Bitcoin Rocks, and Then Drops: Comments from the Cryptoverse

As all crypto followers know, Bitcoin recently edged closed to its all-time high, topping out at around $19K and change. Then, almost magically, it tanked – now trading around $16,500.

While some people view Bitcoin as a store of value, somewhat similar to gold and thus a good hedge against inflation, others view it as a great trading vehicle. And traders love volatility. Still, some observers see Bitcoin as a manipulated commodity where whales frolic to generate short term capital gains.

Whether you are a Bitcoin maximalist or critic, you gotta love the play by play commentary on the world’s favorite crypto. And recent adoption from big corporates like PayPal helps to fuel interest in BTC.

Earlier today, Crowdfund Insider received a series of comments on Bitcoin from crypto-insiders. These perspectives are shared below.

Seamus Donoghue, VP Sales and Business Development at METACO, a provider of security-critical infrastructure enabling financial institutions to enter the digital asset ecosystem, said:

“Bitcoin has risen almost vertically since early October posting gains of 80% driven by the accelerating institutional adoption. Paypal announced October 21 that it would enable its 346 million retail users access to crypto.  As of Nov 2, less than 10% of its US account holders had been enabled and those that could trade were limited to 15,000 dollars. Retail access on Nov 12 was turbocharged as limits were increased to 20,000 dollars and all US PayPal accounts were given immediate access to crypto markets – bypassing the typical friction of KYC for new accounts as Paypal accounts were already all KYC`d. Although institutional interest has focused on the security and hard money aspect of Bitcoin, the retail flows seem to be regaining a taste for speculation that we have not seen since 2017.”

Nicholas Pelecanos, Head of Trading at NEM, believes Bitcoin may soon move higher to top its historic high.

“We are currently witnessing extremely bullish price action in BTC — driven by a mix of market structure and strong fundamentals, Fundamentally, BTC is a much stronger asset now than it was then due to a number of factors, including the halving, a rise in institutional adoption, real-world use cases emerging, publicly listed US companies moving 10% of their balance sheet into the asset and payments giants like PayPal accepting crypto. Historically, BTC witnesses end of and early year rallies, so I wouldn’t be surprised if it reaches or sets new highs this year, or in the early part of 2021. BTC is back at its all time high levels, but what is worth noting is the valuation of the altcoins which are on average still 50% below their all time highs. Some altcoins represent projects that are no longer functioning, yet other projects have seen tremendous development on both adoption and tech. For me, catching these undervalued altcoins is now the trade to be made.”

Rachid Ajaja, CEO and Co-founder of AllianceBlock, a decentralized capital market, had this to say:

“I believe that BTC is and will become a store of value that will not only be a strong alternative to gold but also for emerging markets that are experiencing high inflation and therefore cannot use their currency – Venezuela is a prime example of this. Still, only one thing is for certain: Bitcoin will continue to surprise us, not only now, but for the next 20 years at least. In 2017, there was an old saying: “When your cab driver starts talking about Bitcoin, it’s time to sell”. The subsequent crash in 2018/19 followed by the DeFi wave we are seeing now is a standard crypto cycle – crash, new concept, boom, crash. However, over the last couple of months we have seen interest in the crypto ecosystem build significantly from a number of integral parties, with a number of governments introducing comprehensive crypto legislation alongside plans to launch CBDCs. Leading global enterprises like PayPal have even made plans to integrate crypto into their core service offerings. These are good signs for any investor looking at the market. In addition, it is easier now than ever before to get involved in crypto as the technology has become much more accessible to retail users. I think this too is having a massive impact on uptake.”

Derek Muhney, Director of Sales at Coinsource, a Bitcoin ATM network, sees a new wave of legitimacy driving the value of BTC:

“The steady rise of Bitcoin in 2020 has not only continued, but accelerated, during times of political and economic uncertainty. As a whole, the world is looking outside the traditional norms for how and where they manage their finances. This demand comes from Millennials and Gen Z’ers and their progressive outlook on their financial needs, both present and future, and pivoting away from traditional financial institutions as their store of value with next-to-nothing interest rates. On a global scale, almost one fourth of the population doesn’t even have access to traditional banking so there is a major demand for converting cash into crypto, for example through Bitcoin ATMs, from the unbanked and underbanked as well. In addition, baby boomers and retirees are looking at alternative opportunities to diversify their retirement and trust portfolios and see the steady rise of Bitcoin as a new and approachable investment hub. Investors are currently bullish on Bitcoin given its ever-growing utility. Hundreds of thousands of merchants and retailers currently accept the digital currency and there are hundreds, if not thousands more joining the bandwagon daily and embracing the alternative stream of revenue (not to mention new and alternative customer base) to their businesses. When major financial players, such as PayPal, announced this year their inclusion of Bitcoin, there was a wave of newfound legitimacy and long-term sustainability that wasn’t as easy to map in 2017’s rise and subsequent fall.  Sustainability and continuous growth of global adoption and acceptance of Bitcoin by the masses has made 2020 stand out from 2017 in one major way – credibility.”

Pradeep Goel, CEO of healthcare technology platform Solve.Care, likens BTC to gold:

“Bitcoin is rising due to a number of factors converging — optimism about crypto, geopolitical risk, flight to non-traditional assets, and over-inflated stock market valuations. As a result, people are increasingly starting to equate bitcoin to a stock market hedge similar to gold. Bitcoin is entering mainstream consciousness and is proving to be durable, however, while the crypto market has matured, bitcoin is still hostage to market manipulation forces that have quite a bit of control over its direction.”

Philippe Bekhazi, CEO of Stablehouse, the payment and FX exchange platform for stablecoin issuers and end users, thinks the Bitcoin bull will remain:

“Bitcoin’s current bull run will likely have long-term staying power. The supply/demand imbalance in Bitcoin is significant as the mining supply continuously gets smaller with time (halving) and the demand for bitcoin keeps increasing in these times of profligate money printing. We are also starting to see rotations from Gold to Bitcoin, as more people are starting to see the value of Bitcoin as a so-called Gold 2.0 (Digital Gold) asset. The primary reason investors are so bullish right now is because they are concerned about the depreciating value of fiat currencies the world over. Covid-19 has created significant budgetary issues for most countries. I believe that this bull run will continue, with Bitcoin peaking at $30,000 by the end of 2020 and more gains to be expected next year. With this in mind – previous bull runs have taught us not to overextend ourselves and not to use too much leverage. Volatility is real and losses can be consequential if the plan is not to invest for the long term. Another point of note is that Ethereum and other crypto-currencies are rallying as well, however many of these coins do not have real use cases and caution must be used when investing in them.”

Chyna Qu, COO and co-founder of DeFiner, a DeFi network for digital loans, savings, and payments, sees Bitcoin doubling its all time high:

“A significant reason behind the Bitcoin bull run is the ongoing DeFi craze. 2020’s DeFi surge cannot be ignored and has brought huge investment into the industry. DeFi’s use cases have given people faith in the industry. It’s all cyclical — the more attention the industry gets, the higher the price of Bitcoin, the more people want to get involved. All of this constantly pushes up the price. We predict that Bitcoin will peak at the end of this year at around $40,000. This is related to the Bitcoin halving. The Price of BTC = Cost per F/s / QTh/s , when QTh/s is 25% of the original level, the price of BTC will go up at least 4 times and will have the potential to reach $40,000 easily. Therefore, the halving will help the BTC price break the headwind in early June and will trend up to reach a new level in the foreseeable future. If this also combines the financial crisis of the current fiat currency world, we cannot even imagine how high BTC will go for the next 1-2 years. Previous bull runs have taught us that when there’s a rise, there is going to be a downfall. However, there’s still a long way to go before we hit the next downfall since the Mayer indicator is still far from 2.4.

My advice is to follow what you believe instead of following the market trends. The true price indicator is the technology behind Bitcoin, and use cases are constantly growing.”

And finally, Nick Cote, Crypto Analyst at Hxro Labs, part of Hxro, the gamified crypto trading platform, predicted:

“The primary reason for the steady grind up in Bitcoin has been the increased interest and aggressive buying activity from institutions. A lot of investors are going through Grayscale as they want exposure to the asset, but then don’t need to worry about custody or procuring the BTC themselves. To add fuel to the flames, we also have public and private companies, such as Square and Microstrategy, putting BTC on their books as a hedge against inflation and poor monetary policy management from the central banks. There will be pullbacks of course, but as long as institutions believe in the narrative of Bitcoin being used as a store of value or hedge against inflation, it becomes a positive feedback loop. Liquidity attracts liquidity, and as the price of Bitcoin rises, it becomes a more investable asset for the larger institutions.

Investors are bullish for a variety of reasons, including the narrative of BTC being used as a hedge against inflation in the legacy markets, as well as being perceived as a viable alternative to gold as a store of value. Investors are also influenced by what other investors do – when you have central banks looking at launching CBDC’s or legendary investors such as Paul Tudor Jones pushing the value of Bitcoin, it creates additional feedback loops and further buy-side pressure. When you factor in Bitcoin’s limited supply and deflationary mechanisms of supply issuance, you create a perfect storm for sustained upside.

You can throw out what you may have learned from the last crypto bull cycles when speaking about Bitcoin because this cycle is — and will continue to be — driven by institutional money. Previous runs, in comparison, were primarily driven by retail money. Retail money is weak-handed, and generally less sophisticated, with much shorter time horizons for investment. Retail is looking to get rich quick, while this recent institutional buy-in is driven by long term outlooks and structured investment theses. The ‘smart’ money has more information at their disposal and is buying Bitcoin to hedge out risk, vs the retail mindset of just wanting to make a quick buck.”

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