Financial Experts are Bullish on Bitcoin
If you think Bitcoin is too volatile to invest in, you’re partially right. It’s volatile, sure … but that’s exactly why top financial experts say now is the time to buy Bitcoin (or, at least, part of the reason). After all, only a volatile asset has the potential to surge astronomically.
Dan Morehead, CEO and Co-CIO of Pantera Capital and Mike Novogratz, Founder, CEO and Chairman of Galaxy Digital, are bullish on crypto, and think you should be too.
Bitcoin is a Serial Killer
When technology is disruptive, they call it a category killer, Morehead points out. However, he says Bitcoin is not a category killer but a serial killer, meaning it won’t happen overnight … but through the volatility, eventually it will mature and become a good unit of account. And as more and more people own BTC, it will become less and less volatile.
“Bitcoin was born in the last financial crisis,” explains Morehead, “as a currency that would survive these seemingly endless bailouts of shareholders by the public.” At the time, Bitcoin inventor Satoshi Nakamoto was outraged that England was spending £50 billion to bail out shareholders and banks. Today, the U.S. is printing $50 billion every four days to stimulate the pandemic-riddled economy.
#BTC and Financial Crises And as history repeats itself, Morehead believes that the digital currency born in the last financial crisis will come of age in this one. And he projects 3 to 4 years before we recover to pre-crash GDP levels.
By the way, printing money is not necessarily the way to save an economy. Many experts think that overuse of the printing press diminishes the value of the currency. And while fiat currency is being printed, the supply of BTC was just halved for the third time. Based on supply and demand, this would mean, in theory, that while the value of paper money goes down, the value of Bitcoin (and other cryptocurrencies) goes up. In effect, there are more and more dollars chasing fewer and fewer bitcoins.
History Repeats Itself?
If we look at history — with the caveat that past performance doesn’t necessarily dictate future potential — we can see that past halvings (in 2012 and 2016) did coincide with price increases afterwards, and rallies of thousands of percentage points, whether because of real or perceived scarcity.
In addition, as the supply of BTC has increased over the years, each halvening had a lesser reduction in supply, from 15% in 2012 to 5% in 2016 to only 2% in 2020 — which is basically a reduction of 1/3 each time. This is known as a “stock-to-flow ratio,” and it means that the price impact also decreases.
So between halvings, if the first one rallied a whopping 9,000% (from a price of $12 to ~$1,100) and the second rallied almost 3,000% (from ~$650 to ~$19,500) … then, even if this one only rallies $1,000%, that would drive the price of Bitcoin from almost $9,000 to over $115,000 by the next halvening in 2024.
And if we examine yearly BTC price lows instead of yearly highs, we can see that the low has increased year over year, with only one exception (in 2015 the low was $190, flanked by $306 in 2014 and $360 in 2016). So far in 2020, the low is $5,014, while last year it was $3,399. This is very rare for financial assets. If the pattern continues, holding Bitcoin (or rather, HODLing it, in crypto vernacular) for 3 to 4 years almost guarantees a long-term profit.
How High Could it Go?
But could the price of Bitcoin really go up as high as $100,000 or more? It might sound crazy, but both Morehead and Novogratz say it could.