🚀 Bitcoin: The top? Or the Beginning?

Bitcoin looks poised to move past $20K for the first time ever going into the new year with institutions piling in, trading volumes at the highest ever, and new projects gaining momentum.

If there’s one thing to say about the year 2020, it’s this; 2020 surely won’t be forgotten.

This year, Bitcoin and co. saw a historic rally past its all time highs following the major dip across all equities (except houses duh) amid the coronavirus pandemic in March. But what caused the magic internet money to make a comeback? Is it here to stay?

  • Boo, Inflation: Amid the unprecedented money printing that occurred this year, investors were hungry for assets perceived to be resistant against inflation.

  • Growing up: Analysts believe that the cryptocurrency market has evolved since— cough cough…2017. This time around boasting things like full fledged derivatives markets and insurance protocols.

  • Institutional love: In 2020 we saw large cap companies like Square and PayPal offer new cryptocurrency services to over 300 million people, with the Circle + Visa deal soon to follow in Q1 2021. These companies have also been scooping up Bitcoin to add to their balance sheets.

  • Decentralized Finance (DeFi): Traditional finance and savings yields are at an all time low (no more than 1%), DeFi products have been growing in popularity by offering yields of 1-8% thus killing two birds with one stone; inflation protection & a low-risk means to generate yield. 2020 Q3 alone recorded over a 1000% increase in Total Value Locked (TVL) in DeFi projects.

    “Bitcoin is a natural safe haven for those seeking shelter from rapidly increasing central bank money printing and the inflation that everyone agrees is already increasing,” Sergey Nazarov, co-founder of Chainlink

So what’s different this time around?

Wall Street warming up to Bitcoin has made companies like Grayscale Bitcoin Trust (GBTC) the first publicly traded fund pegged to the price of Bitcoin flourish, in just Q2 2020 more than a dozen Wall Street firms let the SEC know about their new shiny investments in Grayscale. These are some comparisons to how Bitcoin and Grayscale compared to traditional investing in 2020 as of 12/06;

  • Nasdaq 100 in 2020: up 38.91%

  • S&P 500 in 2020: up 14.5%

  • GBTC in 2020: up 190%

  • Bitcoin in 2020: up 170%

We’ve accepted that we won’t be using Bitcoin to pay for our Starbs

So the whales on wall street have been gobbling up Bitcoin like turkeys, but what about the rest of the world? If the world isn’t actually using it aren’t we just living through 2017 again? Consumers till aren’t making purchases with Bitcoin, but some would say investors have realized the best use case for Bitcoin isn’t peer-to-peer payments, but rather a store of value, a.k.a. digital gold. In 2017, the thought was that if we don’t begin to use Bitcoin for P2P payments it was a failure, in 2020 that’s no longer the case.

Other projects have emerged that have more of the characteristics of being our everyday cash, and Bitcoin has proved itself is a verifiably scarce asset that can be used to hedge against market uncertainty. The cryptocurrency universe is more mature in 2020 than it was in 2017, I compare it to how I have matured since then (19 in 2017, 23 in 2020); 19 year old 2017 Baley has come a long way in the past four years, has it a bit more together now, but there is still a long road ahead filled with uncertainty much like Bitcoin, blockchain, and cryptocurrency.

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