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The year 2020 has sucked for just about everyone. Unless you have Bitcoin (BTC).
The price of Bitcoin has risen 125% since the start of the year, again making it the best performing asset, just as it has been over the past decade.
Oddly enough, the audience seems completely oblivious to this fact. But not everyone is ignoring Bitcoin’s latest rally above $ 16,000. Currently, the price is only 20% of its all-time high.
Wall Street is not here yet
Given Bitcoin’s impressive year, it’s no surprise that Wall Street is now starting to realize that the world’s first decentralized cryptocurrency is not going anywhere.
Do you remember 2017? This historic Bitcoin price hike was largely driven by retail traders – the average Joe – who anticipated a rush to Wall Street alongside the frenzy of new tokens minted via initial coin offerings.
At the same time, the CME showcased its cash-settled Bitcoin futures in the height of December 2017 and … pop!
The price of BTC fell sharply in the following months and the hype turned into a multi-year bear market. Media obituaries made the average Joe eat the loss, and many called Bitcoin just another burst bubble.
Google searches for “Bitcoin” to tell pretty much the whole story.
But in 2020, Bitcoin’s public research no longer reflects BTC because its price has “decoupled.”
What’s more interesting is that even Wall Street is still largely on the sidelines, suggesting that BTC could be very undervalued at $ 16,000 and with a market cap of $ 297 billion. However, the latest data suggests that this is already starting to change.
“Wall Street is not there yet,” Gemini Exchange co-founder Cameron Winklevoss explained last month. Winklevoss added:
“The institutions are not in Bitcoin at the moment. It’s a retail phenomenon over the past decade. So Wall Street talks about it, they know about Bitcoin, but they’re not really there from our point of view, but it’s starting to happen.
Wealthy zip codes in New York and Silicon Valley drive BTC price
As Cointelegraph reported earlier this month, it is primarily the affluent areas of New York City and Silicon Valley – which are home to many high net worth people – that are most interested in Bitcoin right now.
But while the public is largely unaware, several high net worth investors are announcing BTC as a new asset class. Paul Tudor Jones, Michael Saylor and Stanley Druckenmiller have made waves in 2020, revealing their positions in Bitcoin.
Are they achieving something the public didn’t in 2017? Was the average Joe just too early then?
Jones said investing in BTC is like investing in Apple stock early. Saylor said his company, MicroStrategy, which bought a total of $ 425 million in Bitcoin, will hold it for 100 years, calling it “the world’s best collateral.”
Meanwhile, Druckenmiller, the latest high-profile Bitcoin convert, now claims that “If the gold bet works, the Bitcoin bet will probably work better.”
Together, these smart investors are starting to realize one thing. As Tyler Winklevoss said:
“Bitcoin is better to be gold than gold.”
Gold only rose 23% in 2020 during a year of global economic upheaval when this safe haven metal was supposed to shine (pun intended).
But Bitcoin, or “digital gold,” has stolen the show, gaining 125% year-to-date and up nearly 300% from its coronavirus crash lows in March. Additionally, BTC’s market cap is only 2.36% of gold, which some long-term investors consider the best asymmetric risk-reward bet in history.
People who bought Bitcoin 10 or even five years ago would most likely agree.
The end of Bitcoin’s ‘stealth phase’
With its fixed supply, Bitcoin becomes particularly attractive as a hedge against inflation, which is virtually guaranteed by the US Federal Reserve.
But unlike gold, Bitcoin is absolutely rare. Its supply is mathematically fixed and cannot be changed by any authority.
Additionally, the extraction rate for new BTC is reduced by 50% every four years, which analysts say is one of the biggest catalysts for new bull market cycles. This event is called the Halving, with the last taking place in May 2020.
Cryptocurrency trader Michaël van de Poppe believes that the Bitcoin market is now emerging from the stealth phase and entering the awareness phase. BTC is no longer just digital money to buy drugs on the dark web.
According to van de Poppe:
“With Stan Druckenmiller, Michael Saylor, and other listed companies entering the Bitcoin markets, it is quite clear that we are at the start of a new bull cycle.”
Bitcoin is a small club, and you can be there
In addition to the halving, the aforementioned investors also noticed that BTC’s fundamentals, network activity, and infrastructure on the ramp (e.g. Cash App, PayPal) have all improved significantly since 2017. It hasn’t So it’s no surprise that this emerging asset class is starting to look like a simple smart money bet.
Other investors will also come to realize that a small allocation of capital in Bitcoin significantly increases the returns of the portfolio. Last month, 10T Holdings co-founder Dan Tapiero, Noted:
“Only a 3% BTC position over the past 5 years would have increased the performance of a 60/40 portfolio from 6.8% to 10.2%.”
At this rate, investment fund clients will start asking questions such as: Why is my nephew’s Bitcoin reserve surpassing my 401K, FAANG stocks, gold and Warren Buffett combined? How to get exposure to Bitcoin?
But what makes Bitcoin truly unique is that it doesn’t follow Wall Street rules. It is software with its own set of rules. This is not a stock or an IPO. It is a technology open to all and for voluntary use. He has early adopters, not insiders. There are market cycles, not bailouts. It has been around for over a decade and is getting stronger day by day.
Although it has been around for almost 12 years already, Bitcoin is just starting to be noticed and taken seriously by serious investors. At the same time, it maintains the lowest barrier to entry for everyone compared to traditional finance.
This is precisely why Bitcoin always presents a unique opportunity for the average Joe: to acquire BTC now at prices lower than what Wall Street will pay later.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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