In mid April Adamant Capital published an important paper, “Bitcoin in Heavy Accumulation”. It has been publishing these reports for some years now and as it says in the introduction, each time they did so was when Bitcoin was down 80% from an all-time high. In April 2019 it is 75% down from its 2017 high, and this is a good point for investors to enter the market according to Adamant Capital.
According to Adamant, Bitcoin is in an “accumulation phase” right now and its researchers expect BTC to trade at a range between $3,000 and $6,500 until there is a new bull market that “permanently cements the denarian cryptocurrency as a multi-trillion dollar asset.”
The market does appear to be picking up momentum and while it is still experiencing some slight setbacks every few days, the outlook feels brighter. But what is going to drive the price of BTC for the next five years? Adamant Capital suggests there are three key drivers that are worth our attention.
Hold on to decentralisation
Bitcoin must hold on to its promise of a decentralised ‘currency’. But, it also needs to work on its scaling and add more protocols. The Adamant report states, “Bitcoin stays close to its roots of being a lightweight, robust, and universally accessible protocol.” Watch out for Lightning Network developments as well as Taproot and Schnorr signatures that will “improve privacy and smart contract functionality on the network.”
Bring BTC closer to the financial industry
Adamant Capital point to the “financialisation” of BTC and how this may drive the price. For example, in 2017, LedgerX launched a physically settled bitcoin futures platform and CME launched its own bitcoin futures product. In 2018 we have seen partnerships between the New York Stock Exchange and Blockstream o create a cryptocurrency data feed and announced their bitcoin futures platform BAKKT and in 2019 Fidelity Digital Custody, Nasdaq bitcoin futures, and a crypto asset custody solution from Northern Trust are all expected to launch. These are just a few examples and not the whole picture. The report says: ““Bitcoin’s qualities of political neutrality, unparalleled security, globally accessible liquidity, and predictable financial policy are provably improving,” and adds, “As it matures, we expect for Bitcoin to disrupt the $100 trillion investment vertical of Liquid Store of Value, and become a globally used digital gold and reserve asset.”
And the last driver is the millennial generation. According to the report, this is the largest growing demographic in the world, whose disposable income is expected to supersede all other generations by 2029. This generation witness the effect of the banking crash and have also grown up with technology, so it is easier for them to get their heads around the concept of cryptocurrencies, and Adamant Capital suggests they will boost Bitcoin adoption and thus its price.
The report concludes by saying, “Supported by over 10 years of infrastructure development, we believe the stage is set for mass market adoption in the coming 5 years.” And, for those of you thinking of investing, it also suggests that this phase is an important moment of opportunity, because it won’t be long before BTC is widely recognised as a “portfolio hedging instrument and reserve asset, and will begin making significant inroads as a payment network.”