It’s hard to believe we’re into Q3 of 2020, a year that will definitely go down in history, as the year Richard took a break from work and was a stay-home dad. Okay no, the year the real economy went to hell, while Wall Street partied like it was 1999. In the face of this clusterfuck we call 2020, there is one thing that’s slowly gaining strength and steam. Bitcoin. I believe, as do many other notable bitcoin bulls like Anthony Pompliano, Crypto Lark, Raoul Pal and PlanB, that Bitcoin is on the cusp of a new and more powerful multi-year bull run.
Today’s post is brought to you by the letters Q and E, along with the word “Unlimited”
Bitcoin’s price is up 65% year to date. It started off 2020 just above USD $7,100, and is currently knocking on the door of USD $12,000. In between, when the full extent of Covid19 hit in March, Bitcoin dipped as low as $3,600 on certain exchanges. It has since bounced back up and beyond, and is primed to end the year on even higher ground.
Bitcoin, along with Gold and US equities are riding on a high, divorced from the reality on the ground that is tearing up livelihoods and decimating businesses. Companies like Hertz, Victoria’s Secrets, JC Penney, Aldo and GNC have all filed for bankruptcies this year.
The US Federal Reserve in March also announced unlimited QE (Quantitative Easing), effectively printing dollars and throwing them at businesses to keep them afloat. But we have to ask, what are the consequences of such an action?
In an unlimited supply of US dollar world, how much is a dollar going to be worth? We’re staring at potentially the US dollar facing a huge inflationary pressures in the years ahead.
Bitcoin layer 2
At the same time, bitcoin is quietly gearing up on scaling activity by adding on layer 2 blockchain technology. An example of a 2nd layer protocol is the Lightning Network, that allows for micropayments zipping across the world in a quick and secure fashion.
Layer 2 protocols are currently way more popular on the Ethereum blockchain, but more and more companies are exploring building their layer 2 on top of Bitcoin instead, and this will definitely boost the longevity and viability of bitcoin as something that’s more than a store of value, and hence, even more valuable than the proposition of a digital gold. What’s more important than digital gold? Usable digital gold.
Institutional Interest in Bitcoin
In the 2017 bull run, the run-up was fueled mainly by retail investors FOMOing into the price once it hit $10,000.
This year though, we’re starting to see a lot more institutional interest, and even outright landgrabs for the existing supply. MicroStrategy, a Nasdaq listed firm worth over US$1.2B, just announced in august that they have bought 21,454 Bitcoin, worth $250M at the time, as their primary treasure reserve asset, saying it is superior to fiat currency.
Not long after, Tahini’s, a middle eastern restaurant chain based in Canada also announced that it had swapped its cash reserves for… you guessed it, Bitcoin.
Banks want in on the bitcoin playground
Even the banks want in on the bitcoin merry-go-round. The US bank regulator in July released a statement saying that national banks are now permitted to provide custodial services to clients with regard to crypto assets.
This is huge news, but also, personally I’m a little bit confused by it. We have crypto to avoid banking disasters, but then now we’re gonna hold our private keys in bank vaults? Seems like we’re taking a step back with this move in terms of control over our assets, but I’m sure that will be sorted.
The main thing is, interest is definitely boiling over. The crazy thing is, everything described in this post (with the exception of Lightning Network) happened this year alone, and we still have Q4 to contend with!
Warren B buys Gold!
Warren Buffet, who’s had a long time aversion to gold, recently dumped his bank stocks to buy into a gold mining firm. How long before he goes into Bitcoin?
All these actions point to a world that’s moving away from the dollar and fiat currencies, seeing what the different countries have been doing to battle the economic fallout of covid, in turn sealing the fate of hyperinflation of fiat.
I think 2021 will be a super interesting year for bitcoin and other crypto, and many are calling for USD$100K per BTC by December 2021. We shall see.