Bitcoin is sitting around $11,000 after reaching nearly $14,000 a week ago. Popularity of crypto is increasing, sentiment is improving, and prices are likely to continue to trend higher.
Facebook’s Libra is likely opening the door for other major corporations to introduce their own fiat-backed digital tokens. This is extremely bullish for Bitcoin and other systemically important altcoins, as Facebook’s Libra points to the likelihood of a much more digitized and tokenized future. Popularity for digital assets is increasing once again and demand from retail and institutional interest is likely to continue to drive demand and prices higher going forward. I fully expect this Bitcoin surge to take prices to $50-100K per Bitcoin in the next 12 months.
Facebook’sLibra coin is a big deal for the cryptocurrency industry, but it does not pose a threat to Bitcoin or any other decentralized coin. The Libra is much different from Bitcoin in many respects. Firstly, it is essentially a stable coin, much like Tether or TrueUSD or any other coin backed by fiat currency that is designed to reflect the value of the dollar or any other fiat currency it is backed by.
When someone buys Libra tokens, they are essentially buying a stable coin backed by a basket of major currencies, managed by Facebook. This should enable users to use the Libra similar as to how they would use dollars within Facebook’s ecosystem, but in a more efficient way, only a digital token can offer. Libra is centralized, meaning that it has a third-party, Facebook, responsible for managing the assets backing the coin. This is much different from Bitcoin, as Bitcoin and other traditional transactional and store of value coins are true peer to peer cryptocurrencies, independent of any third-party involvement. Bitcoin and other transactional or store of value coins are volatile, can increase greatly, or fall in price, while the Libra is designed to be a stable coin.
Facebook is a major, global corporation, and is one of the first to demonstrate that it believes cryptocurrencies can and will likely be widely used going forward. The Libra should make transactions more efficient, convenient, and probably less costly for Facebook, thus potentially increasing the company’s profitability. It is likely that Amazon, Apple and others to introduce their versions of the Libra going forward.
The widespread use of digital tokens like Libra and any others that come down the line should help propel the entire crypto industry into the mainstream. However, it is important to remember that any tokens coming from major corporations that will mimic Libra will still be fiat-backed stable coins designed to improve overall corporate efficiency.
Therefore, the Libra and other corporate-backed tokens coming down the line are likely less of a threat to the decentralized digital asset industry but are more of legitimizing component that should help propel Bitcoin and other major altcoins into the mainstream. With only about 20 million Bitcoin ownersworldwide roughly 99.95% of the applicable global market is untapped. The world’s M3 fiat money supply is over $90 trillion, dwarfing Bitcoin’s market cap of $200 billion by a magnitude of over 450 to 1.
At 1% of global fiat market share, we would see Bitcoin at over $50K per token. As the world becomes more digitized, Bitcoin becomes more popular, gains market share, its price will continue to trend higher long term. Moreover, Bitcoin has a set supply of only 21 million tokens, while the world’s fiat supply can be inflated indefinitely.
If we have an economic downturn, central bank “stimulus” creates fiat out of thin air. More money printing equates to inflation and devaluation of fiat currencies through the expansion of the money supply. Bitcoin is immune from inflation and is even a better hedge against inflation than gold, as it has a capped supply, whereas gold can be mined indefinitely. As popularity and sentiment continue to improve, Bitcoin should experience robust demand, and prices should continue to climb higher over the long term.
Money isn’t everything, but it certainly keeps you in touch with your children.