Bitcoin, the world’s first and largest cryptocurrency, has far surpassed all other asset classes. Bitcoin is up a mind-blowing 17,355.7%, while the S&P 500 Index ETF (SPY) is up 223.3%. Although this process may seem long for amateur investors, the data points to much higher prices.
Bitcoin’s Supply and Demand: The Perfect StormHalfing (Supply)
The highly anticipated Bitcoin halving event took place earlier this year. This is part of Bitcoin’s monetary policy; It increases scarcity (supply) by reducing the number of new Bitcoins entering the market and reducing the reward given to Bitcoin miners such as Riot Platforms (RIOT) and Marathon Digital (MARA). Historically, Bitcoin investors receive rewards post-halving. Halving events took place in November 2012, July 2016 and May 2020. A year later, Bitcoin’s price has more than doubled (and much more) each time.
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Image Source: BitBO/TradingView
Bitcoin ETFs Boost Demand
While supply is more constrained, demand for Bitcoin has become nearly insatiable following the launch of several spot Bitcoin ETFs in the U.S. The world’s largest asset manager, BlackRock (BLK), has $10 billion under management in its iSHares Bitcoin ETF (IBIT). came into existence. ) much faster than any ETF launch in history – a sign of intense demand. (crypto exchange giant Coinbase (COIN) is the custodial exchange)
Governments, Companies Adopt Bitcoin Governments, States Take Steps Towards Bitcoin Holding
Nayil Bukele, the young president of the Latin American country El Salvador, took a bold step in purchasing Bitcoin for his country and making it legal tender. After some early turmoil, the bold step was to pay Bukele’s dividends. The average price of Bitcoin assets in El Salvador is ~$40,000 (Bitcoin is currently trading around $70,000). As a result, Bukele managed to win another presidential term.
El Salvador’s success is influencing asset allocators in the U.S. Last month, the Wisconsin State Board of Investment purchased $99 million worth of IBIT ETFs.
Public Companies Are Switching to the “Bitcoin Standard”
In late 2020, software firm MicroStrategy (MSTR) became the first public company to adopt Bitcoin as a reserve asset. While the strategy was controversial at first, the results are hard to argue with. MSTR shares are up more than 1,000% in the last five years.
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Bitcoin: Protecting Yourself from Reckless Government Spending
Amid the COVID-19 pandemic and support for foreign wars such as the Ukraine War, government spending has boomed over the past decade. Why rising government spending is bullish for Bitcoin Many investors see Bitcoin as a hedge against reckless spending and inflation due to its fixed supply and established monetary policy.
The story continues
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Image Source: US Treasury
Bitcoin’s Big Base
Bitcoin emerges from a multi-year fundamental structure. Earlier this year the Gold ETF (GLD) emerged from a similar underlying structure and has trended strongly upwards. As the old Wall Street adage goes, “the taller the base, the higher the space.”
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Image Source: TradingView
Trump and Biden Court Crypto Voters
Leading candidates for the next president of the United States, Joe Biden and Donald Trump, were not always pro-crypto. However, each candidate has shifted their messaging to a more professional crypto stance in an effort to appeal to young crypto enthusiasts. Friendlier regulation and a more open-minded view of the crypto industry should be a bullish catalyst.
In conclusion
Bitcoin has been the best performing asset in the last decade and has risen very quickly. However, many data points indicate that Bitcoin will eclipse $100,000 by the end of the year.
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BlackRock, Inc. (BLK): Free Stock Analysis Report
SPDR Gold Shares (GLD): ETF Research Reports
MicroStrategy Incorporated (MSTR): Free Stock Analysis Report
Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report
Riot Platforms, Inc. (RIOT): Free Stock Analysis Report
Coinbase Global, Inc. (COIN): Free Stock Analysis Report
iShares Bitcoin Trust (IBIT): ETF Research Reports
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