The report suggests that Covid-19 has accelerated Bitcoin’s maturation as an asset, showing its strength amid declining equities. In addition, it points to the ever-increasing appetite from institutional investors, and Grayscale, or GBTC, in particular, which has been consuming about 25% of the the new supply:
“So far this year, its increasing AUM has consumed about 25% of new Bitcoin-mined coins vs. less than 10% in 2019. Our graphic depicts the rapidly rising 30-day average of GBTC AUM near 340,000 in Bitcoin equivalents, about 2% of total supply. About two years ago, it accounted for 1%.”
Narrowing GBTC/BTC premium
Bloomberg finds the narrowing of GBTC/BTC premium a telling sign: “The steadily declining premium in GBTC despite strong inflows indicates supply being taken off the market, and maturation. On a 30-day average basis, the Trust’s 20% premium over its underlying net asset value compares with the historical mean of 39%.”
BTC to $20K or $28K?
The report says that “something needs to go really wrong” for Bitcoin not to increase in value. Then it states that it will approach a 2017 high of $20,000 and may even reach a new high of $28,000: “Last year, the high was about $14,000, which would translate into almost double in 2020 if rotating within the recent band, and mean little in the big picture.”
According to the report, another major reason for the appreciation of Bitcoin is the rapid growth of Tether (USDT). Last May, its market cap stood at $4 billion. A year later, it expanded to $10 billion. The increase in the circulation of the stablecoin indicates greater adoption of crypto assets: “Interest in digital links to the dollar represents the need to transact and store value in the world’s reserve currency without an intermediary. We can’t help but draw parallels to the adoption of paper currencies throughout history as the world today moves rapidly toward digitization.”