From 3800 to 28000, have you been convinced by Bitcoin?

In 3 days, 2020 will end.

If I described 2020 in one phrase, I would say “the year of magic”.

At the beginning of the year, no one expected bitcoin to drop 50% in one day; and when the big dive came on March 12, no one expected bitcoin to break through the previous high at the end of the year, or even run directly to $30,000.

In addition, public opinion on cryptocurrencies has taken a 180-degree turn this year, and institutional investors have started to pour in, so the cryptocurrency world can be said to have topped the past few years’ developments this year.

So below, we’ll take a look at what happened in the 2020 cryptocurrency world, and my views and opinions on these big events.

Prices: Bitcoin outperforms a host of mainstream

For most people, the only way to get involved in the blockchain is to trade (or speculate in cryptocurrency). After all, it’s the least gated thing to do.

So, it’s never blockchain technology that people are interested in. It’s not about how far Bitcoin’s lightning network has come, or whether Ether’s 2.0 will lead to a fork, or when exactly Polkadot’s cross-chain will land.

What everyone cares most is always the price of the cryptocurrency.

So let’s take a priority look at how much the top 15 coins in terms of market cap have risen in the past year.

Top 15 Cryptocurrency Growth in 2020(%YTD)

In 2020, the total market capitalization of cryptocurrencies as a whole grew 2.8 times, and of course the vast majority of that growth was attributed to Bitcoin. After all, Bitcoin currently accounts for up to 70% of the market cap.

Bitcoin has really performed satisfactorily in 2020, rising close to three times and outperforming a host of cryptocurrencies such as EOS, BCH, and BSV.

Of the Top15, only 4 cryptocurrencies are outperforming Bitcoin: ETH, ADA, LINK, and XEM.

Also from a “current price/previous high” perspective, Bitcoin is directly beating all coins.

Because the price of Bitcoin has gone up to new highs, while many coins are still lying on the ground, like XRP, BCH, EOS, ADA and other coins are even 80 to 90 percent away from their former highs.

Historical Highs Comparison for Top 15 Cryptocurrencies (Current Price / Previous High)

And the recent market trend can be summarized as follows:

1. When Bitcoin soars, other tokens would follow to rise

2. When Bitcoin pulled back, other tokens would drop, giving back most of their increases.

3. Basically a fake drop in bitcoin, all other tokens break down.

Many people believe that the real bull is not Bitcoin alone, but a blossoming of a hundred tokens. So the mainstream will definitely have a day to explode. This is something I don’t deny.

But I need to remind you that many mainstream tokens in this round are hard to rise above bitcoin, and those that can rise above bitcoin will become the new mainstream, but no one knows which token will be. And some of the old mainstream may not even break the previous high.

Regarding mainstream cryptocurrency, there was big news last week (Dec. 22): the U.S. SEC plans to sue crypto company Ripple and two executives, alleging that Ripple is a security and must comply with federal securities laws.

As a result, XRP plummeted 40% in one day and was also taken down directly by Coinbase.

In fact, there are some cryptocurrencies that SEC has punished, EOS has paid $24 million fine for this, XTZ has paid $25 million fine …

Who will be next?

Previously, SCE Chairman Clayton had made it clear that bitcoin and Ethereum are not securities.

The DEFi ecosystem on Ethereum has flourished this year, and liquidity mining has brought about a huge wealth effect. By the end of 2020, the total locked-in value in the Ethereum DeFi ecosystem reached an all-time high of $13 billion.

With DeFi, Ethereum has fully demonstrated its value as a platform.

But it is important to emphasize that the boom in the Ethereum network will not necessarily lead to a lift in the price of ETH. This is because there is no direct relationship between the two.

Of course, when ETH 2.0 goes live, the logic of value capture will be different.

Although Phase 0 of ETH 2.0 has been launched this year, it will be at least two to three years before ETH 2.0 is fully online, and there is still a great deal of uncertainty involved.

Market: retail investors have missed the opportunity, institutions are playing the game

The entry of western institutional investors is considered to be the biggest driver of Bitcoin’s price rise.

Since this year, Greyscale has become the name brand giant whale in the circle, and its every move is the focus.

And according to BitcoinTreasuries, 28 companies, including Grayscale and MicroStrategy, now hold 1.15 million BTC, worth more than $30 billion.

This December in particular, we’ve seen news reports of institutions “building” positions every now and then.

In addition, many Wall Street bigwigs have also shifted their stance on bitcoin this year.

Paul Tudor Jones, a household name in hedge funds in the United States, a Wall Street master trader, who has recorded five consecutive years of triple-digit returns, and his flagship fund has averaged about 20% annual returns and no losses for 25 consecutive years.

In May of this year, he publicly praised Bitcoin:

“Investing in bitcoin is like investing in Apple and Google in the early days, which are still very early days. Bitcoin is the best anti-inflation bid. I have about 2% of my position in bitcoin.”

Stanley Druckenmille, American billionaire and chief general of Soros, is known as the most profitable machine in history. Over the past 30 years, he has produced an average compound annual performance of 30%; in his investment trading career to date, there are no negative return years; in the past 120 quarters, there are only 5 losing quarters.

Last June he said he had no interest in Bitcoin, and then in November this year, he said he already held Bitcoin:

“I’m an old fashioned guy, but I’m slowly accepting that bitcoin is a good asset class for storing value. I hold several times as many positions in gold as I do in bitcoin. But frankly, if gold investing works, bitcoin will work better.”

The bitcoin market is destined to become increasingly institutionalized, and big money is involved in bitcoin for no more than three reasons:

First, interest-driven. Wall Street has been doing the business of pumping, and the pool is too small before that there is no need to intervene, now the pool is large so participate in the deal for them is a sure thing.

Second, the need for investment. The pursuit of asset appreciation, transaction-oriented, liquidity is king. Bitcoin can be said to be an extremely liquid asset in the world at present, so it is a good investment choice.

Third, the need for allocation. It seeks assets that do not depreciate in value and is oriented towards storage of value. It is essentially a defensive investment, and the choice of bitcoin is also a consideration for portfolio correlation.

This year, central banks around the world are printing unlimited amounts of money.

How exaggerated is it? The statistics show that 21% of the total number of dollars ever printed was printed in the year 2020.

As long as the dollar keeps being printed, all assets price will go up.

The “demand to allocate bitcoin” is amplified in the general environment, so the incremental capital brought by institutional entry is unimaginable, and the price rise will be unimaginable too.

An unprecedented bull market is in front of us, and the only thing we can do is to “ hold, and do not move “.

Bad Environment

The market part is mainly talking about overseas institutions, then the last environment part, we will focus on the domestic.

The year 2020 started with a big crisis: Fcoin disappeared and close to 13,000 bitcoin could not be cashed out. In the second half of the year, OKEx, one of the “big three” exchanges, made a surprise announcement: the person in charge of the private key was lost in cooperation with the police investigation and the withdrawal of funds was suspended. It took more than a month to return to normal. In addition, this year there are many other problems with small exchanges, such as ZB, DragonEx, TokenBetter, Livecoin…

Several black swan events have made everyone more aware of the risks of centralized exchanges: subjective evil, government regulation, and hackers.

According to the data, bitcoin holdings on exchanges have been increasing at the start of 2018, even as the market has gone bearish. But one of the very big changes this year is that the number of bitcoins held on exchanges has dropped sharply by about 20% since February.

The large outflow of assets from the exchanges shows, on the one hand, that people are becoming more conscious of the safety of their assets. On the other hand, it’s actually more people seeing cryptocurrencies as long-term investments rather than short-term speculative transactions. That’s how the market structure has changed.

In terms of the general environment, there is another grim topic this year: the cards be frozen when withdrawals are made. And on October 11, a nationwide “card-breaking operation” was launched to crack down on and regulate the illegal and criminal acts of illegally opening and selling phone cards and bank cards.

According to official reports, there is no time limit for this card-cutting operation until the passive situation in which the two cards are proliferating and a large number of them are being used for crime is completely changed.

So affected by the card-breaking action, the problem of difficulty in getting out of money in the cryptocurrency world is unlikely to be improved in the short term.

Conclusion

In 2009, with the global financial crisis and the birth of Bitcoin, Satoshi Nakamoto wrote this in the Genesis block: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

And on January 3, 2009, the Chancellor of the Exchequer was on the verge of bailing out the bank for a second time.

In 2020, in the face of the economic crisis, the Federal Reserve is printing money like crazy, and that money can’t help but flow into cryptocurrencies.

At this point, Bitcoin has risen to $28,000, the mainstream media is scrambling to cover it, and the term “Bitcoin” is still not exploding in Google Trends.

At this moment, it was 5:00 am and the sky was already shimmering with light. Some people are still sleeping, but we are already up and going, the road ahead is not rugged, and the sun will appear at the top of the mountain in an hour.

Article from Blockchain Inspection

Translated by Yang(Mengyan Finance)