Here’s What Can Have An ‘Explosive Effect’ on the Bitcoin Market
For some time now, bitcoin has been trading in a range, seeing sideways consolidation over the past week.
According to trader DonAlt, bitcoin can trade sideways between $5k to $20k for the next five to ten years, just like gold did for the seven years after hitting the peak in 2011. Bitcoin has already been ranging for more than the past two years.
While DonAlt isn’t bullish in the near future, there are plenty of reasons to be bullish still.
For now, despite the retracements in BTC price, daily active addresses are continuing their long-term uptrend. DAA made a two-year high at 1.02 million after hitting 1.08 million DAA on July 1st.
Bruce Ng and Juan M. Villaverde of Weiss Crypto ratings point to the quantitative easing “infinity.” The US Federal Reserve has been pumping in lots of money into the system to prop up the economy battered by the coronavirus pandemic.
In 13 weeks, the Fed printed about $22 million new paper money per minute and is now onto a new relief package.
“Historically, investors pour into gold as a safe haven when they lose confidence in paper money. This time, they're going to pour into Bitcoin as well. And indeed, both are already on the rise,” reads the bullish view of Ng and Villaverde.
It has been only the month of July when bitcoin got stuck in a rut while gold went up to hit eight-year highs. Otherwise, Bitcoin still performs better than the bullion in terms of YTD gains or since the pandemic hit.
Institutional money is also pouring into the world’s leading digital asset. In the last quarter, billionaire investor Paul Tudor Jones announced that he has almost 2% of his wealth allocated to bitcoin.
According to him, bitcoin is the hedge against inflation, and “we are witnessing the Great Monetary Inflation — an unprecedented expansion of every form of money, unlike anything the developed world has ever seen.”
The price of groceries is getting more expensive by the week.
You wanted inflation? You got inflation. pic.twitter.com/f5p9t7mzLh
— Jason Yanowitz (@JasonYanowitz) July 8, 2020
While the Grayscale Bitcoin trust is seeing heightened demand for the digital asset, major venture capitalist Andreessen Horowitz recently raised half a billion dollars to invest in crypto start-ups.
“Not only is this some of the smartest money on Wall Street. But the sheer weight of institutional-sized money flows into a small market like Bitcoin can have truly explosive effects,” believes Ng and Villaverde.
And with bitcoin’s market cap at $170 billion, 1/218th the size of the US stock market, just 1% or 2% of wealth during crypto would be sufficient to send bitcoin to the moon.