Bitcoin will mature into a gold-like store of value this year, according to the latest projections by Bloomberg. The financial magazine’s report, “Bitcoin Maturation Leap,” notes that the cryptocurrency is poised for a bull run, after being temporarily dragged by the coronavirus-induced stock market tailspin.
With its correlation to gold jumping to all-time highs, BTC is poised to transition from a risk-on speculative asset to the crypto market’s version of the metal.
“This year marks a key test for bitcoin’s transition toward a quasi-currency like gold, and we expect it to pass,” the report says. The damage to world economies caused by Covid-19 is prompting governments to dole billions of dollars in stimulus. Bloomberg expects bitcoin to gain amid the circumstances, helped on by mainstream adoption.
Per the report, despite BTC’s annualized volatility that’s averaged about 5x that of the S&P 500 in the past year, the crypto is down 5% in 2020 against 22% for the stock index as at April 2. Bloomberg said:
As digital gold, BTC appeals to the cashless internet economy largely on account of its characteristics that include round-the-clock price transparency, and the lack of limits, interruptions or third-party oversight, notes Bloomberg.
The report shows BTC’s decline this year holding above its 2018 low “which was about an 80% drawdown from the peak.” The stage for a strong comeback is set. It states: “On sounder footing after its previous shakeout, bitcoin is gaining relative fuel as stocks reset, if history is a guide.”
While Covid-19 will witness the enduring decline of cryptocurrencies, BTC, is considered a hedge asset, that will appreciate. “The macroeconomic effects of the coronavirus accelerate bitcoin’s process of gaining value relative to other cryptos.” In the year to April 2, BTC outperformed the Bloomberg Galaxy Crypto Index, surging 40% versus 13% decline in the index.
The cryptocurrency community believes that Bitcoin was made for the type of economic upheaval that has gripped the world since COVID-19. Billionaire trader Mike Novogratz tends to agree, saying in an interview with CNBC that Bitcoin is facing a key moment, as monetary policymakers continue to dole out trillions in stimulus.
The Galaxy Digital founder hearkens back to the saying that money doesn’t grow on trees, pointing out that there will only ever be 21 million bitcoins mined.
Novogratz, whose investment strategies straddle both a macro portfolio and cryptocurrencies, is finding anecdotal evidence that Bitcoin adoption is at hand.
Novogratz: Oil Market Broke
The oil collapse this week that saw the price go as low as negative $40 per barrel has weakened its case as a store of value asset and given Bitcoin yet another reason to shine. Apparently Novogratz, former macro hedge fund manager at Fortress Investment Group, has seen this market dynamic play out before.
The Carolina Panthers player invested in, and has been promoting Fold, an app which offers users the ability to spend Bitcoin or fiat currency at major retailers such as Amazon, Uber and Starbucks. Similar to cashback rewards from major credit cards: the more you spend, the more Bitcoin rewards you earn.
Okung told Forbes he believes “finding more ways to EARN bitcoin is just as important as getting more people interested in simply buying bitcoin.”
Bitcoin advocate and educator
Earlier this month Fold announced it had joined Visa’s Fintech Fast Track Program and will launch a Fold Visa debit card that offers Bitcoin rewards. Okung said it “represents a significant step towards mainstream adoption of Bitcoin. We’re excited for our partnership and the opportunity to introduce even more people to the best money in the world.”
Okung has become something of a crypto educator since tweeting “pay me in Bitcoin” in May 2019. His company has since hosted a Bitcoin conference in Los Angeles. He said that he saw Bitcoin as “a practical solution to overcome the imminent demise of the legacy financial system”:
The number of smart contracts deployed on the Ethereum network reached 1,971,632 in March, hitting a new all-time high and marking a 75% increase from the previous month.
Dune Analytics, an online analytics platform, recorded the number of contracts deployed on Ethereum over the last 12 months with the average only registering around 670,000 contracts per month.
Notably, this peak coincided with the cost to deploy on Ethereum being at one of the lowest points, with developers spending an average of $11,600 to do so. This suggests that the adoption of the Ethereum platform is on the rise, signaling strong support for the coming upgrade to Ethereum 2.0.
Although the number of smart contracts has increased in March, there has been no noticeable increase in the number of transactions as a result, suggesting many contracts are not being utilized or do not translate to an increase in end-user engagement.