Bitcoin prices have more than doubled in 2019 and advancing to become the best-performing asset class in 2019. Data company Messari believe Bitcoin prices, currently around $8,000, could rally to new highs by the end of the year, topping the $12,902 level reached in June.
Bitcoin: +114%
US Tech-Stocks: +31%
S&P 500: +21%
Gold: +17%
10 year US Bond Yield: +1.6%
With the global economy slowing and trillions of dollars of government bonds from Europe and Japan trading with negative yields, Bitcoin’s price gains this year could conceivably attract a new wave of investors who previously wouldn’t even take a look at crypto-currencies.
Paul Brodsky, a partner at Pantera confirmed: “We’re getting interest from significant institutional investors of all types.”
The long-term argument for Bitcoin is that, unlike stocks and bonds whose prices are often highly sensitive to the decisions of central banks and governments, Bitcoin is independent of sovereign authorities. Instead, it’s governed by fixed policies that are hard-coded into the underlying network, and therefore difficult to change. Under those rules, the supply of Bitcoin is capped at 21 million, so it won’t be prone to inflation like developed-market currencies such as the U.S. dollar, euro and yen might be if their respective central banks resorted to more money-printing as a way of stimulating their economies. Many cryptocurrency proponents characterize bitcoin as Gold 2.0 – essentially a newer, technologically improved and more portable form of the precious metal, viewed since ancient times as a reliable store of value.
Messari’s Qiao Wang: “Bitcoin is slowly becoming digital gold…”.
Bitcoin’s internal gauges reveal a healthy and growing market. Bitcoin’s so-called hash rate, a gauge of processing power, has increased this year to about 90 exahashes per second (an exahash is a quintillion hashes), from about 40 exahashes at the start of the year.
Some industry executives think Bitcoin prices might be setting up for a rally. Catalysts could include an escalation of Trump’s trade war with China. Wang took an informal poll among his coworkers, and the average forecast for the year-end 2019 price was $13,252. “The number is totally within the realm of possibility,” he said.
Sven Franssen