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The year of bitcoin

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A measure of the value of a commodity of limited output in terms of inflation

March 16, 2021, top tierinvestmentPantera Capital has released a monthly report, "Bitcoin Coming Of Age," in which it analyzes future expectations for Bitcoin and Ethereum, including Bitcoin's valuation and why Ethereum is undervalued.

Pantera Capital is a top-tier investment firm focused on investing in blockchain technologyThe male chainFrom Layer2 to apps, Pantera Capital is seen on every track. Every month, Pantera releases a monthly report on market conditions, trends, andindustryThe development is discussed in depth.

In its March monthly report, Pantera offered a deeper understanding of bitcoin's valuation and scarcity. The rhythmical Blockbeats, which translates the monthly newsletter's commentary on bitcoin, hopes to help investors.

The following is the Bitcoin section Of Bitcoin Coming Of Age:

Dear investors,

Last year, as the virus began to affect us all, I wrote in my March 2020 letter to investors:

"Bitcoin was bornfinancialIn a crisis. It's just the beginning of his season. "

When I was a bond trader, I realized that something was upside down. The "best" times for bonds are the worst times for everyone. The recession was the "best of times" for bonds.

Unfortunately, I think this is happening with our encryptioncurrencyThe market.

As the government keeps increasing the amount of paper money, people need more paper money to buy a fixed amount of goods, such as stocks and real estate, but the government ignores the money coming into these areas, or at least I think they do. But as a result, it will also inflate the prices of other things, such as gold, bitcoin and other cryptocurrencies.

The US entered the crisis with an unprecedented structural deficit. Spending was 31 percent more than income. Before the emergence of SARS-CoV-2, the Congressional Budget Office projected deficits of more than $1 trillion. Now it may be three times as much as expected.

"A billion here, a billion there, and soon it's going to be a lot of money."

"-- U.S. Senator Everett McKinley Dirksen

Now that we're at the trillion-dollar level, it goes without saying that deficits at this point must have a positive impact on the prices of things that can't be incremented, like stocks, real estate, and cryptocurrencies. In other words,BTC/ USD trade against the exchange rate will rise.

The price of bitcoin could hit a new record in the next 12 months. It's not going to happen overnight. My guess is that it will take institutional investors 2 to 3 months to process their current portfolios. Spend another three to six months looking at new opportunities, such as distressed debt, special situations, cryptocurrencies, etc. Then, when they start to allocate assets, those markets will really start to take off.

It happened. It took months to stabilize. It took months to get back on its feet. Now it's all on fire.

I've been through multiple cycles over 35 years, and my trading instincts tell me that crypto asset prices are about to melt up.

We will see higher prices before the cycle ends.

Price prediction is carried out by halving and S2F model

In the April 2020 letter, we published the S2F (Stock to Flow Ratio) model to analyze the impact of the Bitcoin halving event on the Bitcoin price.

We predict that if the impact of halving bitcoin is similar to history, it will pull up along the following monthly path:

比特币的当打之年

Bitcoin is now ahead of our forecast for April 2020 -- it will hit $115,000 this summer.

inflation

"In a sense, inflation is a pervasive monetary phenomenon that occurs when the increase in money exceeds production output."
"-- Milton Friedman, 1970, The Counterrevolution in Monetary Theory

Inflation is a monetary phenomenon everywhere, but not all inflation is created equal.

Investors often ask why we don't see inflation. The answer is: it all depends on where you look.

The CPI(Consumer Price Index) does not show inflation. The Fed's CPI target mainly includes things that have an unlimited supply -- flat-screen TVs, flip-flops, etc. With the global economy so weak, it's going to be hard to see inflation on these things. That's why I'm confident that the Federal Reserve and other central banks will continue to do what they do.

The outbreak is banned and stimulatedpolicyConsumers in the rich world have saved a lot and piled up demand. In the US, the savings rate soared from 7.6% in 2019 to 16.0% in the third quarter and 13.4% in the fourth quarter of 2020.

There will be massive inflation for things that can't be easily increased: gold, real estate, bitcoin, etc. The best proof of this argument is the stocks in the S&P 500 index. Revenue in the second quarter of 2020 was down 32.3 percent from the same period last year. But the Standard & Poor's 500-stock index is at an all-time high. This is all a monetary phenomenon.

The number of shares is limited. But Fed Chairman Jerome Powell has made it clear that quantitative easing will be unlimited. He went on:

"When it comes to lending, running out of ammunition is not going to happen."
-- Jerome Powell, March 26, 2020

The U.S. budget deficit for fiscal 2020 is $14,500 per adult. To put that in perspective, that's 1,000 times the cost of a single dose of vaccine ($14.50).

比特币的当打之年

Unlimited dollars

What happens when you flood the market with lots of goods? The price of goods will go down. Just as the price of the dollar:

比特币的当打之年

This is the Fed's inflation-adjusted and trade-weighted dollar value. This reminds us of the supply and demand diagram of ECON 101.

比特币的当打之年

Bitcoin's monetary policy is designed mathematically -- no central agency can engage in "quantitative easing." Some might change the old phrase to "bitcoin" instead of "land" :

"Buy land; no one can produce it anymore."
-Mark Twain

Morgan Stanley on crypto assets

"I've been preaching about bitcoin for a decade. In the early days, it was like preaching in the desert. But in recent years, it's become more and more like preaching to the choir, which makes it more and more interesting, and the choir is growing. Now the choir became more and more beautiful -- then I let them sing by themselves"
-- Ruchir Sharma, head of emerging markets and chief global strategy officer, Morgan Stanley.February 9, 2021

Why cryptocurrencies are coming out of the shadows

Slowly realized the revolution. "the government, in the event of an outbreak $ruled the world, and is the most popular medium of international trade, other currencies against the dollar to anchor, most central Banks as a" reserve currency ". In the u.s., only five powers have coveted status as a reserve currency ", dating back to the mid - 1400 - s: Portugal, then Spain, the Netherlands, France and Britain. The rule lasted an average of 94 years. In early 2020, the hegemony of dollar lasted for 100 years, it also gives us $questioned how long can also dominate the reason..."

"In addition, under the guidance of the federal reserve, the major central Banks are frantically to print money, in order to make the economy running during outbreaks, it also weakened the people's confidence in all sovereign currency. 20% of the $circulation are issued in 2020, the printing press, it also greatly increase the attraction of the currency, the currency of the design is gradually" mining "Singapore dollars and the total supply co., LTD. In fact, the central Banks together to promote the development of encryption currency is unintentionally, for a long time, encryption currency has long been considered a decentralized, democratic substitutes $..."

"Not only is the hottest investment choice 2020 COINS, back to see this decade, he is also the hottest investment targets, average annual growth of more than 200%. The currency has exceeded $value. But it with the traditional inflation hedge assets, such as gold is still very small, compared gold reached $12 trillion in the global market. It also left a very big growth space for the COINS."

"The most overwhelming and practical applications of encryption currency embodied in the $470 billion worth of remittance market, explosion-proof workers can send money back to the low and middle income countries. These transfers usually take 1 to 5 days, 5% to 9% of the total amount of fees for the remittance. Now, use encryption currency payment system can be completed in a few seconds of the remittance, and only a few cents fees."