Corporate Finance, DeFi, Blockchain, Web3 News
Corporate Finance, DeFi, Blockchain News

$20k, $30k, $40k… What next for Bitcoin?

by Ilias Louis Hatzis.

The last 25 days have been breathtaking for bitcoin and the entire crypto market. Less than a month ago, bitcoin crossed $20k, then 10 days later, it crossed $25k and then, with without breaking its stride, it crossed $30k.The bitcoin boom has gone into overdrive this week. A few days ago, bitcoin’s price has crossed $40k. In less than one month, bitcoin’s price has doubled and the total value of entire cryptocurrency market, for the first time ever, passed $1 trillion on Wednesday. What a wild ride it has been for bitcoin in the last three years. In 2017, the bitcoin price soared from less than $1,000 at the beginning of the year to around $20,000 in under 12 months. Then it all disappeared. By December 2018, bitcoin was worth less than 4,000 bucks a coin. The primary difference between now and 2017 is that reputation risks have dissipated and more people than ever are using bitcoin as an exit from the traditional financial system, as opposed to a purely speculative investment. The only risks now are glitches in the technology or a risk-off swoon like what happened in the first quarter of 2020. When Julius Caesar crossed the Rubicon river on January 10 in 49 BC, he ended the Roman Republic. But the reality is that the Republic had ended much earlier, corroded by decades of corruption and conflict. The Covid-19 pandemic has clearly reshuffled the cards and has become bitcoin’s “Rubicon moment.” Will you be able to buy a cup of coffee with bitcoin? Probably not with the current version of Bitcoin. But just like Caesar laid the foundation for the empire that followed, bitcoin is laying the foundation for the economic changes that coming and will stretch well into this century, transforming the way money is created, distributed and spent.

Last year was a very special year for bitcoin, with its price up by almost 400% over the past 12 months, an incredible return compared to other asset classes. However, it will be nothing compared to what will happen in 2021.

There are growing expectations that bitcoin is set to become even more mainstream. There are a lot of institutional buyers out there and bitcoin has become the preferred investment against the dollar inflation, hedge or gold. This has driven bitcoin demand to 3x the supply. Compared to 2017 when demand came from the retail market, this rally has been much more institutionally driven But retail investors will eventually be back again. We are already seeing signs of retail interest ramping up. If you look at the number of times bitcoin has been Googled, these levels are 5x what they were a few months ago. As far as payments go, the integration into PayPal’s platform is a step in the right direction. There’s also a whole heap of additional scalability improvements being worked on the technology itself.

The value of all bitcoins in circulation is now more than $700 billion and the total value for all cryptocurrencies is more than $1 trillion, according to CoinMarketCap. Bitcoin’s dominance in the cryptocurrency market is at 70%. As both retail and institutional investors alike continue to realize that bitcoin can serve as a hedge against inflation, as well as a yield-bearing asset, through the use of DeFI apps, you can expect this dominance to increase even more in 2021.

In the long run, bitcoin will be the only cryptocurrency that will matter. it’s entirely possible that bitcoin eventually breaks $100,000 per coin, by the end of 2021.

We’re reaching an inflection point where bitcoin will essentially become the reserve currency of the internet. This is a shift in thinking about currencies, that economist Milton Friedman predicted could happen as far back in the 90s, when the internet and the concepts of digital currencies first appeared.

For global regulators and central banks, bitcoin and crypto is no longer an abstract curiosity. They represent a threat to the financial orthodoxy. That is why, different central banks are prepping their CBDCs and when they are finally deployed, governments will have far more control of your money. With their new CBDCs, they will be able to censor your transactions for any reason and will be able to confiscate your money much easier, compared to what they can do with the existing banking system. This is only going to drive more people to bitcoin.

While it’s difficult to say what will happen, or how high prices will go, we can be confident that cryptocurrency is not going away anytime soon. Bitcoin has cemented its place as a worthwhile investment and 2021 will be a pivotal year with much greater institutional and retail investor adoption. The ongoing issues around the cost and speed of bitcoin transactions means it’s still not a great payment option, but Paypal and Square are changing that and in 2021 bitcoin could be used to make payments. This year will be remembered for the rise of digital money. The groundwork is now in place for more mainstream adoption of bitcoin and cryptocurrencies at the same time the rails are being established for the use of digital currency for payments.

Sooner or later, bitcoin’s price will experience a major correction. However, the low will be higher than previous lows and eventually bitcoin’s price will bounce back, as it always does, passing previous highs to reach new levels. So, your strategy should be the long game, continuously buy what you can afford and HODL.

Ilias Louis Hatzis
Ilias Louis Hatzis
Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG.
He writes the Blockchain Weekly Front Page each Monday.I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve.
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

Lundi 11 Janvier 2021