We will try to look at the different facts and fundamental materials that gives support for Bitcoin growing in 2021. If you are new to crypto, this is a good article for you to understand the bullish factors for Bitcoin. (we will have a bearish case in another article)
Understanding Bitcoin and cryptocurrencies requires understanding of a few smaller items:
-State of US dollar & government
-Token supply and demand
-Market cycles
-Retail vs Institutional investors
Bitcoin Supply and Demand:
New Bitcoins are created by miners. The supply of Bitcoin will only decrease every four years due to halvening events.
On the buying end, we have retail buyers (Average joe investors) and institutional buyers (Wall street investors, family offices, hedge funds, investing pools, corporate treasurers etc...).
The 2017 bubble was mostly caused by the emotional retail buyers getting dumped on by the smart money who loaded up on bitcoin back in 2016.
We are starting to see a similar situation in 2021 where currently Bitcoin is much talked about in the smart money circles but barely talked about in the retail circles. Google trend shows that the keyword Bitcoin only has 20-25% of the search volume experienced at the peak of the 2017 bubble.
What Smart Money? Smart Money Behaviors?
Institutional investors, Hedge funds, corporate treasurers are buying into bitcoin as a hedge against the out of control inflation the US government is doing. Institutional investors tend to invest in flocks and we have a few institutional early adopters who are making massive gains (Micro Strategies, Square and a half dozens more).
Expect to see more in 2021 as jealous investors start asking their fund managers why isn't their fund in bitcoin.
Shortage of Bitcoin
Right now there's a shortage of coins as institutional buyers are buying them up. The recent reduction of coins mined (halfening) reduced the supply of new coins has added more pressure to the system.
While most may not notice but if you know the numbers, you will see that exchanges are facing a declining balance of Bitcoins stored on exchanges (sign that they're being bought up and kept in cold storages).
This is just institutional buyers alone. we haven't even tapped into the full force of retail investors who are still on a wait and see stage. Different experts are expecting them to rush in between Q2 of 2021 and Q3 2022 depending on which graphs you're using.
A conservative run up will be around 72k while Citibank has given estimates of 300k. (NOT FINANCIAL ADVICE).
Below is an infographic of where bitcoin is headed complete with bullish and bearish factors.
