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5 Reasons Bitcoin is About to Skyrocket

Posted January 25, 2022

By Guest Contributor

5 Reasons Bitcoin is About to Skyrocket

[Note From Zach: Bitcoin has had a rough start to the year. Given what's going on in the crypto space, I wanted to give my colleagues over at Altucher Confidential the floor to help you make the most of the opportunities showing up in today's digital assets world.]

 

Crypto’s down.

Again.

First, let’s point out the obvious.

Crypto is volatile. It can go down 80% in one month… and then jump up 600% in the next month.

It’s just what crypto does.

And with the markets roiling, many believe bitcoin will keep sinking further.

When markets hit max fear, that’s when we begin taking the contrarian position. But only if we have the data to back it up.

There are several reasons to believe the contrarian position is right… and that crypto could have an explosive 2022, starting sooner than most think.

#1: Interest is Still Sky High

Interest in crypto is sky high.

The Fidelity Digital Assets Institutional Investor Survey found that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future.

NYC mayor Eric Adams just took his first paycheck in BTC.

San Diego State University (SDSU) is now accepting bitcoin donations. (Harvard, Yale, and Brown Endowments have been buying bitcoin for a while.)

And that’s just scratching the surface.

#2: Countries are Piling In

Fun fact:

Last year, 352 public workers in Ukraine declared owning cryptocurrencies. Collectively, they own 46,351 bitcoin.

At current prices, that’s over $1.5 billion worth.

As you know, El Salvador was the first to adopt bitcoin as legal tender. Then, Tonga announced they would follow suit. And Rio de Janeiro, the financial heart of Brazil, has announced it will buy crypto with 1% of the city’s treasury reserves.

We expect several countries to give similar announcements this year.

According to Fidelity, countries might buy bitcoin just to hedge their bets. In a recent trends report, Fidelity laid out why:

“History has shown capital flows to where it is treated best and embracing innovation leads to more wealth and prosperity. We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future. We therefore wouldn't be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”

#3: Bitcoin Hash Rate Hits New ATH

Bitcoin’s hash rate has just hit another ATH.

chart

China’s ban on mining didn’t kill bitcoin, as some pundits suggested it would. Nor did Kazakhstan’s outage. All these things did was spread mining out even further, making bitcoin more decentralized — and stronger — than before.

A decentralized bitcoin is a strong bitcoin. A strong bitcoin raises confidence. Confidence helps boost the price.

And bitcoin is about to get even stronger.

Jack Dorsey recently tweeted that his company Block (formerly Square) is “officially building an open Bitcoin mining system.”

Thomas Templeton, a general manager at Block, wrote:

“We want to make mining more distributed and efficient in every way, from buying, to set up, to maintenance, to mining. We’re interested because mining goes far beyond creating new bitcoin. We see it as a long-term need for a future that is fully decentralized and permissionless.”

#4: Miners are Buying and Holding

Miners are buying and hoarding.

Bitcoin miners are accumulating at levels we haven’t seen since 2020. Historically, spikes in buying from miners is usually followed by a run-up in price.

chart

Meanwhile, another bullish indicator: bitcoin is flying out of the exchanges.

#5: “Smart Whales” Are Buying

Data analyst Justin Gupta tracks what he calls “smart whales” — whales that have consistently outperformed the market in the past year.

Upon writing, the smart whales are loading up.

chart

Though this doesn’t necessarily mean they’ve caught the bottom — nobody can time the market perfectly — it does suggest we’re getting close.

Chris Campbell

Chris Campbell

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