A bullish Bitcoin forecast ($ 1 million) as the Year of the Ox begins

Editor’s Note: Happy Chinese Lunar New Year! First Mover will not release on Monday, February 15, which is Presidents Day in the US cryptocurrency markets, as they always are.

Bitcoin (BTC) was lower, after pushing Friday morning to a record price of $ 48,925, based on prices from CoinDesk.

Market activity was quiet due to the Lunar New Year celebrations in Asia and the upcoming Presidents’ Day in the United States on Monday, according to Craig Erlam, senior market analyst for currency broker Oanda. (This is the Year of the Ox, by the way, that’s seen by some traders as bullish, in case you missed the story last week by CoinDesk’s Muyao Shen.)

In traditional markets, US equity futures were weaker, with an investor telling Bloomberg News that “investor exuberance has subsided somewhat.” Gold weakened 0.5% to $ 1,817 an ounce.

JPMORGAN SMELLS A BITCOIN BURN: JPMorgan employees harassed the management of the commercial division during an internal meeting on when the largest U.S. bank could enter bitcoin, CNBC reported.

RESERVE THE CURRENCY STATUS? ECB President Christine Lagarde said it was “very unlikely” that central banks would hold bitcoin in the near future. “I would say that’s out of the question,” Lagarde said on a conference call hosted by The Economist.

GIVE PEOPLE WHAT THEY WANT: U.S. Securities and Exchange Commissioner Hester Peirce, sometimes known as ‘Crypto Mom’ because of her bullish views on the digital asset industry, said the nation’s financial markets were poised for a product traded in bitcoin. The SEC has refused to approve a Bitcoin exchange-traded fund despite multiple requests. People are already eager to trade a bitcoin ETP, and “so if we don’t give them the natural route, which I think would be an ETP, they’re going to look for other (less optimal) ways to do it” , Peirce said Thursday on CoinDesk TV.

CANADA DOES NOT WAIT: North America’s first bitcoin ETF was approved by the Ontario Securities Commission on Thursday. “They may be normal and SEC too conservative”, tweeted Eric Balchunas, senior ETF analyst at Bloomberg. “Either way, the United States usually follows soon after.

FINANCE EXECS DEMUR ON BITCOIN: Top financial executives at Verizon, Cisco Systems and Mozilla see the risks and accounting challenges of investing corporate money in bitcoin, the Wall Street Journal reported. Such anecdotes call into question the investment narrative that cryptocurrency is expected to benefit from a wave of new demand from businesses.

BAIR IS A BEAR: Bitcoin prices are at “nosebleed levels,” said Sheila Bair, former president of the Federal Deposit Insurance Corp. and now president of the government mortgage finance company Fannie Mae. “Stay away,” she said Wednesday night in an interview with Bloomberg Radio. “It’s volatile. It’s about the nosebleeds now. We don’t know how durable this is. ”

INDIA GRACE PERIOD: Policymakers in India will provide for a transition period if a proposal to ban the use of cryptocurrency is passed as planned, Bloomberg reported. After that, the use of cryptocurrency in all its aspects will be banned through a new law that will be introduced in the current parliamentary session through the Cryptocurrency Bill and the Official Digital Currency Regulation, 2021 .

How Bitcoin hits $ 1 million in 11 years, in an analyst’s scenario

First Mover did some math calculations earlier this week, to illustrate how scarce the bitcoin supply could be for the crowd of new institutional investors and corporate treasurers now ostensibly considering a cryptocurrency allocation, following Tesla’s announcement earlier this week from a $ 1.5 billion purchase.

Come now Charlie Morris, investment director of ByteTree Asset Management, who made his own calculations along the same lines, making First Mover’s amateur efforts look like the doodles of a tiny.

Some 363,500 bitcoins will be awarded this year to cryptocurrency miners for helping secure the blockchain network, Morris said. He assumes that the miners “will probably sell the most, because that’s their business.”

Further extrapolation leads to a figure of $ 18.17 billion: This is the amount of new demand for bitcoin that would be needed this year to “maintain a price of $ 50,000 BTC,” according to Morris.

For the context, Morris writes that gold exchange-traded funds attracted $ 41 billion last year. “Given the offsetting flows in bitcoin at the time, the evidence indicates that gold investors are turning to bitcoin,” Morris writes. “If bitcoin can attract $ 41 billion in 2021, like gold did last year, expect to see an average bitcoin price of $ 100,000.”

It’s quite optimistic, in other words, but not wildly far fetched. As First Mover reported earlier this week, $ 2.02 billion has already been invested in bitcoin-focused investment products this year, based on a report released by the asset manager on Tuesday. digital CoinShares. And the CoinShares report doesn’t even cover demand from investors or corporate treasurers who can buy bitcoin directly through their own accounts, or purchases from retail traders looking for a share of the stock.

Factor in the quadrennial halves of the Bitcoin blockchain, where the rewards for miners are halved, and the barrier to investment decreases every four years. “It continues to decline thereafter, which means that high prices are easier to sustain in the future than today,” Morris writes.

So what does this mean for bitcoin prices? Morris estimates that a price of $ 1 million for bitcoin is reasonable by 2044 at a rate of $ 41 billion of new entries per year. Bitcoin will hit the million dollar mark by 2036 if consumer price inflation averages 2.5%, or by 2032 if inflation averages 5%. That’s just 11 years away, which is a 20-fold gain from current price levels.

Gavin Smith, CEO, Panxora Group: “BNY Mellon and Mastercard’s entry into the cryptocurrency space brings bitcoin two huge steps closer to mainstream acceptance.”

David Mercer, CEO, LMAX Group: “Financial institutions are now preparing to follow their customers.”

Don Guo, CEO, Broctagon Fintech Group: “We hope that the growing adoption will prompt the industry to prioritize providing liquidity by improving the crypto infrastructure. This will ensure that existing and new participants have constant access to the best prices and that the industry will reach the next level of maturity. “

Edward Moya, Senior Market Analyst, Oanda: “Better mainstream acceptance of cryptocurrencies completely alleviates most regulatory issues for now.”

Anthony Pompliano, Morgan Creek Digital, in a Tweeter: “Ultimately, every company will join the revolution.”

Number of big Bitcoin addresses swells, writes CoinDesk’s Omkar Godbole

Bitcoin blockchain data supports the popular narrative that the Bitcoin rally has been fueled by increased institutional demand.

Ether (ETH): Joel Kruger, cryptocurrency strategist at LMAX Digital exchange, offered CoinDesk’s Muyao Shen a few prices to watch: “A pause above [$1,840] will open the door to a massive $ 2,000 stress test, which represents a critical psychological barrier and a measured upward extension, ”Kruger said. “We see the first level of support at $ 1,680, with a pause below to relieve immediate pressure on the top and open the door to a correction towards the $ 1,500 area.”

Avalanche (AVAX): The network almost shuts down after a “bug in cross-chain functionality” fails under high loads, according to the Avalanche developer team on Reddit. The price of the AVAX token has already been multiplied by 15 this year.

Tie (USDT): The dollar-linked stablecoin market cap exceeds $ 30 billion.

REMOTE WORK STICKS: Another year of remote work looms as companies postpone plans to reopen offices to September or beyond, in many cases refusing to commit to specific dates, the Wall Street Journal reports. As First Mover wrote in November: “A centuries-old transition to internet commuting could take place, perhaps one of the biggest transformations in the workforce since the Industrial Revolution, which attracted people to the cities…. Governments and central banks are probably going to have to provide a lot of help and stimulus for the transition to go smoothly, for society to remain united, for people to manage. “

AMERICAN DEBT> 100% OF GDP: Government debt is on track to exceed the size of the entire U.S. economy this year, thanks in large part to the $ 4 trillion in emergency spending approved since March to fight the pandemic and boost production . Debt is expected to reach 107% of gross domestic product within a decade.

PAY NOW OR PAY LATER: Mohamed El-Erian, chief economic adviser to German financial giant Allianz, writes in Bloomberg Opinion column: “What’s good for politics and the markets now increases future risks, starting with financial instability. The more Wall Street soars in the short term, the more difficult it is to ultimately improve economic conditions to orderly validate ever higher asset prices. “