Bitcoin is ending one of the more spectacular weeks of both its recent history and its entire existence, still comfortably above $50,000.
After gaining almost 10% over the past seven days, Bitcoin has surprised an already bullish crowd of hodlers and dealt an increasing blow to naysayers who remain convinced that a crash is guaranteed.
Modern Consensus takes a look back at the week’s events and considers what might lie in store for Bitcoin in the coming days. We also publish a weekly markets outlook, the latest edition of which you may find here.
Bitcoin “eats the world”
Monday began with an already firmly bullish Bitcoin attempting to tackle $50,000 for the first time.
With upwards momentum behind it, the largest cryptocurrency nonetheless faced problems trying to clinch what was a significant psychological level. After several attempts, the conditions finally aligned and Bitcoin began turning $50,000 into support.
The move was accompanied by a familiar mixture of bull factors including corporate buy-ins, public endorsements and U-turns from bears who had reconsidered their stance.
All of these served to highlight the dwindling supply of BTC available on the market, something which provided an overture to the price rises which continue at press time. New all-time highs hit several times in recent days, with estimates putting the next serious resistance level as high as $98,000.
“It is simple. In the old world your money loses value, because governments debase currencies to fund their warfare & welfare state. In the new world #bitcoin increases in value, because math caps the monetary base at 21M BTC,” quant analyst and stock-to-flow model creator PlanB tweeted on Friday.
“The new world is eating the old world right now.”
Bears look all the lonelier
With so much good news around, it is the neutral to dismissive comments on Bitcoin that stand out in the current climate.
Among them are fresh contributions from Elon Musk, the world’s richest man whose company, Tesla, recently converted $1.5 billion of its balance sheet to BTC. Responding to an interview with Binance CEO Changpeng “CZ” Zhao, who questioned his penchant for publicly advertising Dogecoin, Musk chose to deflect from his opinions on any investment.
“Tesla’s action is not directly reflective of my opinion. Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company,” he said in a series of tweets.
“To be clear, I am *not* an investor, I am an engineer. I don’t even own any publicly traded stock besides Tesla. However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere. Bitcoin is almost as bs as fiat money. The key word is ‘almost.’”
Musk nonetheless said that companies would be “fools” to not consider alternatives to cash, given negative interest rates and, by implication, the inflation rampant in many major fiat currencies.
Among the more outspoken naysayers, in addition to economist Nouriel Roubini and new Fed Chair Janet Yellen, was Dave Portnoy, the serial investor who this week pledged to “never” buy Bitcoin.
Portnoy had in fact once owned BTC, but sold at $11,000 after becoming disillusioned by its performance.
“Buy everything that isn’t the dollar”
Looking ahead, the picture remains rosy for traders of both Bitcoin and altcoins. A repeat of last weekend’s volatility may raise concerns of a bull run accelerating too quickly, but in general, there is little doubt about the trajectory of any cryptocurrency market.
“It remains ‘buy everything that isn’t the dollar’ season. Especially #Bitcoin,” popular trader Scott Melker summarized.
BTC/USD reached its latest all-time high of $53,201 on Friday, having taken $53,000 and coming within $1,000 of trillion-dollar asset status.
Grayscale, one of the largest institutional Bitcoin participants, itself reached the level of Wall Street players with $40 billion of assets under management this week. Its Bitcoin Trust (GBTC) reached $34 billion, followed by the Ethereum Trust on $6 billion.
Michael Sonnenshein, the firm’s newly-appointed CEO, also revealed that AUM had doubled since the start of the year. At the beginning of 2020, by comparison, GBTC held just $2 billion in AUM.
“Take the $ amount of #bitcoin you have right now. Multiply by 20. That’s how much I expect you’ll have in 7 years,” investment manager Timothy Peterson told Twitter followers as the week came to a close.