Bitcoin, cryptocurrency and markets - A summary of 2020 and what to expect for 2021

banglasteve (45)in #bitcoin • 3 years ago (edited)

Greetings everyone,

It has been a very long time (two years or more) since I have posted or written anything markets related. I have been waiting and watching the markets patiently in the dark abyss of crypto winter and also busy with my personal life. However with several messages/questions recently incoming about Bitcoin and crypto, I am surfacing again to provide some of my insights and thoughts.

Please note as always this is not investment advice or any advice it is just general thoughts I have and I don't have the "seven secret tips" to make you a millionaire in 4 weeks. A lot of the time I do the opposite of what I say or just sit there watching all the paper profits that could have been 'had' and feel sad.

This article is a follow up of my original blog: https://steemit.com/cryptocurrency/@banglasteve/bitcoin-cryptocurrency-and-markets-a-summary-of-the-first-half-of-2018. Which seems to have played out very much as some of my forecasts.

Some themes I would like to cover:

COVID19
QE/Money printing
Negative interest rates
US Election
Bitcoin/Cryptocurrencies and Gold/Commodities
Markets in general
Free coins

COVID-19

One of the biggest events this year has been COVID-19 and the planned-demic. This has resulted in Governments around the world shutting down most economies and businesses to counter this 'invisible enemy'. I will not delve deeper into sharing my personal views on this due to the sensitive nature, but I do believe that fear is being used as the real threat and is the actual underlying "virus".

Suggest anyone that would like to understand why I use the term planned-demic watch:

QE/Money printing

I am sure we have all seen the memes regarding 'Money printer go brrrrrrr'. Well that is in actual fact the truth. Will keep this short but to stimulate the economy various economies are doing stimulus in the forms of printing more money and cash handouts such as the $1200 stimulus cheques in America. There is more where this came from and it will inflate ALL real assets - your houses, your bitcoin, your goldfish etc. everything will be going up in price.

Negative Interest rates

Sounds weird huh? Does that mean the banks will pay you to take out a mortgage? Ha - we all wish don't we? All this means is that savers are being punished. If you have money in the bank you are in the eyes of investors a fool. But we all have rainy day funds and just because there is no 'real' return doesn't mean we shouldn't have money saved. Interest rates globally are at the lowest levels in history.

This in my theory is all a means to remove physical cash. Coronavirus has accelerated this move by making it seem as though tangible cash can be used to transmit the virus and once large bills are eliminated (see India where the 500 and 1000 Rs notes have been banned) the use and velocity of cash will reduce. Once we have negative rates and cash bans you will be forced to keep money digitally in the bank ONLY but really it should be thought of as an 'invisible tax' on that money which means your wealth is being chewed through by your good friend "the law".

US Election

This claim about election fraud is disputed.... says every single tweet by Donald Trump for the past few days/weeks. This has been a strange election and many argue about who is the 'lesser' of two evils. With all the voter fraud allegations and destroyed ballots it seems that something strange is going on. With the mass media muting these claims and two virus vaccines coming out within two weeks of a Biden "win". Hmmmm...... either way the uncertainty is removed in markets and the world and things can move forward. January will be interesting and whether Trump will actually regain presidency "officially" or be dragged out.

Bitcoin/Cryptocurrencies

Bitcorn. The corn. After a terrible two years it seems that the 'halving' in May 2020 has finally started to give some bullish momentum to Bitcoin. Currently at the time of writing it is sitting at about $17.5k USD or approx. $24.5k AUD. This has been a stellar year for this volatile asset. In the world of negative interest rates and infinite money priniting i.e. QE the future looks bright for the cryptocurrency.

As people are starting to wake up and understand that the value of paper money is eroding they are looking to park their money elsewhere. I have made a list below of the billionaires and fund managers that have recently purchased Bitcoin this year:

Paul Tudor Jones
Michael Saylor
Raoul Paul
Stanley Druckenmiller
Godfrey Bloom
Ricardo Salinas Pliego

There might be others but these are some of the high profile names that I have come across. To understand how inflation can erode purchasing power it is worthwhile looking at the currency crisis' countries like Venezuela and Turkey are facing. In Venezuela toilet paper is probably worth more than the equivalent weight of $100 bolivar bills. Bitcoin's bullish case remains intact as a demand vs. supply case i.e. scarcity argument and the mining difficulty adjusts each cycle with a possible 2x from here but as we saw in 2017 be prepared to stomach 30-40% corrections in any given week.

In terms of all the 'alternate cryptocurrencies' and their ring leader "Ethereum" the future looks good as blockchain gains further recognition and acceptance where real businesses look to leverage the technology. Projects like Ocean which is being explored by Mercedes Benz and Sharering which has recently formed a partnership with Tencent show that these projects are working with real companies. My prediction is that these coins will fly once the leaders aka Ethereum and Litecoin pave the way higher and this will all take place most likely early 2021. I will always get asked what is my moonshot coin. See links below for details (this is super high risk and super volatile please note).

Anyone that still wants to learn the basics and see me make a fool out of myself I share my video below:

Gold/Commodities

Moving onto GOLD! The shiny metal we all use to describe the quality of hard work and our hearts. With reference to the above points on QE and infinite money printing I am bullish with a target between $2200-$2300/oz USD some time Q2 2021. Currently it is sitting just shy of $1900/oz USD having peaked at $2100/oz a few months ago. It has broken the all-time high it set back in 2011 and in my eyes 'cooling' before the next leg up and it can possibly fake out and re-test the lows of $1750 - but this is all a game of probability and information. Bulls ahoy?

With gold we often overlook and forget silver which is much more aggressive and looks like it wants to claw much higher. The easiest way to get exposed to the metals space is through mining stocks but it is worth keeping in mind that these are leveraged relative to the price of the underlying asset. What the hell do I mean? What I am trying to say in simple terms is that a 5% increase in the price of gold can result in a 15% increase in miners. In other words their margins increase significantly, so just like the upside it is worth considering the downside also...

In terms of commodities one of the other metals I am most interested in and will look to possibly enter more aggressively is copper... Wut the reddish/brown stuff from Chemistry class? Yes. Usually followed by downtrends there is usually a massive infrastructure boom and everything we build uses copper of some sort. The only issue is that the supply of copper is not as abundant as before and basic economics tells you increased demand and lower supply means higher prices. Interesting to see how this plays out.

Markets in general

I think 2021 should be a good year for all markets as lockdowns will ease and there is a general agitation of people to want to travel, enjoy and buy things to celebrate the freedoms we should always be entitled to. We can all expect international travel to be booked out once borders open and holidays to be in overdrive. More stimulus will drive other sectors of the market and stock markets function on money supply. Any charts of M2 money supply show when this tapers off that markets jitter and usually correct - this is why markets are higher now than in February/March despite 1/4 of the year being locked down. Markets are basically all about liquidity and confidence as long as the money tap is flowing "we Gucci".

The economy and people will carry on as they always have but one point to make is that a lot of this growth is all fueled by debt which is dangerous in the sense that it's all well and good until the debt collector shows up at your door like the Men In Black. Hence, invest and spend responsibly... if you can...

Thanks for reading and hopefully this summarises the majority of questions I get asked. If you guys enjoyed this let me know as this might be something I do more often if it is useful for others?

As always start small and learn big.