Bitcoin up 280% in 2019 – Have you missed the boat?

It’s on the tip of everyone’s lips as FOMO runs riot.  Have I missed the boat on this new Bitcoin bull market?  Since the big blow off after the late 2017 hysteria, Bitcoin bottomed in December of 2018 at around $4300 in Aussie dollar terms.  The so called ‘crypto winter’ saw it effectively bounce along the bottom until around April this year.  From around $5800 then it has rallied right up to nearly $20,000 ($US14,000) early this morning.  As we write that has dropped to $17,700 ($US12,000) in the matter of an hour.  Is that the pullback people have been waiting for after the parabolic (20%+) run over the last day?

Let’s look at this in perspective.  How does this bull run compare to that we saw get some steam in 2017?

That’s just comparing one bull run to the last and doesn’t take in the bigger picture of a 10 year old asset coming of age as understanding and adoption expands.  Zooming back to 2013 we get a better idea of the trajectory:

You can see why there are plenty calling for $50-60,000 BTC in this bull cycle.  You can also see very clearly the volatility of this formative asset as it finds its way.  By formative, we remind you that its entire market cap right now is around $225 billion.  That, quite frankly, is tiny when compared to say gold at $7 trillion or financial assets at $300 trillion.  If Bitcoin really is going to establish itself as a true hard monetary asset with no counterparty risk like gold, you can start to see the merit in the Bitcoin maximalists call for $1m Bitcoin.  That would translate to a market cap of $17.8 trillion now or $21 trillion when all 21m BTC are mined. After that there is no more supply (unlike the Fiat they keep printing).

In the past we have often seen a rotation from BTC to alt coins such as Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH) after a parabolic session in BTC like we’ve just seen.  You can see below how they have lagged so far, albeit ETH putting in a good run:

Topically, and somewhat prophetically, just before the BTC blowoff this morning market analyst Tim Luongo had this to say:

“Markets that go vertical without really pausing to take a breather will always correct down. Hard.

When that happens given the expansion of Bitcoin’s dominance of the crypto market by market cap percentage in the past few weeks, I would expect to see some strong rotation into both cash and alt coins just clearing major technical hurdles on any correction.

And just so we’re clear as to what’s happening here. The mother of all safe haven trades is emerging. Trade Wars, Near Hot Ones, tariffs, sanctions, popular uprisings and political instability are all on the table.

While we’re all focused on whatever short-term idiocy comes out of Donald Trump’s mouth to secure his control over the Overton Window, we should be asking ourselves why the ECB is going looking at even more negative rates, LIBOR has inverted alongside Eurodollar and the U.S. Treasury market and stocks are at all-time highs.

The markets aren’t irrational. Our perceptions of what is driving this behaviour is. Safe haven assets change with the times.

And when you step back from the insanity of the fiscal and political situation in the U.S. and Europe, the fall-out from their instability on emerging markets and the potential for major shifts in the geopolitical game board does it really seem all that odd that a simple electronic proxy for gold with thin supply, high trust and low holding risk would become a darling of the risk averse?

I don’t.”

Speaking of that monetary insanity of a now record amount of negative yielding sovereign bonds, we shared yesterday the correlation between gold and the amount of negative yielding debt and below, not surprisingly, is a similar picture for Bitcoin:

Beyond these macro economic factors at play, the game changer for Bitcoin is institutional investment which we will discuss in full next week.  We also have the impetus that Facebook’s Libra crypto launch will bring to the broader crypto space understanding and adoption.

Speaking of alt coins, we will be launching 5 more alt coins to join our current 5 offer.  On Monday we will launch trades in EOS (EOS), Stellar (XLM), Cardano (ADA), TRON (TRX), and IOTA (MIOTA).  As with our others you will be able to do high value trades, pay or get paid in cash or bank transfer, lock price and then pay, get a completely cold (hack proof) Ainslie Crypto Wallet (except for ADA) and deal with a human!

We’ll explain more about these new crytpo offers tomorrow.

For all things crypto, go to www.ainsliewealth.com.au for more details and trade or call us on 1800 987 648.