role of Bitcoin as it matures into the money it was built to be. A $100k bitcoin would put Bitcoin's total market cap at $2.1 trillion. For reference, gold's market cap is around $10 trillion. For the time being, it appears that Bitcoin is with gold's market cap as a "safe haven asset". While many will debate the narrative that Bitcoin is a safe haven of any kind, it is hard to ignore the properties of Bitcoin that lend credence to the narrative of "Digital Gold".
Is It Too Late to Buy Bitcoin?
No, it is not. If you want to start investing in a self sovereign, censorship resistant, non correlated asset class - get in touch with us and we will craft your crypto strategy for you.
All The Best,
Keegan Francis
Follow me on Twitter @cryptokeegan