As Bitcoin (BTC) clocks its new all-time high at $27,473, crypto analyst and head of Business Development at Kraken – Dan Held – explains why this is a Bitcoin (BTC) “supercycle” and not any ordinary “bull cycle”. Dan’s hypothesis is based on different macro factors, the global economic scenario, quantitative easing measures by central banks, etc.
1/ Why Bitcoin may be going through a "Supercycle"
This time is different: COVID, Gold 2.0 narrative, institutional herd, and ease of use have set a new stage.
Instead of a normal bull/bear cycle, Bitcoin would break convention and enter a “Supercycle”
— Dan Held (@danheld) December 26, 2020
Below are some of the interesting points that Dan presents in his hypothesis.
- BTC’s market cycle has been typically around 4-years i.e. the period at which Bitcoin undergoes halving. Historically, Bitcoin has shown wild price swings the year after its previous halvings in 2012 and 2016. With the latest Bitcoin halving in May 2020, we are just getting started for the 2021 rally. The idea of reduced supply post halving and increasing demand leads to the BTC price rally.
- Never before Bitcoin had such strong fundamentals as today against the global macro indicators. Mr. Held writes: “Bitcoin is needed, the narrative is singular, and the ability for global value to flow into Bitcoin has never been easier”.
- Post-2008 financial crisis when Bitcoin just came into existence, the stock market has rallied aggressively with minor correction. However, COVID-19 completely changed the global economic scenario. Central banks worldwide kickstarted unprecedented money printing to support the economy. This is for the first time in the financial history that central banks have pumped more than $0 trillion in a single year in the world economy.
- This currency devaluation or debasement has resulted in inflationary pressure. The Bitcoin design serves as a perfect use case to protect wealth against inflation. The decentralized BTC serves as a ‘store of value’ giving users absolute financial freedom free from government intervention. This is precisely the reason that institutions have poured billions-of-dollars in BTC during Q4 2020.
- Bitcoin is Gold 2.0! While over the last many decades Gold has enjoyed a monopoly of being the ultimate safe store of value, Bitcoin is now emerging as a strong challenger. Big financial institutions like JPMorgan, Fidelity, Citibank, Jefferies, Guggenheim and many more have already acknowledged this fact.
- Mr. Held writes: “Right now, Bitcoin’s “Gold 2.0” narrative is the only narrative that is driving the crypto space forward. It is the singular focal point that will continue to accrue attention and purchasing demand”.
- Easy of use and availability is another factor driving Bitcoin price higher. Giants like PayPal have already jumped into the game. With over 350 million worldwide users, this is a game-changing decision to bring BTC use to the masses. On the other hand players like SkyBridge Capital and Grayscale and making BTC availability easy for institutional and accredited investors.
It has been an unprecedented Bitcoin (BTC) price rally over the last week! On late Saturday, December 26, BTC price smashed past $27,000 hitting its new all-time high at $27,473. At the ATH, Bitcoin has hit multiple milestones of hitting a $500 billion market cap and increasing its crypto market dominance to 70%.
Also, Bitcoin (BTC) has flipped giants like VISA with its latest bull run. Over the last week, Bitcoin has added over $60 billion to its market cap. Bitcoin (BTC) has single-handedly driven the crypto market rally over the last week with only Litecoin (LTC) emerging as an equal competitor.
Don't need a model to value bitcoin, but to understand supply & demand dynamics.
Supply will forever go down. Demand has been increasing exponentially due to macroeconomic conditions, which are in play for the foreseeable future.
That's all we need. There is no top.
— Alex Krüger (@krugermacro) December 27, 2020