“Bitcoin 2021 &Beyond” Webinar Highlights It’s A Perfect Storm for Higher Bitcoin Prices
On April 15th, we held our first crypto webinar with several Bitcoin experts including Mike McGlone, Senior Commodity Specialist for Bloomberg Intelligence and Cory Klippsten, Founder and CEO of Swan Bitcoin, co-hosted by technology investor and Clubhouse impresario, Jay Gould. We covered multiple topics over the course of the hour from price predictions of bitcoin, to the risks of governments banning bitcoin, and bitcoin education. You can view a replay of the webinar below:
Or you can read our seven highlights below (co-written by K. Alex Brown).
1. The Digitization of Money Is As Revolutionary & Impactful As When Paper Money Was First Introduced as a Currency
Bloomberg’s Mike McGlone described digital currencies like bitcoin as having the critical properties of being a currency that can be “held, transmitted, and transported with 24/7 liquidity.” As those properties are increasingly enabled by a supportive technical infrastructure, people will begin to trust digital currency more than fiat. Our panelists all agreed that as digital currencies become increasingly embraced, one result will be a shift in the the holders of wealth
2. Paradigm Shift In Institutional Thinking — The Risk Is Increasingly To NOT invest In Bitcoin
In it’s early years, bitcoin was thought of as a novel “black-market” currency used by people and businesses on the fringes of society. Over time, even as retail investors drove the price of bitcoin ever higher, institutional investors, remained on the sidelines. Even the institutional investors who saw the bitcoin light saw daunting career risk in taking the plunge.
Now, we‘re witnessing a major paradigm shift as bitcoin’s market cap is becoming too big for institutional investors to ignore. As it continues to trounce the gains in the traditional capital markets, the risk to institutional investors is NOT participating in the market. The risk for institutional investors is seeming out of touch with the latest investment trends. And that’s not good for anyone investor’s franchise. As a result, institutions are increasingly driving the demand for bitcoin.
3. With Demand For Bitcoin Increasing And Supply Of Bitcoin Decreasing, It’s Hard Not To Be Bullish
Like all goods, the price of bitcoin is governed by supply and demand. On the supply side, the number of new bitcoin being mined is trickling down. Currently, there are about 900 new coins created a day. In 2024, that number will drop to 450 new coins a day.
On the demand side, our panelists see numerous factors driving up demand beyond the growing interest by institutional investment. Other factors highlighted by our panelists included the creation of easily accessible vehicles such as a bitcoin ETF, the growing acceptance of bitcoin as currency used in everyday commerce (e.g. Tesla), and the shift from gold as a reserve currency to digital assets such as bitcoin.
4. Bitcoin: The New Gold Standard
Even though the U.S. abandoned the gold standard in 1971, gold has remained as the dominant reserve currency. However, unlike bitcoin, if demand for gold continues to increase, mining for new gold will accelerate. On the other hand, the current supply of bitcoin is known with a future supply fixed. Therefore, the only factor that can truly impact the price of bitcoin is demand thereby creating a much more stable currency than gold. It stands to reason why there are increasing flows of capital out of gold into bitcoin.
5. Bitcoin Education Leads to Understanding and Investing Strategy
A critical component of the acceptance and use of bitcoin and other digital currencies into mainstream society is education. According to Cory Klippsten, understanding bitcoin is no longer a DIY (do-it-yourself) activity. Now, there is a growing number of formal educational alternatives to study bitcoin and other digital currencies. In addition, many of the firms involved in bitcoin investing provide resources to teach their clients about the market, factors impacting the market, trading strategies, and custody options.
This increasing understanding about the bitcoin market has not only increased the amount of institutional investments, but also increased investments from retail investors. Cory advises to hodl, not trade, and let it “accumulate” and “as a savings technology,” encouraging people to “think about it like a 401(k) where it’s automatically coming out of your paycheck.”
Bitcoin education will continue to grow as people begin incorporating bitcoin and other digital currencies into their portfolio management strategy, including as an option for their 401(k), among other things.
6. BitcoinIs Unlikely To Be Banned By The U.S. Or Other Governments, And Even If It Was, The Impact Would Be Muted
Bridgewater’s Ray Dalio, head of one of the largest money managers in the world, has said “…outlawing bitcoin (in the U.S.) is a good probability.” The panelists vehemently disagreed with Dalio’s assessment, with Mike joking that a U.S. ban was as likely as the four panelists getting hit by a bus. All the panelists see the U.S. government moving in the other direction, particularly with crypto friendly Gary Gensler as the new head of the SEC. And with each passing day that bitcoin is increasingly incorporated into our financial system (bitcoin companies, ETF’s, etc.), it’s less likely that the U.S. would even consider banning it. In fact, Cory states that “the only government that ever matters at all versus bitcoin was the U.S.”.
The panelists believe that China, and many other countries, would like to see the U.S. dollar decrease in importance. In fact, because bitcoin and digital currencies largely trade in U.S. dollars, the dollar has become an even more dominant currency. China sees it’s digital Yuan as an opportunity to impact the dollar’s dominance. However, McGlone believes that the prevailing view of China as a surveillance state, with the intention of tracking the trading and use of it’s CBDC, will dampen market use. As China views bitcoin as another asset that could decrease the dollars dominance, it’s unlikely to have any bans that it actually broadly enforces.
There are countries still banning bitcoin, with Turkey being the latest to institute a ban due to bitcoin’s lack of “supervision mechanisms” and “central authority regulation,” among other reasons. But given that bitcoin bypasses traditional financial rails, it’s difficult for governments to effectively stop it’s citizens from buying and holding bitcoin. In fact, all the panelists agree there is more upside from central banks embracing bitcoin than downside from government bans.
7. While Price Predictions Varied, All Panelist See Significant Upside
All of our panelists believe that bitcoin will continue to go up, even as volatility remains. At $80,000 for a bitcoin, its market capitalization of $1.6 trillion dollars will exceed the value of Amazon. In ten years, as bitcoin becomes an increasingly important currency, it is not out of the question that a bitcoin could cost $1 million.
As the bellwether digital currency, bitcoin has enjoyed a fascinating evolution into becoming a critical currency in the world’s financial marketplace. The taint and cynicism regarding bitcoin has dissipated. Bitcoin has become a larger investment target for individuals, institutional investors, and perhaps, even central banks. Mike McGlone stated it best when he noted that the current economic environment is “a perfect storm for higher bitcoin prices.”
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