It was a difficult year from all points of view. But for Bitcoin, 2020 was a wonderful time.
The cryptocurrency tripled, surpassing $ 20,000 for the first time, as it recorded record after record. Bold people cheered him up as a cover for inflation in an era of unprecedented breadth of the central bank. Wall Street veterans, from Paul Tudor Jones to Stanley Druckenmiller, have blessed it as an alternative asset, adding to the rally. And companies like MicroStrategy Inc. and Square Inc. they moved their cash reserves into encryption in search of better returns than interest rates close to zero.
Although none of these reasons for buying Bitcoin behave with its origins as an alternative to fiat currencies, they indicate a growing acceptance of crypto as its own asset class. And this makes the fan-like community take another round of victory in search of legitimacy.
“What’s happening now – and happening faster than anyone could imagine – is that Bitcoin is moving from a marginal esoteric asset to the mainstream,” said Matt Hougan, Bitwise Asset Management’s chief investment officer. “If it becomes mainstream, there is so much money on the sidelines that it will have to come in and establish a position that will leave me very optimistic for 2021.”
But with Bitcoin gaining more attention, it could gain even more control from regulators, says Guy Hirsch, general manager for the United States at the eToro online trading platform. “Despite this meteoric rise, there are storm clouds on the horizon,” he said, including the consequences of several last-minute actions by the Trump administration, among others.
Adherents say that in some ways, the year devastated by the pandemic has proven to be the perfect environment for digital currency. Warnings about global central banks printing money – some of which have begun to reveal their own interests in digital assets – have raised fears of possible inflation, while interest rates have fallen to lows. This has led some investors to track returns and hedge against cryptocurrencies, pushing their price above $ 24,000 from about $ 7,200 in early January.
Predicting where it will go is a full-blown exercise. Many left the coin dead after the 2017 rally resulted in a collapse the following year, a period of time sometimes called the “cryptographic winter.” But it has grown by more than 200% in 2020 and many investors say it could continue to gain next year. A survey conducted by Deutsche Bank found that most consider it over with 2021 higher, with 41% of participants projecting a target of between $ 20,000 and $ 49,999 and 12% seeing it exceed $ 100,000, according to Jim Reid, a company strategist. .
What’s on the radar? For Meltem Demirors, strategy director of digital asset manager CoinShares, there are some concerns about what the Joe Biden administration might mean for the cryptographic space.
“Overall, I think I’ve had challenges with demons – they prefer more regulation, more oversight,” Demirors said. “I’m a little worried about the way things are going,” especially with regard to antitrust lawsuits and the erosion of internet privacy. However, the industry has several allies, said Demirors, including Patrick McHenry of North Carolina and Warren Davidson of Ohio, who he says have advocated maintaining consumer financial privacy.
In the future, many strategists and investors say the industry could see more control and stricter regulation with Biden in the White House.
Much will, of course, depend on who holds the key positions in the administration. Janet Yellen, who has been appointed secretary of the treasury in Biden’s administration, has warned investors in recent years about Bitcoin, saying it is a “highly speculative asset” and “not a stable stock of value”. One representative did not immediately return a request for comment.
Meanwhile, Bloomberg News reported that Gary Gensler could be nominated to replace Jay Clayton on the US Securities and Exchange Commission. Clayton’s exit from the regulator is welcome news for crypto fans who have seen him take a hard line over the years, sue to stop initial coin offerings, reject applications for Bitcoin-traded funds and launch a final lawsuit against Ripple Labs Inc. Gensler, who served as chair of the future commodity trading commission during the Obama administration, is a senior advisor to the MIT Media Lab Digital Currency Initiative and teaches about blockchain technology and digital currencies.
According to Hirsch of eToro, there is uncertainty about how the Biden administration will approach cryptocurrencies, but the appointments are notable “because Yellen is famous for anti-crypto and Gensler is known for being pro-crypto.”
“Without knowing how the authorities will seek to regulate crypto more robustly in the coming years, it is difficult for markets to continue to grow at the same pace as they are now, especially if, as some fear, regulations aimed at reducing innovation, more rather than promoting it, they are adopted, ”Hirsch said. “Once again, clarity is the name of the game.”