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Disrupting the Financial System, Defying the Odds, and Shocking the World
Bitcoin first started trading back in 2010. While known by few at the time, this simple yet powerful idea created by a pseudonymous person named “Satoshi Nakamoto” is doing what it does best – disrupting the financial system, defying the odds, and shocking the world. Despite several booms and busts, even skeptics cannot deny the long-term performance of the world’s largest digital currency.
Over the past decade, Bitcoin has been up nearly 5,000%, trouncing all other asset classes and most stocks by miles. It hasn’t been all smooth sailing. Amid a bear market in equities, rampant inflation, and the demise of crypto exchange giant FTX and others, Bitcoin lost 64% in 2022. However, Bitcoin has regained all those losses and then some – rising 156% in 2023. For those who have missed Bitcoin’s meteoric price rise, is it too late, or is their meat still left on the bone?
“Nothing else in the world… not all the armies… is so powerful as an idea whose time has come.” ~ Victor Hugo
As Bitcoin prints fresh 52-week highs and retakes its $1 trillion market cap crown, the data suggests that it is far from too late to get onboard. Below are seven reasons why:
Demand
Institutional Demand is Here: Bitcoin ETFs are Driving it
The knee-jerk reaction to the Bitcoin ETF approval was to “sell the news.” However, when investors let the smoke clear and analyze the data, the ETF becomes a much bigger deal than most anticipated. For example, the iShares Bitcoin Trust ((IBIT - Free Report) ), launched by the world’s largest asset manager BlackRock ((BLK - Free Report) ) just 24 days ago.Tuesday, IBIT took in nearly half a billion in inflows in a single day. Since its launch just a short time ago, IBIT has taken in $5 billion, putting it in the top 7% of ETFs.Such significant demand is unprecedented in the ETF world and indicative of massive institutional accumulation.
Image Source: Bloomberg
Supply
Bitcoin Halving Looms
The Bitcoin halving is a programmed event that happens approximately every four years, reducing the reward Bitcoin miners receive for validating transactions on the Bitcoin network by half. Expected to occur around April 20, 2024, the Bitcoin halving will be a pivotal event where the daily issuance of Bitcoin drops from 900 to 450.
While demand soars, a supply shock like the Bitcoin halving will predictably and simultaneously drive down supply. Historically, such price shocks have led to breathtaking price moves over the next 6-12 months. The yellow dots in the chart below show where previous halvings have occurred.
Image Source: Cointelegraph
Sentiment
Price is Higher, Yet Hype is Absent
Though Bitcoin is trading North of $50,000, you wouldn’t know that from looking at Alphabet’s ((GOOGL - Free Report) ) Google Trends.With Bitcoin within shouting distance of all-time highs, interest has waned dramatically versus its peak in 2021.
Image Source: Google Trends
Seasonality
Election Year Seasonality Trends
Seasonality in markets refers to the tendency of stocks or assets to exhibit certain patterns or trends during specific times of the year. Recurring events, such as holidays, economic cycles, or seasonal trends can influence these patterns. In fact, investors who simply followed historical seasonal trends for U.S. equities in 2023 dramatically outperformed. For Bitcoin, presidential election years (like the one we are in now) are incredibly bullish. In the past three presidential election years, Bitcoin returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%. Though the sample size is small because of Bitcoin’s relatively short existence, the numbers are robust enough to consider.
February Seasonality
Drilling down into seasonality further, the week of February 29th (next week) is historically the strongest-performing week of the year.
Image Source: Optuma
Big Picture Technicals
Long-Term Technicals Suggest the Trend is Just Starting
From a long-term view, crypto-related stocks such as MicroStrategy ((MSTR - Free Report) ), Coinbase ((COIN - Free Report) ), and Riot Platforms ((RIOT - Free Report) ) are well off their all-time highs and have room to run.
Image Source: TradingView
The Antidote for Geopolitical Instability and Soaring Global Debts
Earlier this week, the U.S. national debt reached a record high of $34 trillion. Meanwhile, countries such as Turkey and Argentina suffer from rampant inflation rates, unlikely to subside soon. More wars in the Middle East likely mean more spending for Western countries. This is where Bitcoin comes in:
Unlike traditional fiat currency, Bitcoin cannot be “printed” and the total number of Bitcoin that will ever be in circulation is capped, making it uniquely built for this type of atmosphere.
The Great Migration? ETF Trends Suggest Investors View Bitcoin as a Safe Haven Asset
As Bitcoin ETFs enjoy record-breaking demand, investors are exiting gold ETFs such as the iShares Gold Trust ETF ((IAU - Free Report) ) and the popular SPDR Gold Shares ETF ((GLD - Free Report) ).
Image Source: Bloomberg
Are investors viewing BTC as an alternative “safe haven” vehicle?
There’s more evidence to this theory beyond the exodus from gold ETFs…
Argentinians suffering from rampant hyperinflation appear to be using Bitcoin as a medium. Bitcoin printed fresh all-time highs versus the Argentine Peso this week.
Image Source: TradingView
Is the “60/40” Portfolio Dead?
For years, a 60/40 portfolio of stocks to bonds was seen as the ultimate means of diversification. If stocks do poorly, bonds should pick up the slack, and vice versa. However, in 2022, amidst inflation and rising interest rates, the 60/40 portfolio suffered its worst year on record. Could investors allocate a small portion of their portfolio to Bitcoin in order to diversify further?
Bottom Line
Bitcoin has been on a remarkable journey since its inception in 2010. Though Bitcoin has produced returns of ~5,000% over the past decade, its not too late for investors to jump onboard.
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Bitcoin's Perfect Bull Storm
Disrupting the Financial System, Defying the Odds, and Shocking the World
Bitcoin first started trading back in 2010. While known by few at the time, this simple yet powerful idea created by a pseudonymous person named “Satoshi Nakamoto” is doing what it does best – disrupting the financial system, defying the odds, and shocking the world. Despite several booms and busts, even skeptics cannot deny the long-term performance of the world’s largest digital currency.
Over the past decade, Bitcoin has been up nearly 5,000%, trouncing all other asset classes and most stocks by miles. It hasn’t been all smooth sailing. Amid a bear market in equities, rampant inflation, and the demise of crypto exchange giant FTX and others, Bitcoin lost 64% in 2022. However, Bitcoin has regained all those losses and then some – rising 156% in 2023. For those who have missed Bitcoin’s meteoric price rise, is it too late, or is their meat still left on the bone?
“Nothing else in the world… not all the armies… is so powerful as an idea whose time has come.” ~ Victor Hugo
As Bitcoin prints fresh 52-week highs and retakes its $1 trillion market cap crown, the data suggests that it is far from too late to get onboard. Below are seven reasons why:
Demand
Institutional Demand is Here: Bitcoin ETFs are Driving it
The knee-jerk reaction to the Bitcoin ETF approval was to “sell the news.” However, when investors let the smoke clear and analyze the data, the ETF becomes a much bigger deal than most anticipated. For example, the iShares Bitcoin Trust ((IBIT - Free Report) ), launched by the world’s largest asset manager BlackRock ((BLK - Free Report) ) just 24 days ago.Tuesday, IBIT took in nearly half a billion in inflows in a single day. Since its launch just a short time ago, IBIT has taken in $5 billion, putting it in the top 7% of ETFs.Such significant demand is unprecedented in the ETF world and indicative of massive institutional accumulation.
Image Source: Bloomberg
Supply
Bitcoin Halving Looms
The Bitcoin halving is a programmed event that happens approximately every four years, reducing the reward Bitcoin miners receive for validating transactions on the Bitcoin network by half. Expected to occur around April 20, 2024, the Bitcoin halving will be a pivotal event where the daily issuance of Bitcoin drops from 900 to 450.
While demand soars, a supply shock like the Bitcoin halving will predictably and simultaneously drive down supply. Historically, such price shocks have led to breathtaking price moves over the next 6-12 months. The yellow dots in the chart below show where previous halvings have occurred.
Image Source: Cointelegraph
Sentiment
Price is Higher, Yet Hype is Absent
Though Bitcoin is trading North of $50,000, you wouldn’t know that from looking at Alphabet’s ((GOOGL - Free Report) ) Google Trends.With Bitcoin within shouting distance of all-time highs, interest has waned dramatically versus its peak in 2021.
Image Source: Google Trends
Seasonality
Election Year Seasonality Trends
Seasonality in markets refers to the tendency of stocks or assets to exhibit certain patterns or trends during specific times of the year. Recurring events, such as holidays, economic cycles, or seasonal trends can influence these patterns. In fact, investors who simply followed historical seasonal trends for U.S. equities in 2023 dramatically outperformed. For Bitcoin, presidential election years (like the one we are in now) are incredibly bullish. In the past three presidential election years, Bitcoin returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%. Though the sample size is small because of Bitcoin’s relatively short existence, the numbers are robust enough to consider.
February Seasonality
Drilling down into seasonality further, the week of February 29th (next week) is historically the strongest-performing week of the year.
Image Source: Optuma
Big Picture Technicals
Long-Term Technicals Suggest the Trend is Just Starting
From a long-term view, crypto-related stocks such as MicroStrategy ((MSTR - Free Report) ), Coinbase ((COIN - Free Report) ), and Riot Platforms ((RIOT - Free Report) ) are well off their all-time highs and have room to run.
Image Source: TradingView
The Antidote for Geopolitical Instability and Soaring Global Debts
Earlier this week, the U.S. national debt reached a record high of $34 trillion. Meanwhile, countries such as Turkey and Argentina suffer from rampant inflation rates, unlikely to subside soon. More wars in the Middle East likely mean more spending for Western countries. This is where Bitcoin comes in:
Unlike traditional fiat currency, Bitcoin cannot be “printed” and the total number of Bitcoin that will ever be in circulation is capped, making it uniquely built for this type of atmosphere.
The Great Migration? ETF Trends Suggest Investors View Bitcoin as a Safe Haven Asset
As Bitcoin ETFs enjoy record-breaking demand, investors are exiting gold ETFs such as the iShares Gold Trust ETF ((IAU - Free Report) ) and the popular SPDR Gold Shares ETF ((GLD - Free Report) ).
Image Source: Bloomberg
Are investors viewing BTC as an alternative “safe haven” vehicle?
There’s more evidence to this theory beyond the exodus from gold ETFs…
Argentinians suffering from rampant hyperinflation appear to be using Bitcoin as a medium. Bitcoin printed fresh all-time highs versus the Argentine Peso this week.
Image Source: TradingView
Is the “60/40” Portfolio Dead?
For years, a 60/40 portfolio of stocks to bonds was seen as the ultimate means of diversification. If stocks do poorly, bonds should pick up the slack, and vice versa. However, in 2022, amidst inflation and rising interest rates, the 60/40 portfolio suffered its worst year on record. Could investors allocate a small portion of their portfolio to Bitcoin in order to diversify further?
Bottom Line
Bitcoin has been on a remarkable journey since its inception in 2010. Though Bitcoin has produced returns of ~5,000% over the past decade, its not too late for investors to jump onboard.