Despite the rallies in Bitcoin and stock markets, the past three months have been the worst months for the economy since the Great Recession, maybe even earlier. Dozens of millions have been unemployed, revenues have fallen off a cliff, and social unrest is growing as different groups approach the COVID-19 pandemic in different ways.
Given all of this, Bitwise & # 39; s is global research leader Matt Hougansaid in an investor letter entitled "May 2020: Welcome to the fourth era of Crypto" that the past six weeks "were among the most eventful – and bullish– in the history of crypto. "
Why the last six weeks have been among Bitcoin's best
The analyst supported the strong claim that the past six weeks have been among the best of Bitcoin and Crypto, and pointed to a number of trends that indicate that the intrinsic value of cryptocurrencies, especially Bitcoin, has increased dramatically over this period .
They are as follows:
- Crypto assets outperform stocks: As previously reported by CryptoSlate, market analyst Josh Rager found that Bitcoin has outperformed the S&P 500 by around 30 percent since its lows in March. Altcoins have seen similar gains. Analysts say this trend increases the likelihood that investors will buy cryptocurrencies in the future.
- Central banks and governments are printing more money than ever: In response to the economic impact of the COVID-19 pandemic and the closures, governments and central banks around the world have printed trillions of dollars to keep the economy going. The White House alone has signed a $ 6 trillion stimulus package. The increase in fiat money generation is a positive catalyst for bitcoin, which is relatively rare.
- Bitcoin is the third halving arrived: Bitcoin is the third last week Block reward halving came about and reduced the new range of cryptocurrencies by 50 percent. Assuming constant demand, the decline in supply should add value to BTC.
- Institutional players continue to adopt Bitcoin: There have been a number of strong signs of institutional adoption of cryptocurrencies in recent months – such as growing open interest in CME's bitcoin futures, Grayscale's Q1 report, or comments from Fidelity suggesting "pipeline" growth point out in their crypto business. The epitome of this trend was billionaire hedge fund manager Paul Tudor Jones, who announced his support for Bitcoin on CNBC and in a note distributed to customers.
- China and Libra are driving projects in digital currency: And finally, both the Volksbank of China and the Libra Association show that the world accepts the digital currency and drive their respective projects forward. However, these projects are unlikely to be interoperable with decentralized blockchains, like Paul Tudor Jones wrote"The most compelling argument for owning Bitcoin is the upcoming digitization of the currency everywhere, which COVID-19 is accelerating."
What's next for the crypto space?
The past six weeks have been some of the most bullish For the cryptocurrency, as the analyst has suggested, the pressing question of what's next has been raised.
According to Hougan, recent trends confirm that Bitcoin and crypto are entering their "fourth era" – the fourth major market cycle in which the structure of the industry will change dramatically.
This has been confirmed by Andreessen Horowitz & # 39; Chris Dixon and Eddy Lazzarin postulated The third crypto cycle ended on May 15, 2019, while the fourth cycle has only just begun.
Hougan predicted that there will be three core trends that will define this next era:
- Bitcoin will be widely used as a "normal macro asset".
- The crypto market infrastructure will "continue to improve"
- With the introduction of Libra, crypto from the central bank, etc., digital assets become “mainstream”.
However, what he hasn't hinted at is how these fourth-era trends will translate into movements in the value of cryptocurrencies, especially Bitcoin.
However, there was no take away price prediction. As Hougan has indicated, the key point of his report is to illustrate that cryptocurrencies will become common assets and technologies in the coming years:
"We believe that until the end of the fourth era, most investors will treat Bitcoin and other cryptoassets as normal investments. They won't belong to everyone just as little as anyone owns REITs or MLPs or tech stocks or gold, but they're considered mainstream. "
Cover picture of Annie Spratt on Unsplash
Posted in: Bitcoin, Analysis