Bitcoin Outperforms S&P500 | Stablecoins are Coming
Although last week will always be remembered as the week that oil went negative, we saw bitcoin jump almost 12% from its low to its high and convincingly outperform the leading stock market indices.
One view is that the sharp jump upwards may have been motivated by the futures expiry on Friday, or maybe the excitement building for the bitcoin halving in just over two weeks.
We take a look at some of the news stories from the past 7 days which have given us food for thought.
Bitcoin’s Market Cap Could Reach $10 Trillion, Says Former Macro Hedge Fund Manager
In the April 2020 issue of the “Global Macro Investor” (GMI) newsletter, former macro hedge fund manager Raoul Paul explains why he believes that Bitcoin, which he calls “the future”, could have a $10 trillion valuation in the future.
In his magnum opus, Pal talks about the economic risks posed by the COVID-19 pandemic – which he calls “the biggest event of all of our lifetimes” – and what individual and corporations can do to protect themselves.
A section of his 120-page report talks about gold and bitcoin, which he considers the only two assets that can protect investors from the risk of the potential gradual collapse of “our current financial architecture.”
As far as gold is concerned, Pal says that it will continue to perform well across all fiat currencies, and that it will “massively outperform equities.”
With regard to bitcoin, he believes that the price could reach $1 million in the same period and that bitcoin could be a “$10tn asset class.”
Here is Pal explaining why the idea of a $10 trillion valuation for bitcoin is not so crazy:
“After all, it isn’t just a currency or even a store of value. It is an entire trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm.
“It is nothing short of the future of our entire medium of exchange system, and of money itself and the platform on which it operates.”
Furthermore, Pal says that even if bitcoin goes lower first, that is “good” because it gives us an opportunity to buy more of it.
Pal then goes on to say: “I think this is the biggest trade of our lifetimes and just at the time when we need it the most… We all need to have bitcoin.”
$10K Bitcoin Price Back in Play? Key Metric Hints at Next Supercycle
Bitcoin (BTC) price continues to grow week in and week out, as another 9% has been added to its value since a week ago. However, with the block reward halving being just over two weeks away, and mining difficulty set to increase another 5% in little over a week, is the bull market now upon us or will the halving be another non-event much like other hyped up narratives like Bakkt, institutional money entering, or the VanEck Bitcoin ETF. This article looks at a couple of different scenarios to look out for in the week ahead.
Flights to Stablecoin in 2020
In their recent blog, Coinbase describes the current stablecoin landscape and looks at use cases. Key point is that the power of stablecoins to encourage liquidity, facilitate transactions and act as collateral is just beginning to be understood and that the growth this year is likely to continue to be staggering.
Stablecoins Don’t Inflate Crypto Markets
Stablecoin issuances do not push up the price of bitcoin or other cryptocurrencies, according to research funded by University of California Berkeley’s Haas Blockchain Initiative.
In their report, issued last Friday, Richard Lyons, U.C. Berkley’s chief innovation and entrepreneurship officer, and Ganesh Viswanath-Natraj, assistant professor of finance at the Warwick Business School, found stablecoins serve as tools for investors to react to market movements and not as drivers of price inflation or collapse. Their analysis of trading data shows flows are consistent with investors using stablecoins as a store of value during periods of risk or price depreciation.
Story of Tether Keynote
Just released – Paolo Ardoino, the CTO of stablecoin issuer Tether, goes into the company’s history during the CryptoCompare Digital Asset Summit in London.
USDT is Invading Ethereum, is it Good for ETH?
Ryan Watkins, a research analyst at cryptocurrency data firm Messari, wrote last week in a report that tether’s use of the ethereum blockchain “should be positive for ETH.”
“It’s hard to ignore the promise of decentralized programmable money if you’re spending time in the ethereum economy,” he wrote. “This will provide a bid for ETH.” He adds that the rise of stablecoins might actually pose a longer-term threat to ether, since they might usurp its potential use case as a “medium of exchange.”
“In this scenario, ETH will have devolved into its naive early branding of digital oil, a commodity-like lubricant for the ethereum blockchain,” he wrote. “ETH would still be valuable like many commodities are, but ETH would not be valued like money is.”
Bloomberg: Bitcoin is Setting Up for 2017-Like Bull Run
“Bitcoin Maturation Leap” mentions a number of reasons that the bitcoin market is maturing, and also affirms that “Bitcoin is gaining relative fuel as stocks reset, if history is a guide”.
Bloomberg says that bitcoin and gold, both considered hedge assets, are expected to win the most from the recent COVID-19 induced market turmoil: “Bitcoin and gold also stand to be primary beneficiaries of the unprecedented monetary stimulus that’s accompanied by a mean-reverting stock market.”
It also observes that bitcoin’s correlation to gold “has increased to all-time highs”, concluding: “This year will confirm bitcoin’s transition from a risk-on speculative asset to the crypto market’s version of gold.”
The report reiterates that 2020 will be the year when bitcoin becomes digital gold: “This year marks a key test for bitcoin’s transition toward a quasi-currency like gold, and we expect it to pass.”
BCB Group CEO on BLOCKTV Hosts
Oliver von Landsberg-Sadie shared his thoughts with BLOCK TV in an interview last week around what institutional traders are waiting for from digital assets, & what Covid-19 means for the CBDC push.