Bitcoin
How Bitcoin Is The Solution To What One Billionaire Calls America’s Greatest Risk
Bitcoin has been trading over $20,000 for well over a week now, resulting in more mainstream media coverage, and a wider scope of coverage in the world of finance. It has caused investors, analysts, and billionaires of all kinds to be questioned on their thoughts about the trending cryptocurrency. Responses are a mix of wild speculation and healthy skepticism.
In an interview with the billionaire founder and chairman of Equity Group Investments, Sam Zell, he reveals what he believes to be the “single greatest threat” facing Americans in the future. In the same conversation, although he remains skeptical and put off by certain aspects of crypto, he admits that “ultimately, it may be the answer” to the problem he himself warns of.
Bitcoin: Why The Next Global Reserve Currency Should Be Crypto
Bitcoin and cryptocurrencies have been a polarizing subject in the world of finance ever since Satoshi Nakamoto released the code into the wild, setting the network in motion for the first time.
Since then, the asset has gone through various phases of adoption, starting as a dark web currency and proof of concept, and more recently, becoming a safe haven asset and store of value.
In its early days, cypherpunks, techies, and convicted criminals were the asset’s biggest supporters, while naysayers were aplenty. Over the years, the asset’s bubble and bust cycles attract new investors in waves and convince the critics of past cycles to turn believer.
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This latest wave has begun for the first time to pique the curiosity, interest, and capital of corporations, hedge funds, and billionaire investors. What comes along with that crowd, is the cryptocurrency’s strongest arguments and criticism yet.
Already, some of the biggest names in finance have come out to say that the stock-to-flow model Bitcoin supporters subscribe to based on the asset’s digital scarcity, is flawed. Meanwhile, others claim that the cryptocurrency should be worth $400,000 already based on alternative models.
Bitcoin suddenly became interesting to this category of wealth in 2020, as these investors seek to protect that wealth from the US dollar’s expected weakness.
The dollar has taken a beating throughout 2020 due to excessive money printing and continued mismanagement of monetary policy. Fearing hyperinflation and little upside in other markets such as stocks, these high wealth individuals and institutions increasingly considered Bitcoin as a store of value, and the digital gold narrative took hold.
But not everyone is convinced just yet.
The dollar has fallen 99.99% against Bitcoin since its inception | Source: BTCUSD on TradingView.com
Billionaire Investor: Dethroned Dollar Is The “Single Greatest Risk,” Standard Of Living To Decrease By 25%
Sam Zell founder and chairman of Equity Group Investments, warns that if the dollar loses its “global reserve” status it could lead to “a 25% reduction in our standard of living,” referring to Americans as a whole.
“Unlimited debt and irresponsible activity don’t lead to positive outcomes,” the billionaire explained. “That’s a disastrous kind of scenario.”
Zell doesn’t come right out and say that Bitcoin is the solution, and starts off his thoughts on the cryptocurrency claiming “I am very skeptical, frankly.” But he does admit that “it may be the answer or one of the answers,” ultimately.
Bitcoin has been pitched as an ideal global reserve currency due to its non-sovereign traits and the fact it works counter to the “irresponsible activity” that Zell is referring to.
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Bitcoin’s hard capped supply solves the issues created by quantitative easing and was designed as an alternative to these failing fiat-based monetary systems. Everything about it is the solution to what Zell calls the “single greatest risk.”
What is holding Zell back from becoming a full Bitcoin believer, is due to the “chameleons and other fast-talking characters,” the crypto industry is “extraordinarily populated by.”
Zell says that most of the leading figures in the crypto industry are not “the kind of people I’d like to follow.”
The crypto industry is still young, and for every snake oil salesman, there is a Tyler or Cameron Winklevoss. And over time, the Authur Hayes of the industry that helped put a target on its back will be forgotten, and the legacy laid forward by the likes of Michael Saylor and other brilliant minds, will be what is remembered in the history books.
FEATURED IMAGE FROM DEPOSIT PHOTOS, CHARTS FROM TRADINGVIEW.COM
- Bitcoin has seen some mixed price action as of late, with bulls being unable to take control of its trend in the time following its rally up to $28,500
- The rejection here was quite intense, and it has yet to show any signs of strength in the time following this occurrence
- The fact that bulls have guarded against any deeper drawback is positive because it invalidates the possibility that this recent high is a blow-off top
- One trader is now noting that there is an incredibly bullish indicator that is flashing for Bitcoin
- He points to the cryptocurrency’s monthly RSI, noting that a monthly close above a specific level that it is nearing is historically followed by parabolic moves higher
- In the past, these movements have had an average return of 1,010%, but their size and length seem to diminish with time
Bitcoin and the entire crypto market have declined over the past 12 hours, which appears to be the direct result of the pressure that XRP is placing on the market due to its latest selloff.
Where the market trends in the mid-term likely won’t depend on XRP, which means that this latest round of selling pressure may mark a knee-jerk reaction from investors.
One analyst is noting that Bitcoin’s monthly RSI is flashing an incredibly bullish sign for where BTC trends next.
Bitcoin Struggles to Gain Momentum Following $28,500 Rejection
At the time of writing, Bitcoin is trading down just over 1% at its current price of $26,700.
The crypto has been trading between the upper-$26,000 region and the lower-$27,000 region throughout the past few days.
It has yet to garner enough buy-side support to break above the heavy resistance laced throughout the lower-$28,000 region. For now, this peak could mark a blow-off top.
Indicator Suggests BTC is About to Go Parabolic
One trader explained in a recent tweet that Bitcoin could be on the cusp of seeing a parabolic move higher in the days and weeks ahead.
He points to the cryptocurrency’s monthly RSI as an indicator for this possibility.
“BTC – Monthly RSI. Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”
Image Courtesy of il Capo of Crypto. Source: BTCUSD on TradingView.
The coming few days should shed light on Bitcoin’s trend, as continued weakness could confirm $28,500 as a local high and lead to a deeper retrace.
Featured image from Unsplash. Charts from TradingView.
Bitcoin has had an explosive breakout year as a maturing financial asset,. The cryptocurrency is finally being considered by institutional investors for the first time, during a year that will go down in history for unprecedented money printing.
The asset’s hardcoded digital scarcity is a primary driver of its boom and bust cycles, and in the year following each block reward halving, magic happens. With the new year right around the corner, here’s a look back at past crypto market cycles for a glimpse at what to expect from Bitcoin in 2021.
Looking Back At Historical Bitcoin Market Cycles
All markets are cyclical and go through distinct phases of bear and bull trends. These cycles can take place over the course of decades, or a handful of years. In crypto, cycles often move faster than traditional assets due to the always-on, 24/7 market.
But because Bitcoin is just over a decade old, there are only a couple of boom and bust cycles at which to glean any useable data. In technical terms, when Bitcoin breaks its former all-time high, the new bull market is on.
Fundamentally, this occurs every four years following the asset’s block reward halving. This built-in mechanism slashes the supply of BTC in half at a time when demand is beginning to resume.
RELATED READING | NY TIMES BESTSELLING AUTHOR: BITCOIN S2F IS FLAWED, NOT MATHEMATICALLY SOUND
The combined effect of suddenly diminished supply and growing demand throws buying and selling equilibrium so out of balance that price appreciates exponentially.
2020 has acted as the ideal example of the impact each halving can have on the market. Bitcoin went from “a fad” to full-blown FOMO in less than nine months, all because supply and demand is so favorable to positive ROI.
And while 2020 was definitely a breakout year for a bullish Bitcoin, it is next year that will make a new wave of Bitcoin billionaires.
Halving years are marked in blue. In the year following, the cryptocurrency goes full parabolic | Source: BLX on TradingView.com
Move Over 2020, Why 2021 Will Be The Cryptocurrency’s Best Year Yet
Glancing at the chart above and it’s shocking to see just how high Bitcoin has climbed in twelve years. During the twelve years of trading, the cryptocurrency has had three distinct halvings, cutting the reward miners receive from 50 to 25 BTC, then from 25 to 12.5 BTC, to the current 6.25 BTC.
Each time this happens, demand begins to so drastically outweigh the limited supply, the asset goes parabolic and rises exponentially.
RELATED READING | BITCOIN BULL RUN IS OFFICIAL ACCORDING TO MONTHLY RSI, MORE BULLISH THAN 2017
In the two post-halving years on record, the first resulted in well over 6,000% ROI and the second just under 2,000% ROI. What could 2021 bring crypto investors?
Another 2,000-6,000% return isn’t likely simply due to the law of diminishing returns, however, even a 400% increase from current levels would result in a price of $125,000 per BTC.
Featured image from Deposit Photos, Charts from TradingView.com
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