Bitcoin to $200k in 2021?

Why Smart Money Sees Bitcoin's Rise as Inevitable, Willy Woo's Cryptoeconomics, What the Whales Are Doing, and 7 Recommendations

Bitcoin, Ethereum, DeFi, Blockchain, Web 3.0, and the future of money

Published weekdays on Substack and TelegramTuesday, January 26, 2021 | Issue 5 | 506 SubscribersPublisher: Ryan Allis

Graph of the Day: Bitcoin Cryptoeconomist Willy Woo Predicts a $29K Price Floor, Then A Major Bull Run Up to $200k BTC By Year End

Tuesday Analysis - Why Willy Woo is Bullish on Bitcoin (WWWBOB)

  1. Hey we’re 5 days into publishing this newsletter and are already over 500 subscribers via Telegram and Substack. That’s pretty cool. Thanks for sharing it with your colleagues, friends, and family as we document the creation of an open and fair monetary system that works for everyone and allows regular people around the world to save their money in currency that doesn’t keep getting devalued each year due to variable and unpredictable supply.

  2. In this issue I hope to explain in as simple terms as possible why Crytoeconomist and Investor Willy Woo thinks the price per Bitcoin is going to $200k per coin in the next year based on the increasing rate of inbound capital flows into the cryptocurrency. Willy is a partner at Adaptive Capital.

    1. He publishes a paid Substack newsletter here. I encourage you to sign up if you want very granular bottom and top predictions based on on-chain analysis built upon a capital inflow/outflow model.

    2. Willy’s background: “I'm no stranger to tech, I first heard the word "Bitcoin" within my startup. It was 2013 and I was compelled to to buy my first coin; 1 BTC. By 2014, on the island of Bali where a burgeoning Bitcoin community was very much alive, I fell down the rabbit hole. By 2016 I'd started full time research into the space, funded only by my own curiosity. Since those early beginnings I've written for Forbes and CoinDesk, even gaining a top-5 analyst positioning in 2017. My tweets now find their way to third party media articles. I appear semi-regularly on webcasts and speak at conferences on my work analysing the structure of the crypto-asset markets.”

    3. While I am a paid subscriber, I’m using the charts from his public Twitter posts for this newsletter

  3. For those just getting started understanding Bitcoin, read this incredibly clear article by 19 year old William Clemente called “Hyperbitcoinization: The Path To Becoming The World’s Dominant Form of Money.”

  4. And when you really want to go deeper, read The Bitcoin Standard by Saifedean Ammous

Ok, now for the analysis. Here’s why Willy Woo thinks BTC is going to $200k per coin in the next year.

  1. First, Willy notes that with more and more hedge funds, public companies, university endowments, pension funds, sovereign wealth funds, Central banks, and ultra-HNW individuals buying into BTC that we are at the early stage of this cycle. The large holders are buying the dips, showing that smart money is making long term bets the price will rise.

    1. “Buying by sophisticated long term holders continues unabated, particularly by whales. It’s a strong indication we are still very early in this bull market.”

    2. “Oh look. Suddenly there's a whole bunch of newly minted whales.... holders of 1000BTC+. (I'm seeing more whales coming in on this dip)”

  1. Second, Willy points out that based on the on-chain analysis model he has built with both a minimum price (in pink) and a maximum price (in green), he is seeing, “Upward bendy motion detected on Top Cap model. Now on track for $200k minimum.”

  1. Third, Willy points out:

    1. “Coins are moving off the market to very strong holders, the ones that keep accumulating without selling. (RED)” The more red you see, the more people are HODLing.

  1. Fourth, Willy explains that we have likely reached the bottom for this mini-cycle as the Spent Output Profit Ratio Chart shows. When it is below zero, investors would have to sell at a loss to exit their position, which rarely happens en masse. Since it’s now near 0, he thinks we’ve bottomed out and the next leg of the bull run is coming.“And we have a touch down! A full on-chain SOPR reset. Coins moving between investors per hour (24h MA) no longer carry profit on average. To push SOPR lower, investors would have to be willing to sell at a loss.”

Source: Glassnode

Here is his overall conclusion:

  • “Definitely deploy now if you're talking about HODLing through this bull market. So little difference when the top [for this cycle] is $200k-$300k. Been seeing so many people wait for the dip, as it runs away again and again.”

There you have it… WWWBOB.

FWIW, this analysis runs pretty much in line with the Plan B Stock to Flow Ratio Analysis which has essentially predicted the price of BTC within a very small variance band going back to 2018 based on the timing of halving cycles, which reducing mining supply by 50% every four years (which is in part why BTC cycles tend to run in 48 month periods). This model predicts we will be in a major bull run until August 2021 and then trade flat for three years before resuming the bull run again after the May 2024 halving.

Plan B writes, “If history is any guidance and #bitcoin continues its current trajectory, BTC could be $100K somewhere between April and September”

What do I think?

Yes, I think we are in for a run up the rest of 2021 to $100k to $200k due to institutional demand, then flat for 2022-2023 due to broader stock market turmoil (inflation rises, interest rates go up, debt no longer cheap, QE slows down, overvalued stocks come back to Earth from a 35 PE/10 ratio back to 20 PE/10) causing investor liquidity issues, then a major run from $200k to $500k between 2024-2025 after the next halving event. We shall see! IMHO, definitely worth having 5%-10% of your total net worth (or balance sheet) invested into. There just isn’t a better inflation hedge, and with the amount of money being printed in 2020 and 2021, inflation is coming in 2022, which will raise interest rates, reduce cheap money, and soon enough end the stock market bubble. I’d much rather have $10k in BTC and ETH than in a company with a P/E ratio above 50 right now. Always remember that the value of a business always reverts in time to the present value of future cash flow.

Lastly, it’s important to take all these projections with a grain of salt. There will be lots of volatility along the way, and it’s hard to market time. That’s why I prefer to make an upfront investment to get in, and then dollar cost average over time. If you hold for 10-15 years, there’s a high probability you will do very well, without any of the sleepless nights.

While I believe the intrinsic value of 1 BTC is about $550k (to make Bitcoin equivalent to the $12T total market cap of gold), no one knows how long it is going to take to get there and whether it will take 1 year or 20 years. Further, there are always risks like Quantum Computing that will require cryptographic improvements to get around and that other, more flexible, blockchains might be better suited to adjust to.

Daily Podcast Summary

Today’s episode looks at five different topics:

  • Bitcoin whales kept accumulating during last week’s dip

  • Jim Cramer advises Powerball winner to put 5% in bitcoin

  • Previewing the first FOMC meeting of the Biden Administration

  • Earnings week on Wall Street looks good for Big Tech

  • An insider’s look at the state of crypto venture capital (it’s hot)

My Big Picture Crypto Recommendations

Here are my even big picture recommendations for anyone getting started in crypto investing.

  1. Never invest an amount you can’t afford to lose.

  2. Be careful investing on borrowed money (margin). We don’t recommend it until you’re a professional.

  3. Best bet is to buy and hold for the long term (10-15 years) and not attempt to time the market.

  4. We recommend Coinbase for those investing small amounts (<$10K) and the lower fee Coinbase Pro, Binance, or Kraken for those investing larger amounts ($10k+).

  5. Track market caps here.

  6. You can see which blockchain tech is getting the most transactions fees here.

  7. For maximum long-term capital preservation, we recommend keeping 80% of your holdings in BTC and ETH (“The Blue Chips”), and no more than 20% in alternative blockchain tokens (<$100B market cap). For the alternative asset exposure, here’s what we like:

    1. We like these blockchain techs: DOT, ADA, ATOM, COSMOS, HBAR, SOL

    2. We like these DEX Exchanges: UNI, SUSHI, 1INCH

    3. We like these DeFi protocols: AAVE, COMP, SNX, YEARN, CRV, BAL, REN

    4. We like these Oracles: LINK, BAND

    5. We like these Web 3 Tools: THETA, GRT, FILE

    6. We like these Insurance Tools: WNXM

    7. We like these Payment Tools: EGLD, XLM

Digital Event Feb 3 - Bitcoin For the Balance Sheet

Bitcoin for the Balance Sheet - Microstrategy CEO Michael Saylor is hosting a February 3 online event for CEOs and CFOs interested in holding bitcoin on their Corporate Balance Sheet.

  • “Last year, we became the first publicly traded company to adopt bitcoin as a primary treasury reserve asset. Forward-thinking organizations have taken note and reactions have been overwhelmingly positive. We are now taking the opportunity to share our learnings and methodologies, as well as bring together bitcoin luminaries and corporate strategists to discuss how others can benefit from this trend. Join our Bitcoin for Corporations landmark event to understand the array of considerations of this new strategy.” - Michael Saylor

The People We’re Following Closely

If You’re Just Getting Started With Crypto, Start Here

The Coin Times: Tracking the most important blockchain stories of the 2020s including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Just my opinions. Not intended as financial advice. Please do your own research.

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