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Seven compelling factors that are driving Bitcoin higher.

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February1, 20216 min read

As technical as cryptocurrency and Bitcoin (BTC) markets are there are some fundamentals driving the market. These include cryptocurrencys growing mainstream acceptance, the amount of power put into mining the coin, and its availability to name a few. Now that BTC/USD is trading at new all-time highs the market can expect the bullish trends to continue because there isnt much reason for the market to reverse until a clear top is formed. Based on what were seeing inthe marketBTC/USD could easily hit the $59,000 this year and that estimate might be too low.

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1. There is a cost to mine Bitcoin

While mining Bitcoin used to be very easy, an influx of miners (along with other factors discussed below) drove up the difficulty rate while driving down the reward. Now it is virtually impossible for a lone operator to mine a single BTC without the help of either 1) a vast quantity of expensive mining resources or 2) the aid of a mining pool. The mining pools tend to operate where electricity is cheap but there is still cost, not to mention the overhead of running a large mining operation. The latest estimates put the cost of 40 TH/s of computing power at $4.32 per day. Thats may seem small but it adds up over the year. The annual cost runs about $1,576 with an expected reward of 0.08875 Bitcoins or about $3,017 with BTC trading at $34,000. Thats a gross margin of 47% and then add in the cost of buying or renting a unit. The takeaway, it costs money to mine Bitcoin and that is where a lot of its intrinsic value lay.

2. There is not an unlimited supply

Bitcoins value is also driven in large part by supply, and the supply is dwindling. There are only ever going to be 21 million real BTCs ever minted. That doesnt count wrapped BTC or other kinds of defi-sourced BTC which ultimately will also affect BTCs price. But, back to the supply, of the 21 million nearly 90% have already been mined leaving just over 2 million for the mining community to split up. And, not only that, but there are the halvings to consider. A halving is when the Bitcoin mining reward is cut in half. The purpose of this is to help control BTC inflation and extend the lifespan of the mineable BTC pool. The halving occurs every four years, there have been three so far, and the most recent was just this past year. The takeaway here, people who want to own a Bitcoin or use a Bitcoin have to buy one of the few that are already out there.

3. There are a growing number of BTC addresses

Technically, the way that the BTC network is set up, there are already an infinite # of addresses. The system is set up that way to help make it more difficult to find a specific address and hack into it. The more important figure, however, is the number of Bitcoin wallets that currently hold BTC >0. That figure posted a YOY increase in 2020 that has the total number of wallets in use at over 1 million. That doesnt sound like a lot but you have to remember that supply is limited and the number of large holders and whales is rising by mid-single-digits. The number of whales, BTC holders with over 1000 BTC in their account rose by 7% while smaller accounts with 5 to 100 BTCs rose by 4%. In total, BTC whales are holding nearly 2.3 million BTCs while smaller investors account for upward of 10 million BTC. Thats not a lot left for the truly small retail investors who are also flooding into this market.

4. The mining community is still growing

If Bitcoin wasnt an attractive and lucrative investment the mining community would not be growing and it is growing. The latest data shows hashing power or the amount of computing power attributed to the BTC network at a new all-time high. The takeaway here is that Bitcoins hashing power has only risen over the long-term and is likely to continue setting new highs long into the future. Thats a lot of competition for a dwindling supply of coins.

5. Bitcoin is the worlds reserve cryptocurrency

Bitcoin has long been the worlds reserve cryptocurrency because its the easiest to use, themost widespread, the first that most new users buy, and its role in defi. The proof of this is in the coins market dominance of its percentage of the total cryptocurrency market cap. Except for a brief period during 2017 and 2018 when the Altcoin craze was going on Bitcoin has always commanded at least 50% of the total market cap. Lately, that has risen to over 60% where it has trended since mid-2019. The takeaway here is that when the world turns to crypto Bitcoin is the first name they seek. And the world is warming up to crypto.

6. Bitcoins get lost, locked, and burned every day

As if the limited and dwindling supply was not enough to support BTCs price movement there is the lost BTCs to consider. The estimates vary but investors should assume that roughly 3.7 million BTCs are already lost or irrecoverable. One analyst estimates that 1,500 BTCs are lost every day. What lost means is that they are in unrecoverable wallets. We know where they are on the blockchain but no one can get to them for 1 of 2 reasons. The first is that they are really lost due to password protection and/or lost devices. Those coins will never come back to the market. The second is burning. Some operations on blockchains require you to lock or burn coins. This essentially loses coins on purpose but in a way that spawns new value. For example, if we wanted to launch our own cryptocurrency we could burn $1 million worth of BTC and produce 1 million $1 MarketBeat Coins.

7. Defi is growing

Defi isdecentralized financewhich, in a nutshell, means locking BTC or another cryptocurrency into a smart-contract. The total value of defi grew at an exponential pace in 2020 and now amounts to over $27 billion in value. Thats not all BTC value but BTC is well-represented. The takeaway here is that defi is growing and will continue to suck up BTC value and drive demand for BTC.

After a strong rally from the 2020 lowws the Bitcoin market is very bullish. BTC is likely to move sharply higher over the next year and basied on the recent move, it could run close to 100%. Assuming the recent consolidation at all-time-high levels will lead to a continuation we project at least $27,000 in upside from the $32,000 level.

Read more:
This Is Why Bitcoin Will Hit $59,000 In 2021 - Entrepreneur

Visa is piloting a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services, the payments giant announced Wednesday.

The Visa Crypto APIs pilot program will let clients easily connect into the infrastructure provided by Visas partner, Anchorage, a federally chartered digital asset bank, to allow their customers to buy and sell digital assets such as bitcoin as an investment within their existing consumer experiences, Visa said in a press statement.

Visa envisions a product set that extends to other cryptocurrencies and stablecoins as well as other crypto services such as trading, Visa crypto lead Cuy Sheffield told CoinDesk in an interview. Digital bank First Boulevard is the first bank involved in the pilot; Visa has issued a wait list for other banks.

Previously, Visa had been focused on helping crypto companies issue bank cards and has partnered with 35 crypto firms to date, but this is the first time the company has offered crypto services to banks.

Last week, Visa CEO Al Kelly said during an earnings call that stablecoins could be used for global commerce, adding that to the extent a specific digital currency becomes a recognized means of exchange, theres no reason why we cannot add it to our network.

Next phase

This is shifting to the next phase of Visas strategy where were looking at how Visa can also be a bridge between the thousands of financial institutions and help them tap into the growing world of crypto assets and blockchain networks, Sheffield told CoinDesk in an interview. Were excited to see what early tests and consumer engagement look like for things like dollar-cost averaging to buy bitcoin or for things like earning bitcoin back as rewards.

Similarly, digital asset manager NYDIG tapped banking technology provider Moven to offer NYDIGs APIs for buying, selling and holding crypto to Movens bank customers. Both products come in the wake of several letters from the U.S. Office of the Comptroller of the Currency giving banks the green light to custody crypto and the ability to conduct payments and other activities with stablecoins.

Visas news also comes after Anchorage became the first OCC-approved national crypto bank, although Sheffield said that Visa had been working on this product with Anchorage and regulators long before the custodians charter was granted.

Creating a Black crypto bank

The news also coincided with an announcement from Visa that it would be partnering with five Black banks and fintechs to offer financial and business services that cater to the Black community.

First Boulevard, the first firm to join the Visa pilot, is a digital bank that is building tools to help African Americans passively build wealth and will launch sometime in early 2021. The bank plans on using the bitcoin services and its partnership with Visa to educate its customers about bitcoin as a way to close the general wealth disparities faced by Black communities, said Donald Hawkins, president and CEO of First Boulevard.

In the future, Hawkins said he hopes his customers come to the bank rather than YouTube for information about investing in crypto.

Currently, First Boulevard offers customers 15% cash back for spending at Black-owned businesses. In the future, Hawkins plans to allow bank customers to put those rewards into crypto investments or high-yield crypto savings accounts.

First Boulevard plans to partner with Visa on financial education in addition to using the crypto services plugins.

Crypto is a gateway to financial literacy, Sheffield said. Its much easier to get people excited about money and important concepts around investing by just explaining what bitcoin is.

The bank also plans to offer resources for investing in real estate as well as micro-investing.

Normally, banks in traditional finance have to get buy-in from the board and management before making a play in the crypto space. At First Boulevard, jumping into crypto was serendipitous, Hawkins said.

Our target market is Black Gen Z and Millennial women, Hawkins said. The majority of our team is made up of exactly our target market. So cryptocurrency has been a hot topic in our company since the very beginning.

The rest is here:
Visa Signals Further Crypto Ambitions With API Pilot for Bank Customers to Buy Bitcoin - CoinDesk - CoinDesk

One River Asset Managements CEO says his firm now holds bitcoin worth well over $1 billion. He revealed that the institutional interest in bitcoin is astounding, noting that almost all major institutions in the U.S. are having discussions about the cryptocurrency. He believes that bitcoin will be worth more than gold, placing its value at approximately $500K.

The CEO and co-founder of One River Asset Management, Eric Peters, shared his view on bitcoin at length in an interview with Bloomberg last week. Firstly, he revealed that his asset management firm now holds bitcoin well in excess of a billion dollars at this point. He then discussed the case for institutional investors to own cryptocurrencies currently.

We are in a unique period right now, Peters began. It is the period seen many times throughout history where governments become extremely indebted, monetary policy becomes less effective, and ultimately governments need to issue lots of debt and begin actually spending. Typically, when they do that, they try to unburden themselves from the debt theyre incurring by debasing the currency that theyre issuing that debt in. The CEO added that ultimately, those who hold that currency lose their spending power.

He proceeded to talk about crypto assets, stating that they are really interesting in the sense that theyre a new asset class altogether. He noted that they have some unique qualities, part of which resemble the qualities that youd find in gold except that theyre wildly underpriced relative to gold.

Moreover, bitcoin and other cryptocurrencies have technology properties, and will look different tomorrow, and next year, and in a decade to come. This makes bitcoin unique to gold because if gold has looked the same two thousand or two billion years ago, then it will look the same in two thousand and two billion years from now, the One River executive described, elaborating:

I think you have to be a real pessimist to think that an emerging technology platform doesnt become more interesting, more useful, more valuable.

He further detailed that Its very rare that you find an asset that can kind of allow you to capitalize on future upside [the technologies] while also mitigating the downside [monetary debasement] like that.

Peters also clarified that he always starts with the macro aspect when it comes to investing as he has been a macro investor his entire career. With technology, the CEO opined:

Ive seen enough to know that, in essence, tomorrow is going to look better than today. When youre investing, thats incredibly important to know does tomorrow look better, worse, or the same. I think Ive seen enough to just understand that tomorrow looks better than today in these assets.

Were issuing enormous amounts of debt. Were having our central bank buy them the scale of it is just so profound so the question is, in that environment, what are the assets that you can own, he continued.

Peters proceeded to list some plausible investment options: equities, gold, and digital assets. He asserted that digital assets are dramatically undervalued relative to some of these other stores of value, which is why his firm is excited about this, emphasizing that Its just an undervalued asset for that macro backdrop.

The One River CEO also praised bitcoins fixed supply. He stated: Its unlike any asset that Ive seen in the world in the sense that theres no supply response to the price. If bitcoin went up five times in value, or 10 times, or 100 times, there wouldnt be more bitcoin produced. You cant say that about really any other asset in the world.

He also compared bitcoin to gold. I think it will be worth more than gold at some point because gold is not infinite. Gold continues to increase in terms of supply, he noted. In contrast, there will only be 21 million bitcoins. The CEO elaborated:

If it were just to go up to the market cap of all the gold in the world, it would go up to something in the order of $500,000 per bitcoin.

Right now, its trading at lets say $30,000, so if you look at it from a traders perspective theres enormous convexity to the upside, he affirmed.

Answering a question about how long it will take for bitcoin to become more valuable than gold, Peters said that it is policy dependent. He could see it happening in a number of years if we see some type of next recession that is followed by even more issuance and more buying from the fed. Nonetheless, he pointed out that one of the things about these assets is it doesnt cost you anything to hold them. You have the price risk to the downside but you dont have a negative carry.

The One River executive also discussed whether crypto assets will appeal to institutional investors if they continue to exist alongside fiat money or whether institutions need to see some kind of government or central bank acceptance or endorsement before jumping in.

After he publicly revealed that his firm had invested about a billion dollars in bitcoin, he said that the number of institutions that have been filling my day with calls and inquiries about this is astounding. He reiterated that it is already happening enormously.

Peters expects the crypto asset class will mature in a decade from now, adding:

Whats happening is almost every big, credible institution in the U.S. is having discussions about this Many of them are calling us to ask.

Theyre fascinated by this, he further shared, emphasizing that they should be because this is the first and last asset class that will appear in our lifetime.

As for how the crypto landscape, including BTC, will look like a year from now, Peters said, Prices will be higher. While admitting that there will continue to be volatility, he believes that it will decrease the higher the prices are. He explained that as the prices rise, youre drawing in new types of investors, with stronger hands, quite frankly so I think that over the next year, a lot of money will be drawn into these assets.

He also believes that more regulations will come out in an effort to increase transparency for the whole crypto asset class but the regulators will not destroy the asset class because they understand that the future of finance will be digital.

Do you agree with One Rivers CEO about bitcoin? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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Asset Manager Values Bitcoin at $500K, Expects BTC to Be Worth More Than Gold, Sees Massive Institutional Interest Markets and Prices - Bitcoin News