At the end of 2020 and the beginning of 2021, bitcoin has opened a new round of bull market. The peak of $19800 in the bull market in 2017 has been easily exceeded. At present, the price of bitcoin has reached $50000 and its market value has exceeded $1 trillion.

Even though there are thousands of cryptocurrency types, emerging applications are springing up, such as defi, NFT, etc., but the position of bitcoin in blockchain applications is unshakable.

Compared with other blockchain applications, bitcoin is the only successful blockchain application so far. Not only that, bitcoin is a complete and completed product, that is to say, it hardly needs further development. Bitcoin has a clear application scenario - Digital gold, clear mathematical model, the only thing to do is to continuously increase market share. In contrast, although other blockchain applications have very broad and exciting application scenarios, they are still in the process of continuous development, so they will also produce more uncertainty.

With the increasing scale of bitcoin, the acceptance of bitcoin is also increasing.

At present, the market value of bitcoin has exceeded one trillion US dollars, equivalent to the market value of a large cap stock. And because it is 24-hour uninterrupted trading, so the amount of its single day trading has far exceeded the single day trading volume of apple, Tesla and other large cap stocks. According to the analysis of ark invest, the daily trading volume of bitcoin will exceed that of the U.S. stock market within four years and that of the global foreign exchange market within six years.

Many listed companies have a lot of cash on their balance sheets. As the Federal Reserve continues to print money, the US dollar has entered the depreciation channel. More and more listed companies are considering to convert some of their cash into bitcoin to hedge against the depreciation of the US dollar. In January this year, Tesla purchased $1.5 billion of bitcoin. In addition, square and MicroStrategy also allocated bitcoin as part of their assets last year. According to ark analysis, if S & P500 listed companies convert 1% of their cash into bitcoin, the price of bitcoin can rise by $40000. If the ratio is 10%, the price of bitcoin will rise by $400000.

In addition to replacing the cash of listed companies, bitcoin is very suitable for portfolio diversification because of its low correlation with other traditional assets such as stocks, bonds, gold, oil, etc. If the investment institutions take bitcoin as a part of their investment portfolio, it may have a significant impact on the price of bitcoin.

According to the analysis, the price of bitcoin will be increased to US $55000, and if the allocation rate of art in bitcoin is increased to US $60000, the price of bitcoin will be increased to US $55000.

Is bitcoin too expensive? For many people, the current price of bitcoin is close to US $60000, which is outrageous. However, if bitcoin is really used as digital gold, the market value of bitcoin is one order of magnitude lower than that of gold. If bitcoin can really reach the market value of gold, then the price of bitcoin should be $500000. Of course, this may not happen for a long time to come.

In fact, the biggest problem with bitcoin right now is that it's too cheap.

One of the important reasons why many institutions don't come in is that bitcoin's plate is too small. If the market value of bitcoin can reach the market value of gold, I believe that more institutions will take bitcoin as a part of asset allocation. Whether you understand the principle of blockchain or not, and whether you believe in the future of blockchain or not, bitcoin has been "declared dead" for countless times since its birth, but it has reached a record high again and again. This is a fact that cannot be ignored.

(2021-4-12)