Thursday, January 27

Why did Bitcoin “stuck” at $59,000 and when will the next high occur?

The human being is addicted to round numbers, after all, our brain was “programmed” to identify dangers and keep us fed. If you ask anyone trained in memorization, you’ll find it easier to keep an image than numbers or information.

In short, there is nothing special about the US$59,000 number, however, its market capitalization, that is, multiplying by the 18.88 million coins already issued, results in US$1.11 trillion. Again, there is nothing special about this figure, except that it represents exactly 10% of the $11.1 trillion in gold.

gold capitalization

Another curious fact: the funds listed on the gold stock exchange have a market value of US$ 200 billion, according to data from GoldHub. Bitcoin funds and ETFs are left with US$ 50 billion, according to the report by CoinShares.

After all, should Bitcoin be worth more because of this?

No. This comparison is unfair, as banks, countries and international bodies keep physical gold in storage, so they don’t need ETFs and funds for that. That’s $1.75 trillion supposedly stored that way. This is because these values ​​are not audited.

At the other end, it is possible that governments, in addition to El Salvador, have large amounts of Bitcoin, but this is not disclosed, at least officially.

What’s the next “target” for Bitcoin?

Some point to $69,000, the all-time high of 10/Nov, as it equals silver’s market capitalization. However, I don’t see the slightest sense in this, as this metal is not used as a store of value.

So I believe the next stop is at $1.9 trillion capitalization, touching Amazon and Google. Coincidentally, $100,000 for every Bitcoin, so there are two reasons to hold onto that level: newspaper headlines and the “round number”.

When should the next high take place?

You should ask Jerome Powell, chairman of the Federal Reserve, that. The orange line is the US base currency, on the left scale. On the other side, we have the market capitalization, both in billions of dollars.

The monetary base is the deposits of banks in the FED, in addition to banknotes and coins in circulation. If this trend continues, everything indicates that when this index reaches US$ 8 trillion, Bitcoin will have to seek US$ 100,000. No regression or similar was done, just a graphical analysis.

If we maintain this frantic pace of printing money, believe me, before the end of 2022 the US government will hit that target. Believe it or not, this relationship with Bitcoin price is not linear, but exponential: the more disbelief in the dollar, the more people seeking protection against inflation.