Will Bitcoin go over $20,000 and reach all-time new highs by December 2020? Here’s a quick guide for investors to know what’s happening now:

The first question: does Bitcoin over 19,000USD represent a new thesis or outlook for the market? No. As for nearly all digital assets, Bitcoin’s value is established from a ‘stack’ of value propositions. This includes:

  • Store of Value
  • Intermediary of Exchange (to act as a currency)
  • Source of Dependable Liquidity
  • Limited Domicile Risk / Stable Legal Framework, Rules
  • Technology Platform
  • Expression of Public Consensus

For other digital assets or cryptocurrencies, this list can be quite long. The big idea is that no one thing makes Bitcoin valuable. So when Bitcoin’s price has a substantial increase, investors are bound to ask what’s causing it to go up. The most important element of any asset’s value: public consensus. It may be fears of inflation, lack of alternative investments, hedges against some market risk, or whatever else brings the investing community’s attention back around to crypto – the net result of this is a change in popular consensus.  

When we monitor markets for our crypto fund, every factor listed above applies to our assessments; however, the model’s result is an interpretation of general consensus. I’m happy to tell you that this time is different.

Naturally, this is not something that investment managers argue lightly. We’re programmed to stick to the tried and true and help non-professional investors navigate the ups and downs of any market. But, as every good manager knows, the best value is brought about when you retain the capacity to know when everything in your market sector has changed. For crypto, this is happening as we speak.

Major institutional investors are coming to the market, buy-and-holders are still holding (as they probably have been all year), and the natural forces that promote Bitcoin’s value and scarcity are showing year-over-year robustness. Something special is happening here, and we’re thankful to be a part of it.

Where do we go from here? First, we have to keep our eye on the prize, which is one or more digital assets with multi-trillion dollar valuations. We now have several US companies quickly approaching two trillion dollars in value. It’s not hard for us to imagine (and mathematically justify) a globally traded asset to have a 5-20 trillion dollar valuation. Remember, this is a dynamic number that includes inflations and money supply creation. A 20 trillion dollar Bitcoin valuation is 60X today’s prices, and for Ethereum, about 240X today’s prices. That is to say, we have a long way to go. I do expect some severe pullbacks in the 2-4K price range as markets stabilize, but overall, we haven’t seen this level of buying in almost two years. Our fund is currently fully long and allocated.

Categories: Markets

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