Bitcoin 2020 year-end summary report: Even if it rises to 1 million US dollars, it may have nothing to do with most people

According to the annual practice of Baihua, as the year draws to a close, it is time to write the year-end summary and to take stock of the "joys and sorrows".

This year’s theme has nothing to do with previous years’ TPS, anonymity, privacy, platform coins, better BTC, better Ethereum, etc. This year’s theme can be said to have only two:

One is BTC;
One is Defi.

BTC is a feast for outsiders (institutions), while Defi is a carnival for insiders.

This is the previous article. Let’s take a look at what BTC has experienced in 2020.

01 BTC Price and the Pareto Principle

The price of BTC on January 1st at the beginning of the year was 7,100 US dollars.

The lowest point this year was the unprecedented 312 tragedy, when the dollar fell to 3,800 U.S. dollars.

In other words, if your assets in the crypto market have not tripled from January 1st to now, or have not increased sixfold from March 12th to now, then unfortunately, you may have become the negative example you heard on your first day in the crypto market - in the crypto market, if you buy all kinds of altcoins and operate them like a tiger, you will most likely not outperform those who hold BTC and pretend to be dead...

Does it hurt my friend?

In fact, there is something even more heartbreaking.

In the past few months, BTC has been rising after grinding around 10,000 for a long time. You think everyone has made money, right? It’s just a matter of how much.

The truth is cruel. A sudden plunge of 2,000 points at the end of November caused the long positions to lose nearly 1 billion US dollars in 24 hours , which is almost as much as the 312 incident.

What’s more interesting is that in the past three months, in the doubling of the market from 10,000 to 20,000, which one do you think had more liquidations, the longs or the shorts?

The answer is bulls, far more than bears .

As a big V said some time ago: We are confident that it will break 20,000, but the bulls must die.

Many newbies come in and ask foolishly, if BTC rises to one million US dollars, won’t everyone in the cryptocurrency circle be a millionaire or billionaire?

From the process of BTC rising from 10,000 to 20,000, we can clearly see that even if BTC rises to 1 million US dollars, it actually has nothing to do with most people in the circle. Because in fact, it is during the process when most people in the circle lose money that BTC moves forward step by step ...

The same is true outside the circle:

In this circle, you may not believe in any law, but you must believe in the 80/20 law.

02 The biggest driving force - institutions

There is no doubt that institutions are the biggest driving force behind this year's several-fold increase.

Apart from anything else, just looking at the holdings of the most well-known Grayscale, it can be seen that Grayscale is constantly buying.

Source: Non-small

Previous articles have said that institutional investors account for more than 80% of the Grayscale Fund, followed by qualified investors, pension accounts and other groups. Grayscale does not make money from the rise in the price of the currency. In other words, it does not speculate on it itself, but earns management fees . Therefore, Grayscale's increasing holdings actually show that institutional investors and those wealthy people (the threshold for qualified investors in the United States is "individuals with a net worth of more than US$1 million or an income of more than US$200,000 in the past two years, and institutional investors with assets of more than US$5 million") have begun to really like BTC and buy it in large quantities.

In addition to Grayscale, major investment institutions have also begun to "build positions". According to statistics from Bitcoin Treasuries, there are currently more than 16 listed companies on the market holding BTC.

For example, just a search of the news in recent days will yield several:

“Guggenheim Partners LLC recently said it may invest up to 10% of its $5.3 billion Macro Opportunities Fund in a BTC trust”;

“Insurance giant Massachusetts Mutual recently disclosed a $100 million investment in BTC (BTCUSD) for its general investment account”;

"Ruffer, a British listed company, began to reduce its gold holdings in November and allocated $675 million in BTC, accounting for 2.5% of its assets under management, and called it a defensive investment";

…

You see, the coins mined by miners now are not enough for these institutions and funds to buy. When the major pension institutions in various countries take out a percentage, even 1% or 2%, to allocate BTC as a "defensive" investment, you can imagine what the BTC price will be like by then.

03 Public opinion - CCTV, Wall Street, financial KOL, entertainment KOL

In addition to the influx of institutional investors, public opinion on cryptocurrencies, especially BTC, has taken a 180-degree turn:

In our country, CCTV’s attitude is most obvious.

In November 2017, CCTV2 had a program called "When will the BTC madness end?"

In September this year, this news from CCTV2 went viral in the circle.

On Wall Street, JPMorgan Chase, which had previously criticized BTC the most, once issued the harshest criticism of BTC and the entire digital currency industry in 2017, calling it "a scam."

Now, JPMorgan Chase has issued its own JP Morgan Coin this year!

There is no need to say much about the KOLs in the financial circle. There are many BTC fans among them, and the number is increasing. This year, Robert Kiyosaki, the author of Rich Dad Poor Dad, tweeted: "The Federal Reserve printing fake dollars can't save you. Buy gold, silver and BTC to save yourself."

What’s even more exaggerated is that this trend has spread directly to the entertainment industry. First, JK Rowling, the author of Harry Potter, posted a message on Twitter, asking netizens to explain to her “What is BTC?” Then Arya, the famous heroine of Game of Thrones, asked directly on Twitter: Should I hold BTC? Both tweets attracted countless reposts and replies from inside and outside the circle.

This may be the first time in history that public opinion outside the circle finally has a generally consistent direction and atmosphere with that within our circle.

04 Big environment - US dollar liquidity, Paypal

The rise of BTC this year is not only due to halving, public opinion, and institutions, but also the power of the overall environment that cannot be ignored.

Dollar flooding: Since March 2020, the U.S. Treasury and the Federal Reserve have injected a total of US$ 17.3 trillion in base currency liquidity and economic stimulus plans into the market in just 33 weeks.

You have to know that the United States printed only 3.3 trillion in the 10 years from 2008 to 2018. The amount printed in the whole year of this year is equivalent to the amount printed in the past few decades.

In this case, the prices of almost all assets must rise, and no one can control them. If you pay more attention to the economy, you will find that it is not only BTC that is rising, but also condiments ("Suan Ni Hen", "Jiang Ni Jun", "Xiang Qian Cong" are back), food (such as corn futures), industrial raw materials and metals (such as copper, glass, thermal coal, electrolytic aluminum, iron ore...), you will find that the K-line trend of these things is not much different from that of Bitcoin. You must have felt it in your life, many things are rising in price, except wages...

In addition to the massive printing of US dollars pushing up the prices of all assets, Paypal and PornHub have also made an indispensable contribution to BTC.

Needless to say, Paypal is equivalent to directly opening a BTC purchase window for more than 300 million users worldwide . And more importantly, compared to the window or channel, it has given global retail investors a reassurance. No matter how it rises and falls before, BTC or the entire cryptocurrency industry has always been seen as an "alternative" or even a "scam" in the eyes of most people, but now it is different, Paypal can be bought directly! This impression and perception in the eyes of ordinary people who don't understand blockchain is completely different. With Paypal's endorsement, at least the hats of "scam" and "air" have been completely removed.

05 What has BTC become?

However, at the end of this BTC summary, I still want to remind you that you should know what you are investing in.

The original design of BTC is a peer-to-peer electronic cash system. In Satoshi Nakamoto’s later posts, BTC will also carry various possible transaction types through scripts in the future: escrow transactions, bonded contracts, third-party arbitration, multi-party signatures, etc.

These have nothing to do with the current BTC. The main function of BTC is value storage . Cash payment function and various types of smart contract transactions supported by scripts have basically nothing to do with BTC, which is why BCH and BSV forks were later created.

You can say that it was done deliberately by the Core development team and BlockStream, or you can say that it was the final result of free market competition and free choice. In any case, BTC is a store of value and electronic gold, which has almost penetrated into the consensus of everyone in the circle, and outsiders must have been exposed to this information when they first entered the circle.

From a technical perspective, after a hundred years, all BTC will be mined and there will be no more block rewards. If we rely solely on value storage, it will be impossible to generate enough on-chain TX. How can BTC computing power and security be guaranteed by then? Will we have to switch to PoS like ETH?

No one knows the answer. But as an investor, you should understand that as BTC is only 10 years old, is the answer 100 years later important?

BTC has transformed from electronic cash to electronic gold. Looking back in the future, this route may be right or wrong. But there is a saying that goes, the market is always right. Respecting and fearing the market may be an axiom that every investor must keep in mind.

However, no matter how you look at it, BTC in 2020 has a bit of the tragic heroism of Liangshan, who had to obey the government (Wall Street) in response to the amnesty... I wonder if you feel the same as I do?

Do you think Bitcoin can reach $1 million? Please leave your comments in the comment section.

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