Bear market layout: Bitcoin remains the best performing asset in 2019
With one week left in 2019, although Bitcoin has not “breakthrough historical highs” as many advanced forecasts claimed, Bitcoin is still one of the best performing assets in 2019.
BTC’s one currency show
Research Institute President and Founder of Digital Assets Data Ryan Alfred recently stated that “this year, the returns on large cryptocurrency assets are significantly higher than traditional markets.”
Compared with other assets, the top ten crypto assets (Bitwise) perform better than traditional assets such as stocks, gold, and oil. Even if the crypto market starts to decline after July 2019, it is still clearly better than other indexes such as the S&P 500.
Binance also released related information in May this year, pointing out that Bitcoin’s performance in 2019 is better than most traditional asset classes, and the annual return rate is even better than the performance of crude oil and technology stocks.
Compared with the beginning of 2019, Bitcoin has grown by more than 100%. In contrast, the second-largest cryptocurrency by market value, Ethereum, has grown by only 35%, and the third-largest, Ripple, has fallen by 25%.
A Redditor named “Joe-M-4” used 1,000 US dollars at the beginning of this year to invest in the top 10 currencies with a total market capitalization on January 1, 2019, and each currency was purchased for 100 US dollars.
The Redditor updated his article, and his income was 10%. As measured by the S&P 500 Index, the portfolio has lagged far behind the stock market, since the beginning of 2019, the S&P 500 Index has risen by + 24%, which is twice the return on cryptocurrency investment.
However, if the Redditor purchased $1,000 in Bitcoin in early 2019, as of 12/23, his annual compensation would be 104%, which would be 80% more than 24% of the S& P500 index.
Institutional admission, halving soon, Bitcoin’s long-term bullish fundamentals remain unchanged
Fidelity Investments is the fourth largest professional fund in the world. According to Bloomberg, Fidelity started researching Bitcoin as early as 2014 and started mining in 2015, and then in 2015 Fidelity Charitable Investments began accepting Bitcoin.
In October 2019, Fidelity Digital Asset Services (FDAS), a Fidelity-invested subsidiary, is actively preparing for the launch of “custodian and trading services”, and the platform will go from “only accepting specific trial users” to open to “all qualified investors”.
Similarly, Inter Continental Exchange Inc. (ICE) is also approved by the New York Department of Financial Services (NYDFS) to provide escrow services to all institutions, and is no longer limited to the Bakkt Bitcoin Futures Trading Custody.
Currently, Pantera Capital, Galaxy Digital, and Tagomi have chosen to use Bakkt as their digital asset custody company.
From a pure investment perspective, Bitcoin has the properties of gold, oil, and many other commodities-that is, prices fluctuate violently in the short term and have no relevance to the stock or bond market. Because of this, most investment portfolios will involve some speculative assets, and this is why these Wall Street institutions first deployed to prepare for the market.
Yale University, Harvard University, MIT, some pensions, and the Rockefeller family, etc have already included some cryptocurrency assets in their portfolios.
Bitcoin will have its third halving in May 2020, and the block reward will be reduced from 12.5 BTC to 6.25 BTC. From past experience, Bitcoin halving has been a key catalyst for pushing Bitcoin into a new round of bull market.
The first halving took 513 days for Bitcoin to rebound from a bottom of $2.01 before the halving to a top of $270.94 after the halving, a rise of 13,304%. The second halving took 1068 days for Bitcoin to rebound from a minimum of $164.01 before halving to a top of $20,074.04 after halving, an increase of up to 12,168%.
What the bear market should do: Accumulate Bitcoin as much as possible
Bitcoin as digital gold and non-relevant assets under the current unstable economic structure, including the Sino-US trade war, continuous easing of quantitative easing, and other geopolitical risks, are the driving forces that further increase the price of Bitcoin.
What we have to do in a bear market is to keep accumulating Bitcoin.
Earlier this year, DeFi lending platforms began to be widely discussed. The reason is that the interest is much higher than traditional finance’s, with the highest annual interest rate at around 14%. However, with the decline of the crypto market, DAI now only has an annual interest rate of less than 2%, whlie USDC has 3%. This means that interest rates on DeFi lending platforms are unstable.
Even with the highest annual interest rate of 14%, if investors buy Bitcoin at the beginning of the year and hold it until now, they will still have about 100% profit. This outperforms having to convert Ether to stable coins and lending.
Therefore, instead of collateralizing the assets of the DeFi lending platform to obtain interest, Bincentive recommends that you hold Bitcoin or even find a way to increase the Bitcoin in your bear market, whether it is buying on dips, or collateralized in a lending platform.
Many people think that DeFi lending platforms can only collateralize stablecoins. In fact, lending platforms can also collateralize crypto, but interest rates are very poor. Many centralized lending platforms, such as BlockFi, Celsius, Coinlist, and Genesis Capital, are also able to collateralize Bitcoin to earn interest.
For example, BlockFi’s annual interest rate is about 6.2%, while Celsuis is about 3.5%. Take BlockFi as an example. If you invest in Bitcoin, it will give you 6.2% Bitcoin interest per year. Assuming you put 1 Bitcoin, it will become 1.062 Bitcoins in 1 year.
Increase the amount of Bitcoin through borrowing or regular purchase, and then sell it during Bitcoin outbreaks. This is the “high-reward” efficiency that the “high-risk” crypto market should have. Of course, this premise is that investors can bear the high risk of Bitcoin and make good asset allocation.
Many people like to use the tulip bubble as a metaphor for Bitcoin, but as an invention that disrupts finance, Bitcoin has far more imagination than a tulip. Bitcoin has been in existence for 11 years, and our excessive financial expansion and severe inflation remain unresolved. Even though there are still many problems with Bitcoin, Bitcoin has proven its value in politically and economically unstable places like Venezuela and Hong Kong.
This operating theory is actually not complicated, that is, in a bear market, carefully select investment products, build its own investment system, and then wait for the bull market to come.
Layout in bear market, ship out in bull market.
This article expresses an independent view of Bincentive. Bincentive is not responsible for investment profits and losses, and investors should carefully consider various investment risks.
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