Crypto Facts & Fantasies (2020 Thesis)

It’s a 2020, a new decade and dawn for bitcoin and crypto assets! Looking back at the last year, there were many great developments made and familiarity as well as knowledge grew regarding them too. Notably, bitcoin and crypto assets gained the spotlight as they were discussed and debated over by the most prominent leaders of the world. The markets all performed well too. Generally speaking it was a year that was hard not to have a successful strategy that wasn’t just sitting in cash, but bitcoin and the investment grade crypto market still shone out as the clear winners versus the traditional asset classes. Technically though, the traditional markets were given some extra juice in the tank with assistance as the Federal Reserve retreated from their 2018 tightening and instead cut rates while eventually pumping in additional liquidity by the end of last year.

So in the spirit of the new year, it seemed appropriate for a new and updated version my thesis from 2019’s Crypto Facts & Fantasies for 2020. My best hits were calling the bottom “around $3200” and it retesting those lows before staging a new bull market as well as “smart money” investors like banks, endowments, family offices, financial advisers, pensions, and other institutions taking their time before getting regulatory clarity or due to some limitations given the need for knowledgeable talent. One point that seems like a miss was the stance that an ETF not being all that important for the growth and development of the market, but the issuance of new products such as futures and options is certainly a welcomed consolation. Since the last edition of Crypto Facts & Fantasies though, bitcoin is alive and well continuously running in silence earning a reputation as a secure asset for low-cost transactions that are peer-to-peer (e.g. permission-less). Once again I am confident in restating that despite the investment grade crypto asset market being dwarfed by traditional asset classes, it will find itself being equally if not more valuable than all of them in this next decade.

Overall, last year was very positive for the space but there still was a fair share of setbacks along with improvements that led us to this point. A large blow dealt to the community was the animosity from the current US President and his administration regarding their legitimacy. Though, one could argue Donald Trump and his cabinet taking aim at bitcoin and crypto assets as well as the Libra project actually proved they are forces to reckoned with seeing that they took the time to acknowledge them. Not only were these arguments accepted into the public debate forum of Twitter, but it grew to see the floor of Congress this past summer. It should be proof that they will have an impact for better or worse on our current fiat reserve currency system in the years to come. Although it may not carry as much weight as it did at in the first edition, my price call with a time horizon ending 2020 (maybe being a year or so too soon) for bitcoin to reach $60,000 – $100,000 still presents an opportunity with tremendous upside down the line and may need to take some time before doing so with new all-time-highs as the main focus this year.

In a continued effort to publish more often and help demystify the crypto space to present more meaningful content that helps transparency as well as decision-making, I am publishing the second edition of Crypto Facts & Fantasies.

Without further ado….

Facts	Fantasies
1. Despite being below it All-Time-High, it has performed better than traditional assets	1. Bitcoin is in a bear market
2. Bitcoin, and other crypto assets with fixed supplies, may fluctuate more than reserve currencies in their prices, but unlike the latter they cannot be created “out of thin air” or printed more than the set hard cap coded into the algorithm	2. “Winter is coming” again for bitcoin and crypto assets
3. Central banks are already working and testing out solutions to issue and manage their own central bank crypto currencies (or “CBCCs”)	3. The money of the future NOT being digital
4. The vested interests that control the current issuance and printing of all major reserve currencies will not allow any non-banking corporate entity get ahead of their ability to create a digital reserve asset without a fight	4. Libra or any stablecoin’s launch being a success
5. Similar to the current internet having many protocols, so will the “Internet of Money” that will have a variety of them to serving different purposes (i.e. BTC being digital gold, ETH as programmable money, and many more purposes). There’s also forked protocols that modified the core algorithm of another for specified purposes that hope to gain more adoption from their so-called “enhancements” and should be approached with caution and scrutiny	5. There is more than one bitcoin and it’s “better” than the original
6. Seeing how young the market is there is a benefit to having clear guidelines and guardrails for general purposes, but any restrictions may seriously hamper an opportunity for enhancing our current faulty infrastructure	6. Decentralized Finance (or “DeFi”) under strict regulation is good for the industry
7. Last year, JP Morgan created and issued their own stablecoin that would be native on the Ethereum blockchain for settlement since they have seen client interest in investing and trading these assets	7. Banks and other legacy finance institutions continue to miss out on potential returns and new revenue streams
8. As the bitcoin and crypto critic Warren Buffett once wisely said, “the best holding period is forever” and it applies to many assets but even more so the one’s with such upside potential as bitcoin	8. Trading bitcoin and crypto assets is better than just simply buying and “HODL”-ing
9. Bitcoin, ethereum, and other emerging investment grade crypto assets have grown with increased infrastructure, oversight, and ubiquity to receive a retail product following the creation of futures markets and availability on reputable crypto asset trading platforms	9. A bitcoin and other investment grade crypto assets not getting a respective ETF for investors based in the United States
10. It would be more costly and difficult for bitcoin to physically shutdown or become worthless than it would to be worth many multiples more than it is trading currently	10. Bitcoin is going to fail, hit zero, or collapse after being corrupted or suffering a network shutdown

Similar to last year, I am excited to see how this round of facts and fantasies materialize, or don’t, eventually and how they impact my own theories, views, and strategies.

It feels as if there is something BIG coming. As the market found itself in a lull this past December, it looks to be like the bottom from its 2019 Summer high that may lead to another larger and powerful move with tremendous upside coming ahead. The recent bottom looks to be around $6450. Due to market developments as well as global turmoil with Iranian tensions, the price has move north of $8000 per bitcoin. It even tested a major resistance point of $8500 before fading back and some rallying more at the time of this writing. I wouldn’t be surprised if bitcoin found itself quickly over $10,000 leading up to the block reward halving coming up sometime this Spring or took its time bouncing back to retest its recent lows as everyone argues over whether or not it is priced-in. Either way, we will have to wait and see how it all works out.

Have a great 2020, and to the moon!

– JH