The Breakdown - $50K BTC in 2021? Bloomberg Analysts Join the 'Traditional Onslaught' Driving Bitcoin's Rally

Episode Date: December 5, 2020

On this edition of the weekly recap, NLW looks at the consolidating narrative of a bitcoin rally that is: Being driven by institutional investors Shifting the center of the industry from East Asia to North America  Winning converts from major research houses and institutions  Driving the price of bitcoin to new all-time highs

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by Crypto.com, nexo.io, and all nodes. And produced and distributed by CoinDesk. What's going on, guys? It is Saturday, December 5th, and that means it's time for the weekly recap. So, Bitcoin years plus 2020 years combined, means that it feels like about 100 years since Bitcoin punched above all-time highs at the beginning of the week. Then again, this could also be because the real psychological barrier is

20,000 no matter what the technical number is. It could also be because, frankly, after waiting for three years, a whole lot of folks out there want to see more than just a touch-up to previous highs. They want to see a smash to a whole new dimension. Whatever the case, however, one thing that is clear is that there has been a consolidating narrative around this rally. And that narrative is that this time isn't being driven by wonky retail speculators. Instead, the new market participants are U.S. institutions. And the narrative for those institutions, the raise on debt for them to be involved, focuses on limited supply in the face of unlimited printing. To get a sense of just how clear this is, Reuters yesterday published a piece called Howell.

how American investors are gobbling up booming Bitcoin. Bitcoin has grabbed headlines this week with its dizzying ascent to an all-time high. Yet under the radar, a trend has been playing out that could change the face of the cryptocurrency market, a massive flow of coin to North America from East Asia. It is North American investors who have been the bigger winners in the 165% rally this year. Weekly net inflows of Bitcoin, a proxy for new buyers to platforms serving mostly North American users have jumped over 7,000 times this year to over 216,000 Bitcoin worth $3.4 billion in mid-November data compiled for Reuters shows. East Asian exchanges have lost out. Those serving investors in the region bled 240,000 Bitcoin worth $3.8 billion last

month. Now, another part of this article also made an interesting mention. They talked about the impact of the Office of the Comptroller of the Currency, saying over the sub, that national banks could provide custody services. This is something that I've seen mentioned numerous times, although always below the radar. We've also heard it directly on this show from people like Robbie Gutman at Nidig, who said that this made a major impact in allowing U.S. investors to get comfortable finally taking the plunge. Now, another piece of data validating this notion that U.S. institutions have been the driver comes from coin metrics, who published a remarkable graphic showing Bitcoin price movement in November. With huge concentration, price rises occurred during U.S. business

hours and stayed flat outside of them. This episode is brought to you by Crypto.com, the Crypto super app that lets you buy, earn, and spend crypto all in one place, and earn up to 8.5% per year on your Bitcoin. Download the Crypto.com app now to see the interest rates you could be earning on BTC and more than 20 other coins. Once in the app, you can apply for the crypto.com metal card, which pays you up to 8% cashback instantly on all purchases. Reserve yours in the crypto.com app today. Many investors want to be a part of the next bull run. Others seek to build their dream home, finally launch that startup, or fund their education. Try Nexos instant crypto credit lines and borrow against any major cryptocurrency with no minimum or maximum withdrawal amounts,

no fees whatsoever, no credit checks, and flexible repayment. Not to mention the APR starts at just 5.9%. Stay on top of your investment game with nexo.io. And remember, it's your crypto, your credit, your choice. Get started at nexo.io. Hey guys, this week we've got a special product launch sponsor. Looking for the best way to stake Ethereum 2.0 safely and affordably? Go to all nodes.com, the number one enterprise-grade hosting and staking platform.

Type in promo code CoinDesk 3 and enjoy three months of free hosting for your validator nodes. The platform is easy to use, comes with instant node monitoring and multi-level protection for your validator keys. Five minutes is all it takes to get started staking on all nodes.com, the platform preferred by people who make a difference. So visit all nodes.com and use the promo code CoinDesk 3 to get started for free today. Let's go back to November because this is a month that we're going to be talking about for some time. Travis Kling is calling this shift to institutional investors the traditional onslaught and highlighted some of the biggest things that happened in the month. And this is so remarkable I'm just going to read through this. November highlights. Stanley Druckenmiller announces Bitcoin position.

Drucken Miller is, of course, one of the most famous money allocators of all time. He worked for Soros. He's a billionaire in his own right and is just hugely influential. Bill Miller, another classic value investors strongly recommended Bitcoin on cable news. Citigroup Research publishes year-end 2021 Bitcoin price target as high as 318,000. We did a whole episode on that, I'm sure you remember. BlackRock, Fixed Income CIO Rick Reader says Bitcoin could replace gold. That was followed, by the way, with the CEO of BlackRock Larry Fink, talking about why Bitcoin had proven itself.

Guggenheim, the huge global multi-hundred million dollar asset manager filing to buy up to a 10% Bitcoin position through GBT in their 5.3 billion macro fund. And then of course there's Alliance Bernstein, who is a $631 plus billion asset manager. They reversed their position held since January 2018 and recommended an allocation to crypto. We read that on Tuesday. Skybridge, the fund of Anthony Scaramucci files an SEC amendment to invest in Bitcoin with their $3.6 billion fund. Keep in mind, we're still in November here, folks. Ray Dalio on Twitter, after saying that he still wasn't really into Bitcoin, admitted that he might be missing something. Those are his words. Neil Ferguson writes a Bloomberg opinion

piece called Bitcoin is winning the COVID-19 monetary revolution, by the way, preview, spoiler alert. That's coming to you tomorrow on Long Read Sunday. And then there's the other things that aren't just strictly speaking institutional investors but are still huge. Square reported Q3 Bitcoin revenue and gross profit up 11x and 15x year over year. Wyoming elects easily the most pro-Bitcoin advocate in the Senate. Cynthia Loomis, she has held since something like $300 per Bitcoin. She has a clear vision of why sound money is important. Huge, right? There's so much that happened just over the last month, and it's not just an influx of Robin Hood traders or a repositioning of people in the space. There is something big and fundamental and different happening

here. And just to cap it off, Bloomberg just came out with a new report, their Bloomberg Crypto Outlook. It's called Bitcoin joining the 60-40 mix, and their highlights are huge. 10,000 is 2021 Bitcoin base for more of the same towards 50,000. Bitcoin and Crypto asset demand, momentum favorable nearing 2021, Bitcoin gaining key 2021 edge, volatility at new lows versus NASDAQ, golden Bitcoin fundamentally technically sound bull markets, Bitcoin sellers, no thanks, with hoddlers as entrenched as 2010. So the big one obviously that people are talking about is that price prediction towards 50,000, but as you can see, it's driven by this huge combination of factors together. The point of this, I think, is that regardless of what you're seeing with that

number, we are flirting so hard, we're clinging to 19,000, looking up at 20,000. Now, some like Raul have said that we may be looking at a technical correction coming right down the pipe, but either way, I think that it's impossible to see where we are as anything other than hugely bullish with new fundamental underlying strength with a different category of investor driving things. On the one hand, of investors might be more fickle. You're never going to get hodlers to part with their money where these are institutions that at certain times, if certain things happened, if we saw another deep market turnaround, if we saw another liquidity crunch, they might have to liquidate their positions in a very systematic and aggressive way. The flip side is they're playing at such a larger scale

that in the short term, they're likely to dampen volatility, I think, because they're just not going to stress as much about the difference between 19 and 18K as the retail guys out there playing with leverage. Whatever the case, it's been a crazy month and a crazy first week in December. I can't even wait to see what the rest of this month holds. I appreciate you hanging out and listening to the show along the way. And until tomorrow, guys, be safe and take care of each other. Peace.