Putting Bitcoin in Perspective and How to Trade in 2021
January 4, 2021
As we open up a new year of trading, one group of traders has clearly gotten off to a head start.
Before most have even taken down their Christmas trees, cryptocurrency traders have already pocketed billions in fresh capital.
Since the week before Christmas, Bitcoin’s (BTC) price jumped from $20,000 to more than $34,000. For any traders that took a break to spend with family, that’s a huge missed opportunity.
All of this brought in all-time highs and even more speculation.
Yesterday into this morning, those prices crashed hard, down below $29,000. Then, as if that too was a mistake, BTC rallied back up to about $31,150, as I write.
This whole series of moves, which represents billions of dollars created and lost in minutes, came upon no real news.
So, with all of this in mind, I decided to kick off 2021 with a bit of perspective on this giant opportunity.
How We Got Here
As it stands right now, Bitcoin carries a market capitalization of $584 billion. If it were a company with business operations and shares trading on a stock exchange, it would be the eighth largest publicly-traded company in the world.
It would be larger than Warren Buffett’s Berkshire Hathaway, Johnson & Johnson and even Walmart.
That’s quite a feat. In about one decade, Bitcoin grew from an idea into something bigger than companies many decades (and even a century in J&J’s case) in the making.
Of course, that doesn’t mean Bitcoin is just another shooting star destined to burn out.
Every company higher on the list is pretty new too. Apple and Microsoft have been around a bit. But Amazon, Google, Facebook, Tesla and Alibaba are all really from this century.
In that light, it does make sense for Bitcoin to be as large as it is, at least for now.
Each of those other even-pricier companies are likewise in the tech game in one way or another. 30 years ago, that list had none.
In fact, when most of these companies were still in their diapers, the largest company in the world was Exxon Mobil. Now, it doesn’t even make the top 45 in market cap.
The only logical piece of news that could have sent Bitcoin on this latest surge came from institutional investors. You know, the big money players on Wall Street.
Headlines like these started back during the rally in October. They have only accelerated since then, with the likes of JPMorgan chipping in about the influx of institutional “fear of missing out” (FOMO) investors into cryptos.
Speaking of which, it’s worth noting that even when Bitcoin corrects, this money doesn’t necessarily disappear. It heads to other “altcoins.”
The likes of Ethereum and Litecoin have tracked Bitcoin’s recent rise. And over at least the last few days, they even surpassed it.
This chart shows how much Bitcoin each Ether token could buy over the last week:
It’s clear from this that those Bitcoin traders taking profits over the last 24 hours did so through other cryptocurrencies.
That represents the first potential emerging profit idea of 2021.
Cryptocurrencies are going to remain a hot item. And the conversation will become how to play one off another, rather than just how hot Bitcoin itself is at any given time.
I’ll continue to scour opportunities here. While not a traditional business like those higher on the biggest company list, Bitcoin and other cryptos are here to stay.
To your prosperity and health,
Joshua M. Belanger
Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%
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