Bitcoin Pumping, Next Bull Run?
And, El Salvador's Strategy Paying Off
I don’t usually write about Bitcoin’s price. For various reasons.
I feel it more important to educate readers about various aspects of digital currencies, about the unique qualities of Bitcoin. Price is not everything.
But it’s pumping now. And there are reasons for that. The reasons are important. But the numbers get people’s attention.
$42,000.
For one Bitcoin. An asset that has been around for almost fifteen years now, and it demands $42,000 per coin. There may be something to this. (Lindy Effect)
Bitcoin started 2023 at $16,955. That’s quite a run. Up about 150%. The best performing asset of 2023 by a long shot. The best performing asset of the last ten years, by an even longer shot.
Sure, Bitcoin hit an all-time high of over $69,000 in 2021, when every asset class was hitting sky-high, ridiculous, bubble-like prices. It came back to earth, as did Facebook and a lot of other assets. It went all the way down to around $16,000 before beginning its climb to $42,000. And endured the meltdown of all of the so-called “crypto companies,” the FTX’s, the Celsius’s of the space.
Is this the next great bull run for Bitcoin?
Will a bunch of Bitcoin spot ETFs be approved in early 2024? The markets seem to be betting that it will happen. BlackRock, Fidelity, and big players of that ilk. The path for institutional and individual investors alike to easily and safely invest in Bitcoin seems to be just around the corner. Demand should increase.
Bitcoin’s halving will take place in the spring of 2024. The block reward for mining a block of Bitcoin will be cut in half again. Around 90% of all Bitcoins that will ever exist have already been mined. The stock-to-flow coefficient is decreasing. New supply will decrease.
Demand up, supply down, equals “Number Go Up.”
It’s Econ 101. Additionally, 70% of all Bitcoin holders (Hodlers) have not sold any coin in at least two years. They’re religious Bitcoin zealots. Supply squeeze.
Of course, hard-core Bitcoiners are not only concerned with price. They’re promoting and believing that this new form of savings, and maybe currency, can disrupt fiat currencies. Or at least coexist along side the ever-depreciating fiat money. Of many, many nations.
And the continuing deficits run up by the US government, the national debt of over $33 trillion, and the ever-increasing interest on the debt, will promote more money-printing. Which, of course, leads to more inflation. How can it not?
Michael Saylor: Genius or Crackpot?
The CEO of MicroStrategy is one of the world’s biggest Bitcoin bulls. His company has accumulated over 174,000 Bitcoins, worth over $7 billion. They started buying in 2020. They are in profit by over $2 billion. And MSTR stock has more than tripled, of course, in the last year.
Time will tell if Saylor’s gamble pays off. He’s extremely confident, and his board of directors has backed him. The returns to their shareholders have been amazing to this point.
Nayib Bukele: Genius or Crackpot?
The 42-year-old president of El Salvador is probably the biggest Bitcoin proponent of any national leader. He declared Bitcoin as a national currency in September of 2021, and has started, as a nation, mining for Bitcoin using energy from an inert volcano. He offered “volcano bonds” to the public and has given each citizen a Bitcoin wallet to start trading and spending.
The country’s Bitcoin bonds, after trading for a while at a steep discount, have recovered almost all the way to face value.
And the value of the El Salvador’s Bitcoin holdings has increased, to the point where they are in the black now. His strategy seems to be paying off.
Bitcoin’s Market Cap this week exceeded $800 billion. That’s more than Berkshire Hathaway’s. People have bet more money on Bitcoin than on Warren Buffett’s Berkshire Hathaway. That’s staggering to think about. Also, that $800 billion is more than half of the market value of all the silver that exists in the world. Wow.
Just facts here, no cheerleading. Do your own research. Invest wisely. Only invest what you can afford to lose.
Thanks for reading.
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Issue No. 126, December 5, 2023
Rick Mulvey is a CPA, crypto consultant, and frequent contributor to Bitcoin Magazine. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.