Bitcoin broke $19,424 this morning, and looks to attempt to break the all time high (ATH) today or tomorrow. The strength of this run since early October stands on the shoulders of almost 12 years of adoption and a growing number of HODLers (hold on for dear life). Bitcoin clearly broke the correlation to stocks in October. It appears to be in the process of breaking the correlation to Gold as well. For example, Bitcion is up 170% YTD while Gold is up 19% and the Nasdaq is up 38%, SPX up 12.5%, DJIA up 5.4%. It is no longer believable to make the statement now, that Bitcion is following the stock market. As this bull run matures in 2021, Bitcoin will stand alone with no correlation to other assets. More and more Bitcoin out performs other assets. When the stimulus talks fell apart before the election, stocks fell off while Bitcoin pumped tremendously. It went the opposite direction for a few days in November when Bitcoin stalled while stocks did well. Yesterday, Janet Yellen was announced as the potential pick of the potential Biden Administration for treasury secretary. This is good news for stocks because she is a known Keynsian Economist, even more so than Powell and Mnunchin. A potential new stimulus package bouys stocks. What about Bitcoin? It reacts to other things. The Yellen announcement helped Bitcoin due to her longterm outlook on printing currency and growing M2 money supply. This will obviously weaken the USD. It will create a flight to safety moreso than what has been seen so far. This buoys Gold and Bitcoin. Below is a chart of Gold priced in Bitcoin. It shows how Bitcoin eats other assets when pricing those assets in Bitcoin:
The next chart shows the progression of Bitcoin towards a global reserve currency. It could easily take 20 years up to 30 years from now to happen. Neutral ATM believes it will happen eventually. This progression is slow because the habits and thought perspective of two generations regarding money will have to change. This progression and understanding it is what makes talking about Bitcoin hard. Fiat currency has been debasing for decades. Buying power must be stressed as the most important aspect of money, especially future buying power. As the SPX, DJIA, Nasdaq all chart negative strongly when priced in Bitcoin, as well as global currencies and precious metals. As this continues over decades, we acknowledge bear markets will slow this process down. 2022 will likely see Bitcoin pull backs which may stretch into early 2023. But after the halving in late 2023 or early 2024, the next bull run ensues. See the chart below, understand bear markets are taken into account:
As in our recent blogs, we reiterate, that pull backs and price retracements are healthy. As Bitcoin keeps maturing, bear markets will be less severe, bull markets as well. Bitcoin in the 2030’s will be more stable and much less volatile. This is a new technology and a new way to look at money. Generations will have to change their view about money. It is happening, but slowly. Adoption to the internet in the mid 90’s was similar:
What will speed up or slow down adoption to Bitcoin long term? Two words: price action.
As the “Bitcoin’s Adoption Curve” chart shows, if Bitcoin reaches $550K to $600K per coin by sometime in 2030, this would prove Bitcoin is still on the adoption curve to become global reserve currency. Neutral ATM understands not everyone sees Bitcoin this way. There is a lot of misinformation in the public. Many never thought Bitcoin would reach $10 per coin in 2009 when it first came out. Now look at us! Neutral ATM is here to get everyone off of zero Bitcoin. Cheap rates and public educational information for free.