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The year 2020 sucked pretty much everyone. Unless you are holding Bitcoin (BTC).
Bitcoin’s price has risen 125% year to date, once again making it the best performing asset just as it has been for the past decade.
Oddly, the public seems completely oblivious to this fact. But not everyone is ignoring Bitcoin’s latest rally above $ 16,000. Currently, the price is only 20% below its all-time high.
Wall Street isn’t here yet
Considering the impressive year Bitcoin is having, it is no surprise that Wall Street is now starting to realize that the world’s first decentralized cryptocurrency is going nowhere.
Do you remember 2017? That historic spike in Bitcoin prices was largely driven by retail traders – the average Joe – who were anticipating a stampede to Wall Street along with the frenzy of new tokens being minted via initial coin offerings.
At the same time, the CME introduced its own cash-settled Bitcoin futures at its very peak in December 2017 and … pop!
The price of BTC dropped dramatically in the following months and the hype turned into a multi-year bear market. Media obituaries made average Joe eat the loss, and many have written Bitcoin as just another bubble that has burst.
Google searches for “Bitcoin” pretty much tell the whole story.
But in 2020, public searches for Bitcoin no longer reflect BTC as its price has “decoupled”.
What’s more interesting is that even Wall Street still remains largely on the sidelines, suggesting that BTC could be highly undervalued at $ 16,000 and with a market cap of $ 297 billion. However, the latest data suggests this is already starting to change.
“Wall Street isn’t here yet,” said Cameron Winklevoss, co-founder of the Gemini Exchange, last month. Winklevoss added:
“The institutions aren’t into Bitcoin right now. It’s been a retail phenomenon for the past decade. So Wall Street talks about it, they’re aware of Bitcoin, but they’re not really into it from our point of view, but it’s starting. to happen “.
The rich postcodes of New York and Silicon Valley determine the price of BTC
As Cointelegraph reported earlier this month, it is especially the affluent areas of New York and Silicon Valley, home to many high net worth individuals, that are most interested in Bitcoin right now.
But while the public is largely unaware, many wealthy investors announce BTC as a new asset class. Paul Tudor Jones, Michael Saylor and Stanley Druckenmiller caused a sensation in 2020, revealing their positions in Bitcoin.
Do they realize something the public didn’t do in 2017? So was the average Joe just too early?
Jones said investing in BTC is like early investing in Apple stock. Saylor said his company, MicroStrategy, which bought a total of $ 425 million in Bitcoin, will hold it for 100 years calling it “the best collateral in the world.”
Meanwhile, Druckenmiller, the latest big name to convert to Bitcoin, now claims that “If the gold bet works, the Bitcoin bet will probably work better.”
Together, these smart money investors are starting to realize one thing. As Tyler Winklevoss said:
“Bitcoin is better to be gold than gold.”
Gold only grew 23% in 2020 during a year of global economic upheaval, when this safe haven metal was supposed to shine (pun intended).
But Bitcoin, or “digital gold,” stole the show by gaining 125% year to date and up to nearly 300% from the lows of the March coronavirus crash. Additionally, BTC’s market cap is only 2.36% of gold, which some long-term investors see as the best asymmetrical risk-reward ratio bet in history.
People who bought Bitcoin 10 or even five years ago would most likely agree.
The end of Bitcoin’s “stealth phase”
With its fixed offering, Bitcoin is becoming particularly attractive as a hedge against inflation, which is almost guaranteed by the US Federal Reserve.
But unlike gold, Bitcoin is absolutely scarce. Its offer is mathematically fixed and cannot be changed by any authority.
Additionally, the rate at which the new BTC is mined is reduced by 50% every four years, which analysts say is one of the biggest catalysts for new bull market cycles. This event is called the halving, with the latest occurring in May 2020.
Cryptocurrency trader Michaël van de Poppe believes the Bitcoin market is now exiting the invisible phase and entering the awareness phase. BTC is no longer just digital money for buying drugs on the dark web.
According to van de Poppe:
“With Stan Druckenmiller, Michael Saylor and other listed companies entering the Bitcoin markets, it is quite clear that we are in the early stages of a new bullish cycle.”
Bitcoin is a small club and you can be in it
In addition to the halving, the aforementioned investors also noted that BTC’s fundamentals, network activity and ramp infrastructure (e.g. Cash App, PayPal) have all improved significantly since 2017. So it’s no surprise that this emerging asset class is starting to seem like an easy bet for smart money.
Eventually, other investors will also realize that a small capital allocation in Bitcoin significantly increases portfolio returns. Last month, 10T Holdings co-founder Dan Tapiero, noticed:
“Just a 3% BTC position over the past 5 years would have increased the performance of a 60/40 portfolio from 6.8% to 10.2%.”
At this rate, investment fund clients will start asking questions such as: Why does my nephew’s Bitcoin stock exceed my 401K, FAANG stock, gold and Warren Buffett combined? How do I get exposure to Bitcoin?
But what makes Bitcoin truly unique is that it doesn’t abide by Wall Street rules. It is software with its own set of rules. It is not a stock or an IPO. It is a technology that is open to all and voluntary to use. It has the first users, not the insiders. It has market cycles, not bailouts. It has existed for over a decade and grows stronger by the day.
Despite having been around for almost 12 years already, Bitcoin is only now starting to be noticed and taken seriously by serious investors. At the same time, it maintains the lowest barrier to entry for all others compared to traditional finance.
This is precisely why Bitcoin still represents a unique opportunity for the average Joe: to acquire BTC now at prices below what Wall Street will pay later.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your research when making a decision.
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