We cannot end the year without talking about Bitcoin. After all, this month ends the longest streak of monthly gains since the middle of 2019.
There is so much to say about Bitcoin that an article like this one is impossible to cover. Some simple yet important things are worth mentioning and considering for 2021 traders/investors.
Bitcoin in 2021
This is not a forecast about Bitcoin’s price performance in 2021. Instead, it is a look into what might influence the price of Bitcoin – especially since the Security and Exchange Commission (SEC) filed a lawsuit against Ripple.
What do the two have in common? Apparently, nothing.
The SEC announced on December 22nd that it had filed a complaint against Ripple Labs Inc. and two of its executives. The allegations are that they raised over $1.3 billion through an unregistered securities offering. Since the announcement, the price of Ripple collapsed. Rumours circulate before the SEC announcement, so the price of Ripple collapsed from 0.58 on December 20th, to 0.20 and below in the days that followed.
A very good question is – what does this have anything to do with Bitcoin? Apparently, nothing – with the exception that Ripple is one of the most popular cryptocurrencies in the world. On November 24th, it traded close to 0.79 – one month later, it fell below 0.21 and even below 0.17 on December 29th.
Everyone assumes Bitcoin is legit for the simple reason that it is scarce, and the model predicts fewer and fewer coins available. Yet, not many people know that most Bitcoin is owned by a few wallets – less than 10% of all wallets own all the Bitcoin available.
I am not saying Bitcoin is doomed, just that it is the first time we see the SEC laying its power over a cryptocurrency. This time it is Ripple, but is everyone sure that the SEC cannot find something…anything, against Bitcoin?
Only raising a question like this is enough to receive plenty of negative feedback on the financial community. You see, most retail traders are long Bitcoin for $100k and beyond, without considering anything else. For example, if BTCUSD reaches 100k, what would it mean for people earning in USD?
That said, a huge number of individuals and institutions believe that Bitcoin is here to stay.