Bitcoin Rebound Must Mix History, Tools, Expert Says
Previous bitcoin bull markets, which led to epic gains for the largest digital currency, were largely driven by history, but the next bitcoin rally needs to be a more even mix of history and utility.
That’s the sentiment of Galaxy Digital CEO Mike Novogratz, who recently commented on this at the Token2049 conference. The Bitcoin bull market of 2017 saw the digital coin run from $1,000 to $20,000, and Novogratz noted that the rise was largely a result of history as younger investors — Millennials and Gen Z — flocked to crypto for the first time.
He added that the next bitcoin bull market – the one that brought the cryptocurrency to a peak of $69,000 in November 2021 – was largely driven by the coronavirus pandemic, and that the move was “80% history, 20% utility”.
Obviously, bitcoin is in a bear market this year, charging exchange-traded funds like Invesco Alerian Galaxy Crypto Economy ETF (SATO) and Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC). The next bitcoin bull run has to be a 50/50 split of history and utility, Novogratz said.
“There are people who build applications, people who build systems a) that are fast and scalable and b) that are user-friendly. We don’t have them yet – that’s why we are where we are. But in the next few years they will come, he said at the conference.
History-based runs are nice because bitcoin prices appreciate, but as mentioned above, these rallies have durability and are often not rooted in fundamentals. On the other hand, a history-backed crypto rally suggests that the fundamentals are turning for the better, and that the important use case may improve.
These are relevant factors for funds such as BLKC and SATO. As for BLKC, which tracks the Alerian Galaxy Global Blockchain Equity, Trusts and ETP index, the fund’s 61 holdings check the bitcoin toolbox in a number of ways.
Beyond the ETF’s selection of bitcoin miners, the fund is also home to companies that see value in embracing crypto as a form of payment. In addition, several BLKC member firms, although not dedicated crypto firms, are leveraged on the topic of blockchain expansion and infrastructure. Overall, the fund could benefit from the bitcoin utility increasing. As for Novogratz, his comments may be worth listening to.
“As previously reported by Cointelegraph, Novogratz has made some successful predictions about Bitcoin. Back in 2020, Novogratz predicted that Bitcoin would end the year above $20,000, which turned out to be an understatement, with Bitcoin approaching the $30,000 price mark by the end of 2020, Helen Partz reported for the publication.
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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.
