“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it.” ~ Michael J. Saylor, CEO, MicroStrategy Incorporated

Of note in the prior quarter was a new trend of large firms’ diversifying their treasury holdings by acquiring bitcoin as a reserve asset. Underscoring this mainstreaming of long-term cryptocurrency holding is a flurry of regulatory activity demonstrating an accelerating timeline for governments around the world to plan for implementation of an alternative to the current paper-based fiat monetary system. Even as replacing the crumbling current USD backed global system is not openly admitted or covered by mainstream financial press, all signs point to a rapidly maturing internationally coordinated regulatory structure that can accommodate the new digital network protocol-based operating system for money and finance that I have been highlighting over the past couple of years.

Cryptocurrencies have performed well alongside strong moves in precious metals, both benefiting from dollar printing and flight to safety. Positive correlation with equities is cause for caution going into the fall as a disruption in the flow of credit around the world remains a serious overall risk to paper asset prices. I continue to believe one more and last excellent buying opportunity for bitcoin and cryptocurrencies is ahead and today’s exuberant crypto sentiment will be tested along the rocky road to November when the determination of future U.S. leadership and pandemic progression should settle a number of issues weighing on the overall macro outlook.

In January I focused on China and this year being the “Revenge of the Rat”. After the ravages of COVID-19 still plaguing the globe, could a natural disaster of unimaginable scale originating in China be next?

In terms of Bitcoin mining, which is the fundamental task of creating blocks to maintain the blockchain and receiving a reward for that service in bitcoins, China is home to the world’s largest bitcoin mines, thanks to cheap electricity and breakneck speed of getting things done. At one time the country accounted for 95% of the volume traded in global markets. China’s mining dominance in this aspect is over 60% from latest reports by both CoinShares and TokenInsight’s 2019 Annual Mining Report with some reports suggesting China has more than a 70% ownership in terms of bitcoin miners. If you want to use mining pool dominance (hash rates) as a proxy, current hash rate data shows that 9 out of the top 10 bitcoin mining pools are Chinese pools. As of January 2020, these 9 pools control more than 80% of the total network hash rate which is at all-time highs of 112 EH/s.

The destruction of so much mining capacity would be massively disruptive and devastating to the price of bitcoin in the immediate short term, but also present an incredible buying opportunity as mining capacity in other parts of the world would capitalize on China’s misfortune and the network (along with price) would recover. In fact, North America is well prepared for such an opportunity…

See, e.g., Peter Thiel-backed Layer1 begins mining bitcoin at its West Texas facility

Bitcoin and cryptocurrency markets have been consolidating slightly higher with compressing volatility following the overall price rally into last month’s Bitcoin supply adjustment. Fundamentally, as of today the Bitcoin network hashrate and difficulty show signs of recovery after the post-halving miner purge.

Throughout the month liquidity injections from central banks and U.S. government stimulus to Main Street businesses and consumers calmed legacy markets. Bitcoin and cryptocurrencies should benefit in the long term from fiat money printing as investors seek hard assets and Bitcoin’s limited supply makes it more and more appealing.

At approximately 2:45 pm EST today, the Bitcoin network will automatically adjust to reduce the supply of new bitcoins minted daily by half. For the next four years, the reward to miners for securing the Bitcoin blockchain and processing transactions will decrease from 12.5 to 6.25 coins per block, or from 1,800 to 900 bitcoins per day.

Interest in Bitcoin among the traditional investor community shows signs of growth and renewed focus during this remarkable time of coordinated Central Bank lending and money creation. The table has been set for the adoption of Bitcoin as never before in its prior 11-year history, however, I find the majority of crypto market participants and believers are too optimistic regarding the timing of when prices will begin to reflect our new reality.

While Central Banks are poised to issue their own digital currencies (CBDC) in response to the unfolding global financial and economic crisis, decentralized public crypto assets have properties incomparable to what governments and central authorities can offer. Exciting times ahead.

Although the writing on the wall was clear since January when I titled the report “Revenge of the Rat” referring to the assault I saw unleashed on the world at Chinese New Year, watching the reality of the catastrophe unfold in our own country in March has been surreal.

There will be significant incoming counterparty credit and performance failures. The best way to position now for the global reset is to sell the USD into decentralized digital assets, physical quantities of gold and silver (if you can get any), tangible supplies to support life and business operations should supply chains, deliveries and even so-called “essential” businesses completely shut/cease. Limit exposure to cash, assume legacy payment and settlement systems will fail – including cash in banks to be “BAILED IN” – then wait to see who survived the wreckage and buy all the blood you can find.

We are about to see something in the world that exceeds every expectation. All assumptions must be reset and refreshed as events unfold over the next few months. The macro problems facing the world are likely to remake the landscape of large players in bitcoin mining and crypto venture capital world-wide – a brutal shake out is to be expected that could put pressure on prices unless demand for cryptocurrencies as a safe haven is recognized sooner rather than later.

When/if we get there, the crypto asset price capitulation is to be bought with every US Dollar that can be found hand over fist. Paper assets, including all fiat currencies, will not come back from what’s ahead. All the wealth of the world will flow into silver/gold, land/water and decentralized cryptocurrencies.

Bitcoin was born for this.

As disruptive forces around the word continue unabated in severity, the knock-on effects of coronavirus may just provide the extra dose of reality that causes financial market levitation to reverse. I believe conditions are setting up for a historic break-out and break-up in the USD price of crypto assets.

Although 2019 was a great year for Bitcoin/crypto market fundamentals and regulatory developments, to date cryptocurrencies have failed to make meaningful inroads in attracting significant new capital. The accumulation taking place over the past 12 months is occurring among a small group of informed wealthy investors who have been active in the space for many years and a steady but modest stream of new retail investors around the world.

Overall, this is a picture of strength and a set up for spectacular returns in the 12-24 months ahead. But first, the medical martial law state of affairs in China may yet have a severely negative impact on the price of bitcoin and global markets in general. With the Bitcoin network specifically, I am watching the hash rate – that is, the amount of computing power connected to the network recently reaching all-time highs – and whether we will see Chinese mining operations begin to shut down due to firm closures and illness. Price tends to follow hash rate. If it begins to decline noticeably, this could be a leading indicator of where price is going next and for how long until the Bitcoin network and supply/demand dynamics recalibrate through difficulty adjustments and halving supply constraints.

Baring a black swan event in markets external to bitcoin that could cause a price surge, growth and adoption will continue in equilibrium with subdued prices until the supply of new bitcoins is cut in half next Spring (or traders being to front run the expected impact).

Current prices are good levels to accumulate for long term holdings, but I would like to get through the year without seeing a break down through the current support zone where we now sit. As January is seasonally a weak time for Bitcoin prices, I anticipate that late January through March will be a good dollar-cost-average buying period for $BTC and top alt coins which I still expect to significantly outperform bitcoin over 2020-2021. Until Bitcoin starts to shine, however, alt coins will continue to underperform overall so heavy allocation to $BTC is warranted going into the halving.

Bitcoin and cryptocurrencies continue to consolidate and move sideways. My views and analysis from prior months remain intact.

While I expect bitcoin and cryptocurrencies to benefit from investor fear, loss of confidence and any deflationary macro shocks, the beauty of these alternative hard assets is that they will also benefit from central bank liquidity injections directed to support markets. So, whichever way markets move in response to current events like Brexit, trade wars, hot wars, U.S. Presidential impeachment, political protests, etc., in the short term there is a strong reason to accumulate and hold bitcoin and similar cryptoassets. Now presents a wonderful opportunity to build a portfolio designed to capture foundational long-term value of the new global financial system already prepared to rise from the ashes of the exhausted, outdated and broken system accelerating in failure with each passing day.

Today Bakkt formally announced that its bitcoin warehouse is “Open for Business” with BNY Mellon helping to safeguard private key material by providing “geographically-distributed storage of customer assets.” Looking at trends in adoption, sentiment and market maturity, the timing couldn’t be better for regulated, institutional-strength crypto asset infrastructure and financial products to come online.

The remaining days of August and September are a crucial time. Events in Hong Kong and mainland China, Federal Reserve rate decision, precious metals, US Treasury yield curve and US equities are all at major inflection points. If the macro picture breaks down sharply, I think odds are 50/50 that cryptocurrency will be sold off initially providing a brief (single day/week) fantastic buying opportunity before exploding higher.

While the market infrastructure for cryptocurrency is new and largely untested, it is of historic significance that the world now has a choice and the ability to opt-out of what central bank planners and governments have done or plan to do in a crisis. Bitcoin is a bearer instrument fit for the digital age whose value is not dependent on the value of any other asset and bitcoin’s value does not require the performance of any other party (no counterparty risk).

The current market cap for bitcoin is only ~ US$260 billion. It will not take much inflow, especially in a market panic scenario, to cause a spectacular move. But of course, it could all fail spectacularly and crash to zero.

What I saw yesterday was that Representatives from both sides of the aisle can come together in defense of liberty, fairness, equal opportunity, innovation, and accountability. Thank you, Bitcoin. Thank you, Satoshi (and Facebook!) for helping us remember that we in America have values in common no matter our political affiliation - values that will be protected and brought to bear for a brighter future.

It was clarified that Bitcoin is a network that is open for everyone and anyone to use. It is not controlled by any centralized entity, and cannot be altered or tampered with or restricted by any single entity (or group colluding to attack the network).  

Bitcoin (and similar cryptocurrencies) are a new kind of bearer instrument custom-built for the digital age. People who buy bitcoin are not trusting any company or particular group of individuals. People are trusting math, code and a decentralized system outside of our legacy financial system. The network is supported by a voluntary group of programmers, users and capitalist entities working in their own self-interest. The system is brilliantly designed through cryptography and game theory to be self-sustaining, immutable and censorship resistant. 

Bitcoin’s value over the past ten years reflects the increase in TRUST in the Bitcoin network and system, an increase in adoption and an increase in use. 

Battle lines are being drawn among corporations, the banking system, governments and central banks vs the people through open, public decentralized blockchain protocols. I say, let the world decide and let the best currencies win!

Bitcoin and truly decentralized cryptocurrencies have some unique competitive advantages that cannot be replicated by any of the other product offerings. They have some unique obstacles as well. My research and investment choices are heavily focused on following the evolution of these unique factors.

What we have seen this year has stunned most market observers and participants. Bitcoin has recovered 50% of its drop from ATH in 4 1/2 months. I expect $BTC to recover the remaining 50% to ATH within half that time or by August/September.

My target for the current parabolic rise underway since April is US$13,000 in the month of June/July followed by a 40% correction and then a continuation upward after finding support in the US$7,100 – 7,800 range (or higher). As the macro picture continues to deteriorate, it may be wise to rebalance a portfolio away from lower cap and speculative assets into an allocation that meets a few key criteria for maximum performance in a macro market crisis scenario.

In any scenario, I see a strong possibility that Bitcoin can reach US$100,000 in 2019 with periodic 20-40% retracements along the way. Monthly performance may be quite volatile, but the overall trend will be higher until at least December 2020.

April was a month where Bitcoin and the cryptocurrency market price appreciation showed surprising strength, increasing the probability that December 2018 was the bottom of the bear cycle. As of today’s date (May 8,2019), I am expecting a surge upwards from the middle to end of May to confirm the bull market is underway.

Caution is in order surrounding recent enforcement activity by the New York Attorney General against major exchange Bitfinex, continuing concerns about the legitimacy and security of US Dollar “stable coin” Tether ($USDT) and a security breach at Binance exchange.

To date the market has absorbed this negative news and events over the last week with remarkable resiliency demonstrating compelling evidence that we are in a bull market and/or crypto is maturing to the point where panic selling on bad news is less and less of a factor in how the market trades.

The month of March showed many signs, both fundamental and technical, of an imminent and strong breakout upward in Bitcoin and the rest of the market. The break-out arrived on April 2 and pushed Bitcoin above several major areas of resistance. Most market observers were stunned (and short or out of positions).

February saw a bit of relief, optimism and positive momentum return to the market. The market is starting to display bull market characteristics of limited pull backs and consistent strength where taking profits TOO EARLY is a thing. Months of losses can be recouped in mere days. Positive sentiment has accordingly returned to parts of the community while others remain fearful that recent action is a bull trap.

Political instability and military action are also drivers accelerating capital flight into crypto around the world due to national collapse and potential for U.S. intervention in Venezuela on “humanitarian” grounds, North Korea provocation, India/Pakistan conflict escalation – all in MARCH. Based on previous levels of $BTC support a low of $1400 bitcoin is certainly possible, especially if market turmoil triggers an initial “sell everything” response. But I expect the December low to hold.

While the overall trend in crypto markets is still down, $BTC and alts prices have remained above their December 15, 2018 lows. Sentiment is at rock bottom with the majority seeming to favor another leg down into the US$2K region. Perhaps since everyone expects another break of support – well, then we go higher from here. During the next 10-15% rally in Bitcoin, certain altcoins are likely to return 50-100% over the same time frame. The whole market usually rises and falls with Bitcoin, but I am watching for an earlier positive performance breakout to start with Litecoin or XRP before we see the next significant moves in Bitcoin.