Why The Current Bull Run Is Different And Who Is Pushing It
The Perception is Changing..
Bitcoin. Bitcoin. Bitcoin. After seeing its price drop to below $5,000, Bitcoin quickly raced back to $20,000 then to $64,000.
Surpassing all-time highs and surprising many as it roared out of the initial Covid led shock to the markets.
Many people wonder if this is nothing more than another market pump-and-dump, which will ultimately lead many investors holding onto bags.
Months of sideways sloping downward action from the 64k high has helped the FUD linger longer.
A few short lived highs has the current ATH around 69k.
Mounting concerns of yet another period of social restrictions, economic uncertainty, and global tensions; the markets have been tested hard lately.
The truth will prevail yet, this Bitcoin bull run is different.
Achieving big moves with an ETF and long awaited smart contracts..
The narrative will soon be changing too..
According to cryptocurrency analyst Willy Woo and our simple pink line heads-up indicator, there are already many tangible reasons as to why we should be thinking about this Bitcoin bull run differently. For one, the measurement of reflexivity — when investors do not sell even as the price of an asset goes higher — is actually increasing with Bitcoin, not decreasing.
This means, as Bitcoin climbed in price beyond the old ATH of $20,000 less people sold it than expected.
It's is a positive sign that shows even investors who have already made significant gains through their Bitcoin investment are not willing to let go of the asset because they believe the price still has room to grow.
Reflexivity is possibly highlighted in my pink line model below.
The pink line below represents the mean age of all owned bitcoins, in days.
The ebbs and flows of the larger market trends of buys & sells can be illustrated with this.
For example, if the pink line were to go up and to the right for a prolonged amount of time it would express that the mean age of all bitcoin, owned in their current address, would be getting older.
This can only happen if, in general, more people are holding than selling.
Once the ratio is closer to 50/50 (old holds VS new buys) in the overall markets, the pink line would tend to stay level - with the mean coin age between 300 and 400+ days old.
And finally if the pink line were to move to the right (time) and downward at the same time for a prolonged amount of time.. this would illustrate a general trend of two factors.
Each 'sell' of an older coin, effectively ends the life of a bitcoin address somewhere, replacing an older coin 'age' with a newer coin 'age'.
Not a new bitcoin but a new one to the new owner.
This pulls the line down as time pulls us all to the right. Like an etch a sketch, kinda.
Just think about it for a bit..
He also highlights how Bitcoin is actually a more stable investment than gold when adjusting for risk and taking into account the long-term outlook.
“If you're in it for the long run, you want long term stability of returns for the risk you're undertaking. Day to day price volatility drops to the background for long term investors,” says Woo.
By Woo’s estimate, between 1.3% and 1.7% of the global population currently has exposure to Bitcoin.
This still puts the cryptocurrency in the early stages of the adoption curve, with room for exponential growth.
Also, when compared to the adoption of previous technologies like mobile phones and the internet, Bitcoin’s adoption has seen even more rapid growth.
Adoption is easier to visualize than talk about, so follow along.
So on the above image we have a different pink line showing the internet's adoption curve by global users.
Also the image highlights PayPal accounts and estimated bitcoin users, by the numbers and on top of time at the bottom of the image.
To add more imagery let's take a look at this one..
Here we can add another illustration of global internet users vs total crypto users.
It's easy to tell that bitcoin & crypto are not used by all of the people who use the internet yet.
And frankly, they never will be in some sense.
But anyways, if you're noticing that only about 1/3 of the people here on earth are on the internet, then you may know what's next.
If the on-chain data, fundamental story, and narrative upgrades continue to skew towards Bitcoin and crypto, then the exponential age will bring with it - speed, AI, & the rest of the world.
The exponential speed of advancement will only grow.
The estimates from the study done for the above image came to the conclusion that a standard household laptop would be capable of full human brain emulation by the year 2063.
This is based of off the exponential speeds at which processors tend to be able to process data.
The chart above shows 110 years of this.
We did it.
Bitcoin has an ETF.
An Olympic Gold Medal in it's own world.
It is futures based - and bullish overall - but stacks yet another layer of volatility to the already emotional markets. With Fidelity going to Canada to issue their spot Bitcoin ETF.
Holding Bitcoin itself is not such an easy task for those who aren’t comfortable with the technology.
Fears of theft and scams, let alone not understanding the proper way to store and send the currency, have kept many people far away from Bitcoin.
Cryptocurrency asset management firm Grayscale saw this problem and found a way to get new investors exposure to Bitcoin without having to manage any of the headaches that come with cryptocurrency custody.
The Grayscale Bitcoin Trust (GBTC) is a publicly traded investment vehicle that trades with the price of Bitcoin.
GBTC currently has around $37.6 billion in assets under management, and the fund holds 654,885 Bitcoin, and is growing.
Now, investors can get exposure to Bitcoin through GBTC without ever having to worry about the ins and outs of the technology itself.
When the publicly-traded finance company Microstrategy announced it was using its cash to buy Bitcoin, many financial experts thought they were crazy.
But CEO Michael Saylor saw an opportunity to take his company’s cash on hand and put it in an asset that would not be prone to inflation like the US dollar.
As a result, Microstrategy has purchased over 100,000+ Bitcoin in the past year or so. According to Saylor:
"Bitcoin is not a currency, nor is it a payment network. It is a bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, & secure savings account to billions of people that don’t have the option or desire to run their own hedge fund."
The Microstrategy investment, while important in its own right, is more important for what it shows other corporate entities.
Microstrategy, a public company, took its own cash and determined it was better served sitting in Bitcoin instead of fiat.
This was the start of a trend effect of publicly traded companies putting a fraction of their cash reserves into Bitcoin as a hedge against inflation.
When Tesla, Square, and MicroStrategy hold bitcoin on their balance sheets, it shows strong conviction.
Not to be out done by the forward thinking Saylor, Elon Musk joined the party early on as well.
Telsa now owns 40,000+ bitcoins on their balance sheet.
Even with the back and forth of Elon, its a great move forward for the crypto coin.
With institutions and publicly traded companies on board, the sky’s the limit for Bitcoin.
Throw Square, Twitter tips, and El Salvador into the mix to spice it up.
The less investors are willing to sell, the less supply of Bitcoin is on the market for new buyers, creating a supply-demand imbalance where prices have nowhere to go but up.
The question now is, how far can the price of Bitcoin soar?
2020 and 2021 has been a rollercoaster year for the entire world, and Bitcoin is no exception.
This is in large part thanks to the support from institutional investors, who now are taking Bitcoin more seriously as an asset than ever.
These institutional investors and financial institutions are the latest to allocate a portion of their funds to the Bitcoin revolution, and/or support its infrastructure.
And they are largely to thank for Bitcoin’s push past $20,000 and up to $64,000,
Let's review the landscape here..
Maybe the most surprising name on the list, MassMutual is an insurance company that’s been in existence since 1851.
The company announced it purchased $100 million in Bitcoin via the New York Digital Investment Group (NYDIG).
Insurers are thought to be more strategic and saef with their investments, so when one of the industry leaders announced they were getting on the Bitcoin train, it was something that everyone was talking about.
Even JPMorgan took note of this move, saying that it signals wider demand for the digital asset.
The UK-based investment fund said it was allocating 2.5% of its total assets under management, equating to $744 million, into Bitcoin.
The firm recognizes Bitcoin as a good hedge against uncertain economic and monetary conditions across the globe, and the investment is “primarily a protective move for portfolios,” said the firm.
“We see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies,” Ruffer wrote in a statement. “Bitcoin diversifies the company’s (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see.”
While everyone was focused on Microstrategy gobbling up Bitcoin, One River flew under the radar and bought a significant amount of Bitcoin in November without much fanfare.
The asset management firm reportedly purchased $600 million in Bitcoin at prices below $16,000.
To do so, CEO Eric Peters set up a separate firm, One River Digital, to make the digital asset purchases.
One River teamed up with Brevan Howard Asset Management and its co-founder Alan Howard in this investment.
Not only that, One River claimed that in 2021 it would be holding $1 billion in both Bitcoin and Ethereum.
While the Wall Street giant sought SEC approval to purchase up to $530 million in Bitcoin via Grayscale, that wasn’t the biggest news coming out of Guggenheim.
The firm’s founding and managing partner, Scott Minerd, took to the airwaves to announce his view that Bitcoin should be currently valued at $400,000.
"Our fundamental work shows that bitcoin should be worth about $400,000," he said. "It's based on scarcity and relative valuation such as things like gold as a percentage of GDP."
With more and more traditional Wall Street executives taking Bitcoin seriously as an alternative investment and store of value, these allocations to the digital currency could continue to rise, not just replacing gold, but becoming the new, digital asset of the millennium.
A recent trend that was set off by a number of events including MicroStrategy and Twitter, then being capped later by Elon and Tesla. Public companies trading their treasury dollars for bitcoin at large volumes. Will the trend continue... we will see.
Here is a good site to keep up with companies owning btc..
Plus El Salvador is setting up Geo-thermal bitcoin mining facilities off of their volcanoes, among other plans like Bitcoin City.
Volcano powered bitcoin mining..
One of the most popular arguments for bitcoin’s wide scale use is as a store of value, similar to that of gold. In fact, bitcoin is often likened to “digital gold” due to similar qualities.
Michael Saylor, CEO of MicroStrategy Incorporated (Nasdaq: MSTR) the largest publicly traded data intelligence company, purchased bitcoin due to its ..
“dependable store of value…with more long-term appreciation potential than holding cash.” Learn more
The US government seems to still be on the fence about Bitcoin. They remain hesitant to reference it as a true currency or asset.
Biden's pick for head of the SEC, Gary Gensler, recently taught a blockchain course at none other than one of the top schools in the world, MIT.... It seems that regulation in the crypto space is higher on his priorities, so therefore I would expect competent regulation to be released during his term.
If banned, the network would lose so much of its constituency and potential for mass adoption that its usage and value would plummet as a result.
The SEC is obliged to keep the public’s safety at the forefront of their regulations and operations, banning seems counter protective at this point.
To watch 4 and half hours of the most productive congressional talk about crypto in history to date, check this youtube video out.
Bitcoin is also used to circumvent corruption and Venezuelan dictator Maduro’s control of money. Sudan has arrested their own citizens for having $20 bills in their possession.
Sending bitcoin directly to people in need: As borders are closed to humanitarian aid, outside parties such as AirTM and GiveCrypto, founded by Coinbase’s Brian Armstrong, have increasingly turned to bitcoin to transfer capital directly to wallets created and held by charitable organizations and individuals in need.
Bitcoin helps people in real need: Bitcoin supporters often cite Venezuela’s and some African nations' use of bitcoin as a prime example of how the cryptocurrency can be used to democratize access to decentralized financial services.
It is almost impossible.
People like me really just hope a bad guy never gets ahold of Google's time crystal producing quantum machine.
Miners play a key role in securing the Bitcoin blockchain. Miners use their computing power and electricity to confirm the validity of transactions and subsequently post them to the blockchain.
If the top 5 centralized mining pools formed a mega pool they could perform a 51% attack.
Some believe that this concern is overblown, because the moment the blockchain is seen as tainted, the price of Bitcoin would fall at cliff side speeds that the bad actors would lose all of their value in the Bitcoin they stole.
Want to learn more about mining? We’ve got 5 different setups anyone can mine with.
Don’t read this if that's the case.
Bitcoin remains the biggest, most impactful blockchain in the industry, but that doesn’t mean it comes without risks. All of these areas present exposure for the blockchain network, and all will need to be watched closely.
We gotchya back on that part.
We do our best but really anyone who says they for sure know what’s going to happen in the future, would be lying.
P.s.. I know this article was long winded, but I hope that you see the impact and how the chance of reversing back into a world without bitcoin is a very slim chance.
To get a better understanding of the advantages of Proof of Work as a more robust and secure base, check out our piece on consensus.
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