Bitcoin’s return to $100K is just the beginning.
It’s that time of the cycle.
Altcoins are starting to pump once again.
The flagship crypto is on the cusp of setting a new all-time high, even remaining above $75K despite markets being spooked by the (de-escalated) trade tensions between the US and various economies, particularly China.
It’s a blow for anyone who has taken a short position, is betting on a major market crash, or wants Bitcoin to fail and feel vindicated for having never given it a chance.
Unfortunately for them, the situation will get worse…much worse.
Here are the reasons why Bitcoin’s price will rise significantly higher than you think, taking many altcoins with it, covering factors that were mostly absent from previous bull runs.
The deluge of institutional investment
While the 2020–21 bull cycle marked the beginning of Tesla and (Micro)Strategy’s foray into Bitcoin, corporations still played a relatively small role in this asset class.
However, since the US Securities and Exchange Commission (SEC) gave the green light to spot Bitcoin ETFs in January 2024, 12 firms, notably BlackRock, Fidelity, and Grayscale, manage over $110 billion worth of Bitcoin (~1.1 million coins), representing 5.5% of the maximum supply.
The three companies listed earlier control over 80% of these holdings. The iShares Bitcoin Trust (IBIT) alone has approximately $50 billion in assets under management (AUM).
Beyond the spot ETFs, the top 10 publicly traded companies with the largest BTC holdings control an additional 600,000 BTC, including approximately half a million coins belonging to (Micro)Strategy.
Moreover, the upcoming IPO of Twenty One Capital*, a newly formed entity in partnership with Tether and Cantor Equity Partners, plans to launch with 42,000 BTC under management.
“We’re not here to beat the market, we’re here to build a new one. A public stock, built by Bitcoiners, for Bitcoiners.”
Jack Mallers, Co-Founder and CEO of Twenty One
*Not to be confused with 21Shares, a company that also offers exposure to Bitcoin and Ethereum through its ARKB and CETH funds.
Let’s not forget about the thousands of banks worldwide and other countries that want a piece of the action.
The intensifying supply crunch
3.125 BTC are mined per block, generated approximately every 10 minutes, resulting in 450 new BTC daily.
This will drop to 225 coins per day in just under three years and will continue to halve every 210,000 blocks, roughly every 3.5 to 4 years.
by Flametric at Shutterstock, ID 2450301555.
Bitcoin and Ethereum on centralised exchanges have plummeted to their lowest reserves since November 2018 and November 2015, respectively.
I expect similar trends for some other blue-chip altcoins in the coming years as this market matures and more users enter this space.
When crypto commentators, particularly TMI/Money Rules — Investing Tips, say there isn’t much time left, they’re not being alarmist.
Rather, they’re thinking years ahead, factoring in the medium- to long-term supply shock coupled with anticipated increases in demand.
While there will be opportunities to take advantage of dips, I don’t think we’ll see BTC below $40,000 again for a long time, if ever again.
If it’s already becoming a struggle to snap up so little Bitcoin, just imagine what it will be like in future.
Déjà vu
A milestone moment in the financial world occurred in November 2004, with the New York Stock Exchange’s approval of the SPDR Gold Shares (GLD), the first gold ETF.
Its price has more than quadrupled since then, eclipsing $3,000 per ounce earlier this year. It has performed significantly better than the 20 years preceding it (1984–2004).
Bitcoin managed to hit $69,400 years before the advent of spot ETFs. I wouldn’t say this was mostly driven by retail investors (still, they have had a major influence), as many institutional investors have been purchasing BTC under the radar for many years.
With the continuously dwindling supply, rapidly growing demand, and increasing acceptance of BTC as a reliable asset, don’t underestimate its potential moving forward.
Additional thoughts
While we’re unlikely to witness parabolic growth akin to the early days, where it could comfortably do 30–50 x in a year, there’s still plenty of money to be made here, especially if you’re a savvy trader, or have learned to convert (spot) profits from altcoins into BTC.
Despite the flagship crypto’s meteoric rise from around $5,000 in March 2020 to returning above $100,000, many laypeople still don’t want a bar of it.
We all know someone who’s still waiting for “the bubble to burst”.
Even when Bitcoin hits $500,000, these people will still choose to sit on the sidelines.
Heck, the funniest (rather, the saddest) excuse I’ve heard for not wanting to buy crypto is “my star sign doesn’t invest in speculative assets.”
Ironically, this person is obsessed with winning the lottery, but I digress.
This is the nonsense we’re up against, and at this point, we realise that some people will never change, for their own reasons.
As always, each to their own.
Beyond directly holding cryptocurrencies, people have profited from public companies that have pivoted towards BTC and altcoins in recent years. Notable examples listed on the Nasdaq include:
— Strategy/MicroStrategy (MSTR): Up 3,200% over the past five years
— CleanSpark (CSLK): 381%
— Riot Platforms (RIOT): 384%
— MARA Holdings (MARA): 2,000%
Other stocks, such as COIN, IREN, and HUT, have also performed well since the bottom of the last bear market, around December 2022.
Keep an eye on the price performance of Twenty One Capital once it goes public, as well as other BTC (mining) and crypto stocks.
Trump’s approval of a US Strategic Bitcoin Reserve and the introduction of a pro-crypto US SEC and administration earlier this year only add to the bullish Bitcoin sentiment.
However, the market will eventually turn, likely in the coming months, so don’t forget to take profits to have dry powder for the next set of major market dips.
What other bullish catalysts are worth paying attention to? Comment below.
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Disclaimers
• N.B. None of this is financial advice; I am not a financial advisor. This content is for educational purposes only. You are ultimately responsible for your investments.
• My opinions may not reflect those of any news outlet, person, organisation, or other entity listed here.
• Please conduct thorough research before investing in any cryptocurrency assets, staking, NFTS, or other products associated with this space.
• Bitcoin (BTC) and Ethereum account for approximately half of my crypto holdings, followed by Cardano (ADA) and XRP, which make up another 25%.
Originally published at https://www.cryptowithlorenzo.com.
Featured Image by Konstantin K4 at Shutterstock