These 2020 Bullish Bitcoin Indicators Should Not Be Ignored
Bitcoin bulls are calling for new highs in 2020 and beyond.
Bitcoin, like the rest of the global financial markets, has seen a wild ride so far in 2020. From extreme lows in March to more recent spikes above $12,000, bitcoin has proven itself resilient amongst the current climate.
These bullish indicators have played a role in bitcoin’s price strength and deserve more attention moving into late 2020 and beyond.
MicroStrategy Buys $250M in Bitcoin
This is a more recent newsworthy item but it’s huge.
A publicly traded company is putting all of its planned inflation-hedging funds into bitcoin. MicroStrategy is a real mainstream player with a market cap north of $1.4 billion.
Their faith in bitcoin as a store of value represents a major moment in continued mainstream adoption.
“This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” — CEO Michael J. Saylor
Remember When Square Enabled Auto Purchases?
The MicroStrategy move is a major long-term bullish indicator for a variety of reasons. We’ve seen big moves from others in 2020, like Jack Dorsey’s Square. They enabled automatic bitcoin purchases through their Cash App earlier this year. That was big too.
We’ve also seen Grayscale Investments buying up bitcoin at an extremely rapid pace.
MicroStrategy’s investment builds on top of the more “expected” bitcoin plays by investment firms, payment providers or financial companies.
It’s further confirmation that their is mainstream belief in cryptocurrency beyond just the fintech sector, private companies, and investment firms. The movement is taking hold in new, meaningful places.
The Digital Dollar Has Arrived
China is a major player when it comes to digital payments.
COVID, remote working, a greater emphasis of the cloud and so on has all fueled the rest of the world to also go digital across the board.
Digital payments, key to the growing digital world, are more important now than ever before. China is leading the charge here.
China’s digital cash is designed to be an electronic version of a banknote, or a coin: it just lives in a digital wallet on a smartphone, rather than a physical wallet. Its value would be backed by the state. But virtual cash would be quicker and easier to use than the paper kind — and would also offer China’s authorities a degree of control never possible with physical money. — Bloomberg
2020 is seeing China’s government pilot a digital version of their currency. Of course this is a centralized approach to digital currency.
It is nothing like Satoshi Nakamoto’s decentralized peer-to-peer electronic cash system — bitcoin. But, it’s potentially a big bull signal for cryptocurrency.
The rise of the digital dollar means that users are becoming more comfortable/being forced to adopt interacting with their money digitally.
$50 Billion in Crypto Exits China
China’s digital dollar comes on the heels of data revealing that $50 billion in cryptocurrency moved from Chinese-based digital wallets to other places in the world over the last year (CNBC).
This is a huge wake-up call for China. Investors are bucking against the system and transferring more money to other parts of the world using cryptocurrency.
The rise of the digital dollar means that users are becoming more comfortable/being forced to adopt interacting with their money digitally.
China’s digital dollar could encourage greater bitcoin adoption.
Plus, China’s strict economic mandates are also pushing many of their investors into cryptocurrency for other reasons.
There’s a lot to watch with what’s happening in China on top of how other countries will approach their own version of a digital dollar.
Continued Quantitative Easing
Quantitative easing started earlier this year in the initial aftermath of COVID and its related financial impacts. We’re continuing to see the Federal Reserve and Jerome Powell double down on the effort moving forward.
The Fed is essentially taking a long-term approach to resolving the current financial crisis due to COVID.
This can mean continued devaluation of the dollar, lower interest rates, and a greater focus on anything to improve overall employment numbers.
Take the Fed’s Effort Related to Bitcoin With a Grain of Salt
We typically see bitcoin and/or gold spike in price when the US dollar is devalued or when there’s general panic in traditional markets.
2020 is proving that this is not always the case though. QE is a bullish bitcoin indicator to watch patiently and with caution.
While continued QE can help solidify bitcoin’s place as a store of value, it doesn’t necessarily mean that bitcoin is a definitive hedge against the US dollar. Keep an eye on how QE impacts bitcoin over time.
2020 has shown bitcoin to move in correlation with traditional markets at times when we expected the opposite.
We’ve also seen bitcoin move independently, but it has to be stressed that more QE doesn’t automatically equal a higher bitcoin price.
More QE might lead to that in the long-term, but the Fed’s actions also reveal the fact that the value and strength of the US dollar is based more on businesses, governments, and individuals continuing to deal in USD over anything else.
That is what makes the USD valuable in a practical sense. Despite the dollar being devalued day in and day out, QE is more of a long-term bullish bitcoin indicator to watch than a short-term one.
Bitcoin Confidence Remains High
Bitcoin priced predictions are not a key indicator of anything beyond confidence in bitcoin. Coupled with other macro indicators though, it’s refreshing to see reputable names calling for a higher bitcoin price in both the short and long-term.
Bold price predictions on top of mainstream adoption from public companies, greater movement toward the digital dollar, and ease of access to/use of crypto altogether reveal that bitcoin isn’t going anywhere. If anything, 2020 could end up being a year we look back on and deem critical in the evolution of bitcoin.
We could go down the list of bitcoin bulls calling for higher levels by the end of 2020, late 2021, and beyond but we won’t. If you want, you can read this about bitcoin reaching $100,000 by August 2021 or this about wilder calls for a $1 million bitcoin.
2020 is a year for the history books in ways we could’ve never foreseen. How it will impact bitcoin remains up in the air but there are many reasons to remain bullish.
Price action and relative value to USD aside, this year is proving that the world is more comfortable with its largest cryptocurrency.
Thanks for reading! I am not an investment or financial advisor. This is not financial advice. All opinions expressed are mine alone. If you want more content like this, sign up for my weekly email.
