Bitcoin (BTC):Top 5 bullish factors
Bitcoin is still sitting on $30,000, but the bullish pressure is palpable. Here are the top 5 (crescendo) bullish factors.
Exchanges are running dry
Over 97,000 bitcoins have been withdrawn from exchanges in the last thirty days.
It’s true that a large proportion of these BTCs have come from Binance and Coinbase, with whom the SEC has been battling for some time.
However, this trend has been going on for a long time. In fact, it has been uninterrupted since February 2020. More than a million BTC have left exchanges since then.
The percentage of existing BTC on the major exchanges is at a five-year low. Only 1.88 million BTC remain on the twenty largest exchanges.
This is excellent news, since once in one’s wallet, the temptation to trade (sell) disappears. As Michael Saylor stated at the BTCPrague conference:
“Over the course of a year, 85% of the S&P500’s performance occurs in a single day. And 100% in just 36 hours. […] Trading is a sign of intellectual inferiority.”
Trying to beat the market is a monumental waste of time which, in the end, periodically adds to the selling pressure. Just Hodl!
Bitcoin’s 50% dominance has recently made headlines. However, this figure is misleading, since it takes into account the derivatives of national currencies known as stablecoins.
Remove these, and Bitcoin’s dominance rises to 70%. Remove the Proof-of-Stake (Ethereum) and we’re at 95%.
Monetary hegemony is a fight to the death. No shitcoin has ever stood a chance against Bitcoin.
As anticipated, the SEC has finally blown the whistle, and these mountains of “scams”, to use Gary Gensler’s words, will disappear from the exchanges one after the other.
Put another way, the few tens of billions of dollars remaining in shitcoins will be pouring into Bitcoin ever more rapidly.
It would seem that Bitcoin Cash is the new prey of pump & dump, but patience, this money will end up in Bitcoin’s coffers.
The fact that BlackRock has endorsed Bitcoin via its ETF application is a strong signal. A dozen giant funds are jostling for position with the SEC. Fidelity is also in the running.
All it would take is for American investment funds to allocate 1% of their capital for bitcoin to absorb $1.3 trillion. This would be equivalent to tripling the capitalization of BTC.
Beware, however. The best thing would be for many ETFs to emerge. Indeed, BlackRock warns in its ETF application that, in the event of a fork, it will have to decide which one is legitimate…
A decentralization of funds among numerous ETFs is much more desirable. This would protect us from the black scenario of hundreds of billions of institutional funds ending up in a fork controlled underhandedly by them.
Healthy paranoia aside, many individual investors are still afraid to invest in Bitcoin. They are waiting for such funds to take the plunge.
An ETF would therefore see an influx of institutional investments, as well as individuals.
This process means halving the rate of BTC issuance. Since 2023, 6.25 bitcoins have been issued every ten minutes or so. From next April onwards, the halving rate will be 3.125 BTC.
If history repeats itself, we’re on course for a new record in excess of $100,000. Hence the importance of investing in advance…
However, it should be remembered that the impact of halving is halved each time. Reducing the reward from 50 BTC to 25 BTC has a greater impact on supply than a reduction from 6.25 BTC to 3.125 BTC. Ambient demand must have doubled since the previous halving for the impact to remain the same.
What’s more, we mustn’t forget to take into account bitcoin’s market capitalization.
“If bitcoin’s market capitalization weighs one billion dollars, it only takes another billion to cause a 100% appreciation. If bitcoin is worth 500 billion, it takes roughly another 500 billion to generate a further 100% appreciation.”
Put another way, we probably won’t be seeing four-figure annual appreciations again. However, the potential remains enormous compared to any other asset class.
« Fair value »
The biggest short-term bullish factor is surely the forthcoming reform of the US accounting system suggested by the Financial Accounting Standards Board itself.
It is rumoured that the FASB will soon allow companies to account for Bitcoin at its fair value (“fair value accounting”).
Simply put, Bitcoin is not yet covered by current accounting rules. As a result, companies are required to record a loss in their accounts if the price of Bitcoin falls, whereas the reverse is not possible.
Capital gains can only be booked if bitcoins are sold. The result is company accounts that don’t reflect reality, and may deter potential investors.
However, not everyone is fooled. Microstrategy’s share price (which holds over 150,000 BTC) is up 160% since the start of the year.
Unfortunately, other lesser-known multinationals may not be so lucky. So it’s a safe bet that many companies will take the plunge if accounting rules change.
Let’s conclude by saying that the primary factor remains inflation, which no longer leaves anyone unmoved in Western countries. It is even rumoured that central banks will soon be adopting an inflation target of 3% rather than 2%…
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Bitcoin, geopolitical, economic and energy journalist.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.