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In the past half month, after Bitcoin broke through 40,000, it has experienced a correction, and market sentiment has become impetuous, with constant negative news and even rumors. As an old investor who has been in the cryptocurrency circle for many years, I would like to share my humble opinion. We all know that to look at the trend of a currency, we need to look at the trading volume and capital flow preference in the short term, the supply and demand relationship, monetary policy and other fundamentals in the medium term, and the core value in the long term. In the short term, the recent situation is that funds prefer Ethereum and other mainstream currencies, and with the large amount of cash outflow at the end of the year, Bitcoin is temporarily neglected. This is a fact. In the long run, the surge in the past decade has fully proved the core value of Bitcoin. Its unique natural advantage in value storage is unmatched by any other traditional assets. It is not an exaggeration to describe it as digital gold.
Well, today I want to focus on the medium-term positives, which is today's theme, and talk about the new features of Bitcoin at this stage from the five major fundamentals. It is these new features that together constitute the fundamentals of Bitcoin's development in the next few years, and will become a solid foundation for continuing its glory and setting new highs in 2021.
The first bull is the increasingly intensified institutional bull.
Over the past year or so, mainstream investment institutions led by Grayscale have significantly increased their holdings of Bitcoin. Institutional investors have continued to buy large amounts of Bitcoin through Grayscale Trust, which has formed the main tone of the bull market from 2020 to the present. These institutional investors continue to purchase Bitcoin through Grayscale Trust, and Grayscale's trust design makes it impossible for it to form selling pressure on the BTC spot market. Its position planning is more inclined to long-term holding, which is equivalent to a disguised lock-up, injecting strong upward momentum into Bitcoin, stabilizing the market and pushing Bitcoin to new highs one after another. 2020 is only the first year of the institutional bull market for Bitcoin, and Grayscale Trust is the only one to enjoy the dividends. As more and more institutions begin to rush to join this battle, 2021 may become the year of the institutional bull market.
The second bull market is the cyclical halving bull market that occurs every four years.
From the supply perspective, Bitcoin completed its third block reward halving in May last year. Through the long-term trend analysis of the 10-year cycle from 2010 to 2020, we can find a basic rule that each round of halving event will catalyze the next bull market. No matter what the internal logical relationship between the two is, its potential boosting effect on the bull market cannot be underestimated.
The third bull is the retail bull whose enthusiasm is unprecedentedly high.
In November 2020, the US payment giant PayPal announced that all US account holders will be able to purchase cryptocurrencies including Bitcoin through its platform, which has been sought after by hundreds of millions of users around the world, ushering in a new era of "everyone holding and trading in cryptocurrencies". With the sharp rise in the price of Bitcoin in recent months and its increased exposure, retail investors are also scrambling to enter the market, with tens of thousands of new valid wallet addresses added every day, repeatedly setting new historical highs.
The fourth bull market is the liquidity tightening bull market caused by whales hoarding coins.
The amount of Bitcoin stored in exchanges is gradually decreasing, while the number of BTC whales is increasing. As of January 11, the number of Bitcoin "whale entities" (wallet addresses holding more than 1,000 BTC) rose to a new high of 2,140. The number of whales has been proven to be highly positively correlated with the price of cryptocurrencies.
Statistician Willy Woo also said that the recent market buying of Bitcoin is driven by long-term holders. When more assets are transferred from active traders to long-term holders, the market will be bullish.
With the massive buying by whales and the rush of institutional investors into the market, Bitcoin liquidity tightening will become increasingly severe, directly affecting the supply and demand relationship in the Bitcoin market, thereby driving the price of the currency to continue to rise.
The fifth bull is the water bull brought about by the global monetary injection.
Under the influence of the epidemic, countries around the world are in urgent need of monetary easing to boost the economy. The scale of monetary easing by global central banks is unprecedented. The total amount has exceeded 210 trillion yuan. Against the backdrop of global monetary easing, gold, stocks, commodities and Bitcoin have risen. As the best tool to fight inflation, Bitcoin has become a hot asset in this monetary easing. As the saying goes, rising tide lifts all boats. In this era, I believe that you have already drawn a conclusion about how Bitcoin will perform in the next few years.
Finally, as an old investor, I would like to recharge the faith of the new investors whose confidence has been dampened by the recent decline in BTC prices. You should take time to learn more about blockchain and understand the history and core value of Bitcoin. Only in this way can you truly grow from a short-term speculator to a long-term investor and enjoy the economic dividends brought by Bitcoin, this epoch-making new species.
Once you enter the cryptocurrency world, it's like entering a deep sea, and you will never be able to sleep soundly again. I hope that while you are trading cryptocurrencies, you can take a break on time, invest your spare money, keep a calm mind, control risks, and be cautious about adding leverage. Finally, I wish all old and new investors to make a lot of money in the bull market of 2021!!! |
