Why I am bullish on Bitcoin and why you should be too

Bitcoin is yet to resonate with mainstream investors and the average (wo)man as a neo-asset class. I think if you have heard about bitcoin, you would be foolish not to dip a toe. Bitcoin, is a great proxy investment at potentially, the greatest innovations of our age, the internet of money.

Bitcoin Price 2

As a full time Bitcoin market analyst, I have watched Bitcoin evolve over the past 4 years, (i came across Bitcoin by chance in 2011 on a podcast show on virtual reality economies).  I track the progress of both price and fundamentals. Over the next 4 years, I expect the price of this digital asset will take off to at least $4,500 and go on a series of cycles to unprecedented highs.

Tuur

I am not the only one, much loftier valuations, that seem ridiculous now have been put forward. Tuur Demeester potential value of bitcoin for a variety of use cases is an interesting one.

 

What is the value in some silly internet money?

Bitcoin is a world class censorship resistant digital asset whose supply is capped at 21 million. It is valuable because it cannot be confiscated, and its value is likely to go up because there is only a set a amount of it available for the world’s overall demand. The ever growing threat of capital control warrants its consideration

Capital controls, a growing pain

In March 2013, Cyprus contemplated tapping into bank deposits as part of an IMF EU bailout plan. The country’s financial system was under duress, leaving the state with no option but to forcefully confiscate depositors funds. A one-time tax of 9.9% tax was to be levied on Cypriot deposits of more than €100,000. Speculation popped up Bitcoin’s price 350% in February and March 2013.

As Cypriots heard the news of the tax, they started lining up outside of ATMs to withdraw money.

In July 2015, Greek faced the prospect of a forceful exit from the European Union, on failure to meet EU-IMF fiscal and monetary policy demands. Cornered to a wall, the state imposed capital controls on the free flow of money. A daily cash withdrawal limit of 60 euro and strict prohibitions on money transfers abroad. Banks were also shut down for a week. Bitcoin price went up 40% over May – July fueled by a potential Grexit speculation. According to Reuters,

the lines forming at petrol stations and in front of the shrinking number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks

Late last year, Chinese capital controls and Yuan renminbi devaluation fears coincided with a run up in Bitcoin’s price to a $504 high, a 150% price increase followed. The Financial Times Alphaville blog section featured Bitcoin transfers as an alternative for Chinese mainland citizens on How to get your money out of China .

A recurring theme, people’s reaction to top-down imposed controls on their hard earned money. It is a basic instinct, human beings will naturally seek to avert crisis. That is why, despite being miles apart Europeans and Asians exhibited a similar reaction as Ugandans, when a mobile money imposed censorship rendered their electronic funds inaccessible.

According to the Consultative Group to Assist the Poor, the impact of shutting down mobile money in Uganda

the customer base may have lost faith in a system that can be turned off and on at the whim of the government regulator. The result of this distrust was visible for everyone, especially mobile network operators, as many users emptied out their mobile wallets as soon as platforms went live.

Why Bitcoin?

Unfortunately, customer electronic funds held at a bank, and more generally centrally issued money or assets are subject to the whims of dictators, the state, regulators and central banks. In an increasingly cashless global and local economy, average investors will become attuned to the risks posed by bail ins, negative interest policies, confiscation and poor monetary policies.

Bitcoin as an asset class, then becomes a real alternative for institutional and average investors seeking a safe haven for their hard earned wealth. It is why I am vocally bullish on bitcoin.

Remember that we’re still in the early days of this asset’s life cycle But, potential upside of positive performance for BTC is tremendous

There is tremendous upside potential in this nascent virtual currency, and I have little doubt bitcoin will attain the highly criticized lofty valuations. In fact, it has already proven that it can, going up from under 50 cents apiece to $1163. From my trading background, I expect a pattern similar to Berkshire Hathaway’s shares below, which went up from $14.86 to $208,475.

berkshire

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