Everyone is singing the praises for the bulls’ arrival in the crypto space.
Some say that 2020 will mark the biggest bull run in cryptos’, albeit short, history.
We are already in October so we doubt any fireworks will take place now since there is a lot of uncertainty about the US elections.
Add the uncertainty around the stimulus bills, unemployment trends, soon to be lifted forbearances and the list goes on.
2020 still has another 2.5 months to go but most of these uncertainties will take a while to show their true impact.
For instance, what will a Biden presidency mean for the economy and cryptos?
How many people will be forced to sell their homes once the forbearance’s are lifted?
What happens if the next stimulus bill does not pass through?
When will the vaccine become available?
These are some of the unique situations that we have no precedence for. Do not let anyone convince you that we know what’s going to unfold, because no one does.
Yes, everyone has theories, like the ones we are presenting here, but that is all they are: theories.
The BIGGEST metric that crypto community is not considering
We are no economists nor can we run any fancy charts to impress a point on you.
We are just good observers and have common sense to deduce a few things based on data.
For instance, between 2007 and 2010 consumer spending dropped by an overall .2% and we know what that meant for the economy.
In 2020, people have literally cut down on their spending. Some of it is forced due to the restrictions imposed by external forces and most of it is self imposed.
I am sure the spending on marijuana, liquor and food have gone up but what about other spending?
2020 also saw a spike in the savings balances.
Economy is not stimulated by people hoarding their money. People need to exchange value for the economy to thrive.
What happens to the spending behaviors when the true stats around evictions, lost jobs (that are not coming back) and small businesses that are shutting down permanently are out?
Our guess is that people are going to be weary of spending money in the short to medium term. If we were forced to pick a timeline – we would say about 12-16 months (assuming we get a vaccine in Q1 2021).
When is the next bull run?
Based on what we have seen in 2007 through 2010 and observing the consumer spending habits in recent times, we think that Bitcoin (and cryptos) will not find their true peak until next halving.
We know this is not what you came to hear.
If the bull run in your mind is hitting the 2017 highs then we do not think you have to wait until the next bull run.
If the bull run means a $100,000 bitcoin then we stand by our opinion on when that is going to be.
A case for bull run
In spite of what is going on in the street, following factors are acting as strong bull market signals for the crypto space.
Hype: Crypto space (specifically Bitcoin) has been gathering a lot of steam in terms of brand awareness and mass penetration. This is great for the long game.
Adoption: More than ever, private and public enterprises are becoming serious about bitcoin and underlying blockchain technology. What is good for bitcoin is good for blockchain and vice-versa. MicroStrategy investment, Paul Tudor Jones getting involved with bitcoin are some examples.
Tech explosion: Crypto space is home to some of the brilliant minds in the tech space. Add Big Techs interest in the crypto space and you have a perfect recipe for monumental shifts in crypto perception. Tech giants like Microsoft, Google, Twitter, Facebook are all getting involved with blockchain and cryptocurrencies in some shape or form.
Retail demand: More and more retail investors are looking for alternative investments and they are waiting on the sidelines to get involved with Bitcoin. As soon as companies like Fidelity or other brands offer crypto investment through retirement plans – there would be a massive influx into this space.
DeFi: DeFi in its current state might be infested with shittty projects but as a concept and technological shift to turn the current banking system upside down – it holds great potential. Any demand to DeFi brings more demand to bitcoin, ethereum and blockchain in general.
The debate around when is the next bull run will hinge on how the market recovers from this pandemic. How soon will we get the vaccine and how many of the lost small businesses and jobs are we going to resurrect?
From a macro perspective, Bitcoin and few select cryptocurrencies will continue their upward trajectory so if you looked back to 2020 five years from now, you might think bitcoin was on sale.
Question is: how many people have that kind of patience?
Thank you for reading and sharing this article. We appreciate you.
Stay safe and healthy!
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