BTC to the Moon from here?
This morning, all Bitcoin investors had a pleasant surprise. For the first time since 2018, BTC is now at $17,000. This reminds me of the $20,000 bubble too.
But I would like to say that this time, “It is different”.
Why?
Because a lot has happened since 2018
BTC has gained wider recognition. We saw prominent investors like Paul Tudor Jones and institutional players like JP Morgan helping their client to adapt to cryptocurrencies.
Most importantly, we also saw listed companies shifting balance sheet towards BTC. In Sept 2020, Microstrategy bought over $400 million worth of Bitcoin on its company’s balance sheet. and Square bought $50million worth of Bitcoin in Oct 2020.
Why is all these wider recognition important?
The price of all items is a game of supply and demand.
I recently explained why Tesla’s inclusion into the S&P 500 will result in a shortage of Tesla shares, causing its share price to surge in the coming months.
Similarly, for BTC, with more institutional interest and wider recognition, the overall demand for BTC will increase. But unlike Tesla shares, there is NO WAY to increase the supply of BTC.
By algorithm, the supply of BTC is fixed and the total amount will stop at 21 million BTC. This scarcity will also likely to cause BTC to jump as more monies pour into this scarce asset class.
Now imagine if more companies see the value of BTC and follow the example of Microstrategy?
I am a long proponent of BTC because I spent hours and hours reading about BTC and understanding them. So please as you read this, do your own due diligence before you invest in anything.
If BTC fall to zero one day, I am prepared to lose it all. Are you? (Although, the odds is really quite small)
(Disclosure: Pete is long BTC)
