It is becoming increasingly clear that smart money is starting to take Bitcoin seriously
2020 was horrible for virtually everyone except Bitcoin owners (BTC). The price of Bitcoin has risen 125% since the beginning of the year to date, making it once again the highest performing asset of the last decade.
Strangely enough, the public seems to be completely unaware of this fact. However, not everyone is ignoring Bitcoin’s recent rise above $16,000: currently, the price is only 20% off its historical high.
Wall Street has not yet arrived
Considering Bitcoin’s impressive year, it is not surprising that Wall Street is now beginning to realize that the world’s first decentralized cryptocurrency will not disappear anytime soon.
Remember 2017? That historic Bitcoin bull run was driven primarily by retail traders, ordinary people expecting a crowd on Wall Street alongside the frenzy of new tokens issued through Initial Coin Offering.
At the same time, the CME introduced its cash-settled Bitcoin futures during the peak in December 2017 and… pop!
In the following months the price of BTC fell sharply and the hype vanished into a multi-year bear market. The obituaries announced by the media convinced the common person to eat the leaf, and many rejected Bitcoin like any other burst bubble.
Google searches for „Bitcoin“ tell the whole story.
In 2020, however, public searches for Bitcoin no longer reflect BTC’s performance. It seems that the price has „dissociated itself.
What’s even more interesting is the fact that even Wall Street still remains predominantly on the sidelines, suggesting that BTC could be undervalued at $16,000 and with a market cap at $297 billion. However, the latest data suggests that things are already starting to change.
„Wall Street is not here yet,“ explained Cameron Winklevoss, co-founder of the Gemini exchange, last month, adding:
„The institutions are not in Bitcoin at the moment. The last decade has been a retail phenomenon. Wall Street talks about it, is aware of it, but it hasn’t yet entered our point of view, but it’s starting to happen“.
Rich zip codes in New York and Silicon Valley push the price of BTC
As Cointelegraph reported earlier this month, at the moment it is mainly the wealthy areas in New York and Silicon Valley, inhabited by many high net worth individuals, that are most interested in Bitcoin.
While the general public is largely unaware, several wealthy investors are proclaiming BTC as a new asset class. Paul Tudor Jones, Michael Saylor and Stanley Druckenmiller raised a fuss in 2020, revealing their positions in Bitcoin.
Do they understand something the public didn’t know in 2017? Perhaps the average person was simply too early then?
Jones explained that investing in BTC is similar to investing in Apple stocks in the early days of the company. Saylor said his company, MicroStrategy, has bought a total of $425 million in Bitcoin and will hold it for 100 years calling the asset „the best collateral in the world.
Meanwhile Druckenmiller, the newest big name converted to Bitcoin, claims that „if the gold bet works, the Bitcoin bet will probably work better“.
Together, these smart money investors are starting to realize something. In the words of Tyler Winklevoss:
„Bitcoin is better gold than gold itself.“
In 2020, gold rose only 23% during a year of global economic turmoil, conditions in which the safe haven asset should shine.
Bitcoin, or „digital gold,“ stole the show by gaining 125% from the beginning of the year to date and nearly 300% from the lows touched in March in the collapse due to the coronavirus. What’s more, BTC’s market cap is only 2.36% of that of gold, a factor that some long-term investors consider the asymmetric bet with the best risk/return ratio in history.
People who bought Bitcoin ten or even five years ago would most likely agree.
The end of the „stealth phase“ of Bitcoin
With its limited offer, Bitcoin is becoming particularly attractive as a hedge against inflation, a variable far from guaranteed by the US Federal Reserve.
Unlike gold, however, the shortage of Bitcoin is absolute. Its offer is mathematically fixed and cannot be altered by any authority.
In addition, the issue rate of new BTCs is reduced by 50% every four years, which according to analysts is one of the biggest catalysts for the new bullish market cycles. Quest