If you wonder whether or not you should Bitcoin as it trades near its record high levels, the general narrative has only one answer: go ahead and don’t look back.
That is despite a flurry of overheated signals that have preceded Bitcoin’s supersonic rally from the ashes of the March 2020 crash. The cryptocurrency flew higher too quick for its own good, right from its $3,858-nadir to recently-established $24,300-top. Now, half of Bitcoin’s technical indicators state that it costs more than its actual value.
But the market has gone deaf over the recurring warnings. The small players are selling their stash for great profits to large traders. In turn, the larger traders are selling the same Bitcoin lot to institutions. Eventually, it is the white-collar that is absorbing the selling pressure with both its arms.
Take MicroStrategy, for instance. The Nasdaq-listed software development firm is—literally—on a Bitcoin addiction. Today, its CEO Michael Saylor announced that he has bought another $650 million worth of BTC when trading at an average price of $21,925.
Fun fact: Mr. Saylor has purchased Bitcoin with the money he raised via debt issuance — the first of its kind move in the cryptocurrency industry.
MicroStrategy is now the biggest corporation outside the cryptocurrency space based on its Bitcoin holdings: a total of 70,470 BTC worth over $1.596 billion. Mr. Saylor is even sharing his crypto wisdom with Tesla’s Elon Musk.
The message is loud and clear for the average Joe out there. If you sell your Bitcoin, it would probably land in some big firm’s vault. Meanwhile, those who are willing to enter the Bitcoin market, after all, would face a supply deficit as more and more of its units go out of circulation.
Why So Crazy, Homies?
All we have for you is a word:
Tenet erm, inflation. Nevertheless, it will open the right doors (and some wrong ones too).
Big firms like MicroStrategy are accumulating Bitcoin en masse because they think their existing cash reserves would lose value this year and the next. Here is a rap-like narrative to put everything into perspective (imagine Michael Caine reading it to you).
Central banks and governments around the world have injected more than $12 trillion into financial markets. And atop that, the negative yield bonds’ value worldwide now totals around $18 trillion. The Federal Reserve’s balance sheet is now north of $7.3 trillion.
Now here we have an oversupplied US dollar and bonds as parts of every major corporations’ investment portfolio. It is clear they are getting nothing major out of their dependency on government-backed assets. So they have to look elsewhere.
Of course, fiat currencies have to lose their value over time. As a result, every asset—be it an egg crate or a rocket launcher—has to become expensive per their fiat readings. Bitcoin is no different. Firms see that already so they are going long on the cryptocurrency with a limited supply cap.
As a result, we have Guggenheim CIO Scott Minerd, who claimed that the fundamentals show that Bitcoin should be worth at least $400,000. Other than MicroStrategy, insurance giant Mass Mutual, asset management firm Ruffer Management, and billionaire investors Paul Tudor Jones and Stan Druckenmiller, are also bullish.
And no, Warren Buffett still has no love for Bitcoin. But who cares, right?
The 2021 Bitcoin Price Prediction
We don’t have one. Guessing where Bitcoin would be is extremely difficult and CoinStats has no army in the future that could send a message back in time using a turnstile. (Lost? Go watch Tenet guys.)
But the outlook looks extremely bullish. The Fed has clarified that it would continue buying government and corporate bonds unless the labor data comes back to normal and inflation reaches above 2 percent. Meanwhile, expanding balance sheets would keep downside pressure on the US dollar.
So it appears, Bitcoin is ready to explode further higher in 2021. Go pick up your own target. See you at the beginning.