CEO of $12 billion wealth advisory DeVere Group, Nigel Green, noted at the Forbes’ Wealth Management Summit last week that many investors are now taking to Bitcoin as a “legitimate hedge against longer-term inflation concerns, which have come to the fore due to stimulus packages,” Green further noted on Wednesday. Bitcoin is even winning converts among previous skeptics, including DoubleLine Capital CEO Jeffrey Gundlach who noted that “Bitcoin has made me an honest man in 2020.” Even Ray Dalio, the hedge fund billionaire who has expressed skepticism about the crypto asset, noted that “I might be missing something about Bitcoin so I’d love to be corrected.” Finally, a leaked report from Wall Street giant Citibank revealed that a senior analyst thinks bitcoin could potentially hit a high of $318,000 by December 2021, calling it “21st century gold.”
That said, not everybody has been won over, as noted Bitcoin skeptic Jamie Dimon from JPMorgan JPM said that while he’s a “believer” in blockchain technology (JPMorgan now has its own token) and “properly backed, properly regulated” cryptocurrency, bitcoin isn’t his “cup of tea.”
However, the long-term bullish trend is being driven by not only the growing level of institutional adoption, but also the short-term squeeze in liquidity driven by the May 2020 halving of the bitcoin mining reward. Philip Gradwell from Chainalysis notes, This growth in demand is meeting a shrinking supply, as fewer and fewer bitcoin holders are willing to sell, with the supply of bitcoin liquid and available to buy as low as it was in mid-2017, before the previous bull run.”
Additionally, many of bitcoin’s core network fundamentals and analytics remain strong, underpinning the belief that this bull run will be more sustainable than the last one. Five core metrics to keep an eye on include exchange balance/exchange net flows, corporate Treasury balances, changes in Google search trends, active supply/coin dormancy and perpetual futures funding rates.
CRYPTO PRIVACY COMES TO THE FOREFRONT
Leading “privacy coin” zcash, which seeks to serve as a privacy-centric alternative to bitcoin (it also has a hard cap of 21 million units), just underwent its first “halving.” Occurring at 7:37 AM EST on Wednesday November 18, zcash successfully cut its mining rewards from 6.25 ZEC to 3.125 ZEC per block. The annual inflation subsequently also dropped from about 25% to roughly 12.5%.
This event could have a dramatic impact on zcash’s price, as cryptocurrencies tend to perform well shortly after the event takes place. Measured from six months prior to the event to six months after it, the top assets with a halving event had an average gain of 78%. In addition to this development, a “wrapped” version of zcash is now available on Ethereumso people can leverage in DeFi applications to earn yield on their holdings.
A NEW ALL-TIME HIGH FOR BITCOIN?
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BlackRock’s BLK Chief Investment Officer Says Bitcoin Could Replace Gold to a Large Extent [CoinDesk]
How a money laundering crackdown in China is ensnaring crypto OTC trading [The Block]
Bitcoin Now Has a Greater Market Cap Than Mastercard [Decrypt]