2020 is coming to an end.
If you use one word to describe 2020, I just want to say “Magic Year”.
At the beginning of the year, no one expected Bitcoin to fall by 50% in one day; and at the time of the 312 dive, no one would have expected that Bitcoin would break through the previous high at the end of the year, and even went straight to 30,000 US dollars.
In addition, public opinion has taken a 180-degree turn in cryptocurrency this year, and institutional investors have also begun to flood in. The currency circle can be said to be able to match the development of the past few years.
So below, let’s take a look at what happened in the 2020 currency circle and my views and opinions on these major events.
Currency price articles: Bitcoin hangs on the mainstream
For most people, the only way to participate in the blockchain is to trade (or speculate on coins). After all, this is the least barrier-free thing.
Therefore, it has never been of interest to blockchain technology. It is not the extent to which Bitcoin’s Lightning Network has developed, it is not whether Ethereum 2.0 will cause a fork, or when Polkadot’s cross-chain will land.
What everyone cares about most has always been the currency price.
So let’s take a look first? How much has the market value of the top 15 currencies increased in the past year?
In 2020, the total market value of the entire cryptocurrency has increased by 2.8 times, and of course most of the increase is attributed to Bitcoin. After all, the current market value of Bitcoin accounts for as much as 70%.
Bitcoin’s performance in 2020 is really satisfactory. It has risen nearly three times, surpassing EOS, BCH, BSV and other cryptocurrencies.
In Top15, there are only 4 currencies that outperform Bitcoin: ETH, ADA, LINK, and XEM.
In addition, from the perspective of “current price/previous high”, Bitcoin directly suspends all currencies.
Because the price of Bitcoin has risen to a new high, and many coins are still lying on the ground, such as XRP, BCH, EOS, ADA and other currencies are still 80% to 90% away from the previous high.
The recent market trend can be summarized as:
Bitcoin rose sharply, other currencies followed up
Bitcoin retreated, other currencies fell sharply and gave up most of their gains.
Basically, it was a flop on the pie, and the younger brother all fractured.
Many people believe that the real big cow is not one of a kind, but a hundred flowers. So the mainstream will definitely break out one day. I do not deny this.
But I need to remind everyone that it is difficult for many mainstream coins to rise above the pie in this round, and those that can rise above the pie will become the new mainstream, but no one knows which coins. And some old mainstream may even have difficulty breaking the previous high.
Regarding mainstream currencies, there was a big news last week (December 22): The US SEC plans to sue the crypto company Ripple and two executives, accusing Ripple as a security and must comply with federal securities laws.
As a result, XRP plummeted by 40% within a day and was directly removed by Coinbase.
In fact, there are not a few currencies that have been penalized by the SEC. EOS has paid a fine of 24 million US dollars for this, and XTZ has paid a fine of 25 million US dollars…
Who will be next?
Previously, SCE Chairman Clayton had clearly stated that Bitcoin and Ethereum are not securities.
In fact, everyone in the currency circle knows that Bitcoin is the boss, and Ethereum is the second – the strongest public chain.
The DEFi ecosystem on Ethereum is booming this year, and liquidity mining has also brought a huge wealth effect. As of the end of 2020, the total locked value in the Ethereum DeFi ecosystem has reached the highest level in history of USD 13 billion.
Through DeFi, Ethereum has fully demonstrated its value as a platform.
However, it must be emphasized that the prosperity of the Ethereum network does not necessarily lead to an increase in the price of ETH tokens. Because the two are not directly related.
Of course, after ETH2.0 goes online, the logic of value capture will be different.
Although Phase 0 of ETH2.0 has been launched this year, it will be at least two or three years before ETH2.0 is fully online. There is still a lot of uncertainty.
Market articles: retail investors have gone out of their way, institutions are playing games
The entry of Western institutional investors is considered to be the biggest thrust of Bitcoin’s price increase.
Since this year, Grayscale has become a famous giant whale in the circle, and its every move is the focus.
According to BitcoinTreasuries statistics, 28 companies, including Grayscale and MicroStrategy, now hold 1.15 million BTC, worth more than 30 billion US dollars.
Especially in this December, we can see news reports of institutions “building positions” every three weeks.
In addition, many Wall Street bigwigs have also changed their positions on Bitcoin this year.
Paul Tudor Jones Paul Tudor Jones, a well-known hedge fund tycoon in the United States and a Wall Street god-level trader, has set a record of triple-digit returns for five consecutive years. Its flagship funds have an average annual return of about 20% for 25 consecutive years. No loss.
In May of this year, he publicly praised Bitcoin:
Investing in Bitcoin is like investing in Apple and Google in the early days. It is still very early. Bitcoin is the best anti-inflation target. I have about 2% of my positions in Bitcoin.
Stanley Druckenmiller Stanley Druckenmiller, American billionaire, Soros chief general, is known as the most profitable machine in history. In the past 30 years, he has created an average annual compound performance of 30%; in his investment and trading career, there has been no negative return year; in the past 120 quarters, there have been only 5 quarters that lost money.
In June of last year, he also said that he was not interested in Bitcoin, so he slapped his face in November, saying that he already held Bitcoin:
I am an old antique, but I slowly accepted that Bitcoin is a good stored-value asset class. The number of gold positions I hold is times that of Bitcoin. But frankly, if gold investment can work, Bitcoin investment will have better results.
The Bitcoin market is destined to become more and more institutionalized, and there are three reasons for the involvement of large funds in Bitcoin:
First, profit-driven. Wall Street has always been doing a business of pumping water. Before the pool was too small, there was no need to intervene. Now that the pool is big, participating in it is a business that makes a profit without losing money.
Second, investment needs, the pursuit of asset appreciation, transaction-oriented, and liquidity is king. Bitcoin can be said to be an asset with excellent global liquidity, so it is a good investment choice.
Third, the demand for allocation is to pursue a non-depreciation of assets and to be guided by value storage. The essence is a defensive investment, and the choice of Bitcoin is also a consideration of the relevance of the investment portfolio.
This year, global central banks are releasing unlimited amounts of water.
How exaggerated is it? According to statistics, 21% of the total dollar amount in history was printed in 2020.
As long as the U.S. dollar remains in print, all assets will rise.
The “demand to configure Bitcoin” is magnified in the general environment, so the incremental capital brought by the establishment of institutions is unimaginable, and the price increase will also be unimaginable.
An unprecedented bull market is in sight.
And the only thing we can do is “hold it, don’t move”.
Environment: Fear of thunderstorms when speculating coins, and antifreeze card for withdrawal of gold
The market chapter mainly talks about overseas institutions, and the final environment chapter will focus on the domestic market.
In the beginning of 2020, there was a big thunder: Fcoin ran away and nearly 13,000 Bitcoins could not be redeemed.
In the second half of the year, OKEx, one of the “three major exchanges,” announced that the person in charge of the private key cooperated with the police to investigate the loss of contact and suspended the withdrawal of coins. It took more than a month before it returned to normal.
In addition, this year there are many small companies that have had troubles, such as ZB, DragonEx, TokenBetter, Livecoin…
Several black swan incidents have made everyone more aware of the risks of centralized exchanges: subjective evil, iron fist attack, hacker stealing currency.
According to data, starting in 2018, even if the market is bearish, the exchange’s Bitcoin holdings have been increasing.
But a very big change this year is that since February, the number of bitcoins held by exchanges has fallen sharply by about 20%.
The massive outflow of assets on exchanges shows that, on the one hand, everyone is paying more and more attention to asset security.
On the other hand, more people view cryptocurrencies as long-term investments rather than short-term speculative transactions. This is the change in market structure.
In terms of the general environment, this year there is another serious topic from the beginning of the year to the end of the year: the withdrawal of frozen cards.
Moreover, on October 11, the “Card Broken Operation” was launched nationwide to severely crack down on and rectify the illegal and criminal activities of illegally opening and selling phone cards and bank cards.
According to official reports, there will be no time limit for the card-breaking operation until the passive situation of the proliferation of two cards and a large number of two cards being used in crimes is completely changed.
Therefore, affected by the card-breaking operation, it is unlikely that the problem of currency withdrawals will be improved in the short term.
Uncle Jian’s summary
In 2009, the global financial crisis, the advent of Bitcoin, Satoshi Nakamoto wrote this sentence in the genesis block:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
On January 3, 2009, the Minister of Finance was on the verge of assisting the bank for the second time.
In 2020, in the face of the economic crisis, the Federal Reserve madly printed money, and the money could not help but flow into cryptocurrency.
At this moment, Bitcoin has risen to US$28,000, and mainstream media are rushing to report it, but there is still no explosive search for the word “Bitcoin” in Google Trends.
