See also: Is Bitcoin a Good Investment?
Changpeng "CZ" Zhao, Brock Pierce, and Monica Long of Ripple and Sasha Ivanov of Waves comment on the course of BTC.
It was a week of rough sailing for Bitcoin (BTC) this week. On January 21st, after a day of intensifying sell pressure, Bitcoin lost 13% of its value and dropped below $29,000 for the first time since January 5th, at a low of $28,750. It was the largest daily loss for BTC in over 10 months and analysts suggest that the price could retest at $24,0000.
The loss of 13% of Bitcoin's value has not taken the wind out of sails of dedicated Bitcoin devotees. Many analysts are calling this a predictable dip. Some have suggested that the institutional investors decided that the space was getting crowded and unloaded. Either way, the enthusiasm for BTC's decentralized currency remains untarnished -- just a minor course correction on BTC's journey to greater value in 2021.
Returning to Expert Guidance
Last week, we published comments from five luminaries in the crypto world. This week, we continue with insights from another group of distinguished leaders in the crypto space. Their comments are presented with minor edits for length.
Changpeng "CZ" Zhao, Founder & CEO of Binance
"The industry's development of 2020 has formed a new foundation for further growth. The slew of institutional investors making public their acquisitions, combined with the DeFi boom over last summer, raised public awareness and helped BTC break new records this early in the year.
The macroeconomic conditions we saw last year, partly compounded by the pandemic, will continue to pressure more institutional investors to pursue ways to hedge against inflation.
Whether it is for trading or treasury management, institutional investors will consider BTC inevitably, so we think a steady upward trend for the rest of the year would be justified.
...In May last year, BTC had very little movement and subsequently the market started showing interest in altcoins the following month. By July, Ethereum saw 45% month-on-month growth, leading other altcoins and possibly helped propel BTC as well. So we already had an altcoin season last year, and there are prior similar cycles in hindsight but they are perhaps less dramatic in terms of the volume and value we have now...
Around this time last year, BTC was priced at ~$8,800. About five years ago BTC was valued at ~$400. So if we put ourselves in the shoes of someone who had HODL early, and how early is of course a matter of relativity, their excitement is understandable.
Many in the industry also recognize the entry of institutional players as a validation of BTC. Institutional investors can broadly be categorized as active traders, who have no directional bias, or treasuries who intend to allocate a portion of their funds for hedging against inflation...
We are creating worldwide access to digital currency and making that experience enjoyable for as many people as possible without compromising on security. There's no precedent in what we do...
The journey is just still getting started and one thing that we would highlight is DeFi. The industry is working together to explore ways to decentralize finance and that requires a new way of looking at how we save, spend, and access money.
BTC in itself is not as DeFi-enabled as Ethereum or Binance Smart Chain, because BTC wasn't originally built for those applications. Nonetheless, the BTC rally brings a positive effect into the whole market, and as we have seen, advancements in DeFi also spillovers into BTC."
Brock Pierce, Chairman of the Bitcoin Foundation
"I think a lot of where Bitcoin heads depends on a number of other factors in the world. The economic situation, the political unrest, with the way that everything is lining up, I expect Bitcoin to go much higher -- really as we have already started to see.
After breaking all-time highs of 20,000, how quickly we moved up to 40,000. There really are not many levels where I (anticipate) Bitcoin seeing resistance. We could get anywhere from 70,000 to 100,000 by the end of the year, but it will not be without volatility.
"In terms of ‘altcoin season,' for people who are looking at a lot of the altcoins that really didn't have a purpose, a lot of those have continued to be "left for dead." Whereas, we have seen a lot of strength in some of the stronger ecosystems, with Ethereum leading the way, and Polkadot, Cardano… the whole DeFi wave, with Yearn.Finance, and Aave and a handful of other projects there.
I don't think Bitcoin HODLers are getting carried away. A lot of the reasons and merits for Bitcoin that people have been talking about for the last 11 years now, we have seen start playing out in the last year or two.
It's one of those things: we can not control when people come around to it, or when exactly you need Bitcoin to protect you from inflation and a number of other things… but we have pretty high confidence that it is not about if' -- just when."
Monica Long, GM of RippleX at Ripple
"The economic fallout of the 2020 pandemic caused many governments globally to print fiat to stimulate the economy. Consumers and institutional investors alike looked to crypto as a safe haven from fiat debasement. This is a big reason why I believe institutional adoption of bitcoin has grown, as market participants look to this asset class as an inflation hedge.
This doesn't mean, however, that the global economy needs 2000+ digital assets. Every asset needs a use case like payments or store of value -- a key point that those within crypto and those entering this space realize. What's also important is that I don't think there will be one asset to rule them all either -- there's a very small chance that everyone in the world adopts the same single asset. Interoperability between networks is imperative -- the more that developers look to build bridges and adopt open standards, the stronger all of crypto will become.
2020 did bring regulatory conversations to the forefront as we haven't seen in the past -- many policymakers and regulators see the value in this technology -- we've seen positive statements about CBDCs and stablecoins to increase financial access, but misinformation still remains. Some G20 markets like the UK, Japan, Singapore, and Switzerland have released thoughtful frameworks on how they view this technology, while others are still grappling with how to classify digital assets. For crypto to succeed, industry participants need to work with regulators, not against them. The technology is complementary with fiat, and can improve our global financial systems for all."
Max Petrovskiy, Head of Growth and Strategy for Waves.
"I think BTC will be very volatile in 2021. Its rate could reach a short-term high, followed by several months of correction and then a drastic reaction to the overall situation in the world.
The "altcoin season" has begun, especially as far as the DeFi space and Ethereum are concerned. However, the situation is slightly different from that of 2017 when any garage-based startup or even a factory issued their tokens, attracting cash to the crypto industry. Today, there's much less hype and most projects have a very specific focus and don't target mass users.
The hype is vital for the crypto space as it brings liquidity and new users, which, due to the network effect, adds value to crypto, increasing its role as a store of value and payment instrument. In the longer run, the crypto space could turn into a new stock market that enables users to make money and learn new instruments.
Many users pay attention only to the speculative aspect of crypto. But they need to look at the crypto space as a tech platform for finance in general -- from retail to institutional investors. We'll see more projects that are based on public blockchains but offer financial services on par with what today's best banks, brokers and insurance companies offer."
The world at large seems far more prepared to accept Bitcoin after a generally disastrous 2020. The crypto world has adjusted and eliminated weaker projects, and its leadership is embracing the wider audience, even as their key buyers shift from the varied, anonymous, and unknowable whales to the familiar dark suits and ties of traditional finance.
Once a far-off shore, the reality of crypto mainstreaming seems to be upon us.
It seems that in its current iteration, Bitcoin has veered a bit from its intended purpose as decentralized, secure, and anonymous global digital currency and is landing as a "safehaven" store of value and a deflationary measure against a battered USD and a global unease about economic futures.
However, the process of currency adoption was never expected to be a small matter -- time will provide the answers, not only to how much is Bitcoin worth, but how the mainstream audience will choose to use it.
My thanks to all who participated in this and the last installment and thanks to the many respondents whose answers could not be included due to space limitations.
*Header image modified from a picture by Three-shots from Pixabay
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