Bitcoin (CCC:BTC-USD) will not give up its 46.7% market dominance anytime soon. This is the market share that Bitcoin has according to Coinmarketcap. You can see this in the numbers. As of June 23, the total crypto market had a market capitalization of $1.447 trillion. Bitcoin, the single largest crypto, has a market value of $630.75 billion according to Yahoo! Finance.
And no wonder, since Bitcoin has had a stellar year so far, despite dropping 48.7% from its peak on April 12 of $65,503 to $33,630, as of June 23. Year-to-date it is still up 14.5% from $29,374 where it ended on Dec. 31, 2020. This is about the same return you could have made in stocks so far this year, on an index basis. For example, the S&P 500 is up just 14.9% year-to-date, according to Google Finance.
Here is the main point: BTC is likely to rebound by the end of this year. It will probably recover a good deal of the ground it has lost in the past two months. It is not going to lose its dominance in the crypto market anytime soon as a result, given its massive popularity in the blockchain world.
Let’s look at some reasons why.
Bitcoin’s Upside
Recently a well-known hedge fund manager, Paul Tudor-Jones, argued that if all managed fund assets allocated 1% of their funds to Bitcoin, the effect would be massive. There are $78.9 trillion in managed assets, so 1% would be $789 billion, which is 25% above its value today.
But that is not the point. The price of BTC would move much higher from this buying. For example, even a 0.5% allocation would have a “multiplier effect” on BTC’s price. For example, if $400 billion in new BTC token buying hit the market, it would crowd out other buyers. This would effectively multiply the upward spike in the price of Bitcoin.
Not that I think this will happen anytime soon. But it could occur over the next several years on a reduced basis. At some point, there will be a tipping point. There will come a point where investable assets will need a small stake in Bitcoin just to appear to be with it.
Goldman Sachs just came out with a negative report on Bitcoin, according to Barron’s. They argue that retail investors should avoid it. Another analyst at Deutsche Bank said Bitcoin’s value is based on “wishful thinking.”
Just like a contrarian signal, this is probably a really good buying trigger. Analysts rarely get this kind of long-term move like this right.
Moreover, they are simply late. If they had reported this in April, when Bitcoin was at its peak, maybe there I would believe the Goldman Sachs report. But now it looks like the crypto is at or close to its trough.
What To Do With Bitcoin
The fact is that many analysts are now saying that “Bitcoin’s bull market ‘may have come to an end.’” That was the conclusion of a recent investment research report by MRB, an investment research boutique. Their arguments do make some sense. But they are not likely to prevent the cryptocurrency from rebounding once the market recovers from its summer doldrums.
So, in effect, these negative reports, which are the consensus now, tend to act as a sort of positive indicator for BTC’s upside. Look for the crypto to move higher the more these “research” reports conclude Bitcoin’s upside is limited.
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On the date of publication, Mark R. Hake owned long positions in Bitcoin. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
