Bitcoin is humanitarian because it is borderless and permissionless with no ties to any central bank or government. It really cannot be effectively banned and its market cap has steadily grown at amazing rates since 2009 when it came out. The chart below shows how if you zoom out on the charts for Bitcoin you can see how it has ups and downs but over years of investing in it, if you hold on to it, your investment will grow massively. We have discussed in previous blogs the halving cycles and after each one a bull market ensues usually lasting about 18 months. The cycles are lengthening which makes us summise that this bull market might last into 2022. All we can do is address that as the bull market nears its end in late 2021. The last ATH (all time high) was $20,000 in 12/2017. The previous ATH was $1,100 in 2013. If we ratio that to the 2021 or 2022 ATH which we expect. $150,000-$200,000 appears reasonable. Again, we address that when Bitcoin nears the end of the bull market. Now zoom out and look at this all time chart using market cap:
Thanks to Lyn Alden for that chart. The stock to flow model we talk about in many of our blogs is great for analyzing how the halving every four years has a consistent impact on the Bitcoin miners. First they begin capitulating the same number of days after the halving in each cycle, then they re-group after weak miners are shaken out, then then the hash rate of Bitcoin starts growing. This kicks off the network effect of more adoption into Bitcoin. First retailers, then hedge funds, institutional investors, corporations, and eventually endowments and pension funds. Bitcoin is on track with the stock to flow model even after 11.8 years:
What is there to make us believe Bitcoin will now stop following these trends?
- Too volatile. Zoom out and follow monthly or yearly candlestick charts, or the stock to flow model. It may drop 20% to 30% but it always comes back. Avoid buying the peak at the end of the bull market. Read up on Bitcoin. The peak is not too hard to see. Rest assured when we see it coming. We will write about it!
- Governments will ban it. Now that Bitcoin is approaching a $300Billion market cap and the adoption curve has reached Fidelity, JP Morgan, Hedge Fund Mgrs Paul Tudor Jones and Stanley Drunkenmiller, numerous corporations hold it in their cash reserves. Bitcoin is too big to ban. It holds millions of votes. No President could inact the draconian measures to attempt to shut it down. That would force public corporations, hedge funds, and institutional investors and even banks to stop custody of Bitcoin. Trade it for fiat currency? That would be a massive loss for each of these entities. When Gold was banned the US pegged the USD to Gold. Gold became legal to own in the US shortly after President Nixon took the US off the Gold standard in 1971.
- Too slow to transact. Slower transaction times allow the blockchain to be the worlds most secure network. Bitcoin is secure because each Bitcoin can be accounted for. If that were not so, Bitcoin would not be decentralized, it would not allow one to hedge from central bank mahem (Quantitative Easing, Stimulus). Adoption to Bitcoin is only the way it is because Bitcoin has slow transaction times. It truly is decentralized. Neutral ATM believes this is its greatest feature.
In 2021, Bitcoin could easily bring about a 1,500% return on investment. It could easily break 220% return on investment in 2020. Follow the stock to flow model. Sign up with your email address on neutralatm.com to get our updates. Freedom from economic stagnation is available. All you have to do is accept it and consume the information that is available. Neutral ATM is here to get everyone off of zero Bitcoin.