By Jasper Hamill
It’s been an up-and-down week for Bitcoin which saw it soar to an all-time high of $69,000 before taking a $6,000 nosedive. But the bulls are not yet back in their shed, because bitcoin boosters have been out predicting a wonderful future for the world’s priciest cryptocurrency.
Michael Saylor, founder and CEO of the business intelligence company MicroStrategy, believes that Bitcoin is never, ever going to stop going up in value.
“If you look at the world currencies, they [have been] inflating at 10% or more a year for the past 30 years, maybe as much as 14% a year,” he told CNBC. “You can expect they’ll keep inflating for the next 30 years. And so Bitcoin, measured in currencies of the world and in currency derivatives, it’s just going to keep going up - with volatility, albeit.”
He added: “Bitcoin is the dominant digital monetary network, and because it’s dominant and because it’s fixed, it means that it’s the most reliable, highest-integrity, scarcest thing in the financial universe… Bitcoin is going up forever.”
OMG! “Bizarre Activity” Spotted
One of the cryptocurrencies which does not look like it will keep on going up ad infinitum is OMG, the token of the OMG Network. It suffered a brutal plunge this week which saw its price crash by one-third, prompting a crypto monitoring account called @100EyesCrypto to tweet out a “bizarre activity alert”.
The woe behind the OMG plunge was the announcement of a free “airdrop” of a new coin called BOBA. On November 19th, 2021, everyone that holds OMG tokens on a “snapshot” date of November 12 will be given BOBA tokens on a 1:1 basis. When BOBA announced that the snapshot had taken place, the price of OMG fell by more than 25% to $12.70.
The plunge has been described as a classic example of “buy the rumor, sell the fact” trading in action. This phrase refers to a trend often seen on the stock market in which traders buy up assets in anticipation of a positive event - then sell up after this event has taken place.
The Silver Flippening?
Digital asset hodlers trade in the unseen and insubstantial. But out in the “real world”, investors still like to buy and sell precious metals. Or at least they do right now.
If the price of Bitcoin keeps on growing, it will soon cause a “flippening” of epic proportions. Traditionally (by which we mean for the past few years - which is a long time in crypto) the flippening has referred to a hypothetical moment in which Ether overtakes Bitcoin as the world’s biggest cryptocurrency.
We don’t know if this will ever come to pass, but one event which looks extremely likely to take place soon is the great silver flippening. Currently, the market cap of silver is just over $1.4 trillion, compared to roughly $1.2 trillion for Bitcoin.
Bitcoin developer Sylvain Saurel believes this epochal event will take place in November 2021. This week, he wrote: “Once Bitcoin’s market cap has surpassed that of silver, it will then be time for Bitcoin to move towards the great goal of the decade that has just begun: to surpass gold’s market cap.
“Bitcoin is a much better store of value than gold in a future world where everything will become digital. Yet only a tiny fraction of the world’s population has opened its eyes to the incredible characteristics of Bitcoin.
“Bitcoin has invented digital scarcity. Its supply will remain limited to 21 million units no matter what. As long as you have the private keys associated with your Bitcoin, no one can censor you in your use of Bitcoin. No one can even take away the fruits of your labor stored in the world’s most secure decentralized network.”
Has Bitcoin Got The Midas Touch
And if you’re wondering about gold, well, New York Magazine has asked whether it is being “killed” by Bitcoin. This year, inflation has caused price rises in all major commodities, with crude oil up by more than 100% over the past year and everything from coffee to copper rocketing skywards. However, whilst Bitcoin has shot up in value by almost five times over the past 12 months, gold has remained stubbornly stagnant and actually dropped by -1% in the same time frame, according to a tweet from Charlie Bilello, founder and CEO of Compound Capital Advisors.
So what’s going on?
“The most popular theory right now in financial circles is that goldbugs have underestimated the competitive appeal of cryptocurrencies,” wrote New York Magazine journalist Kevin T. Dugan. He continues:
“Bitcoin, prized by libertarians and Occupy Wall Streeters alike for circumventing government control, has many of the same attributes as gold but without the need for vaults, jewelers, or physical mining operations.”
Of course, we don’t know what the future holds for Bitcoin - or any other cryptocurrency - a fact hammered home when every week we hear conflicting news about its mainstream future.
In Sweden, financial regulators have called for a ban on Bitcoin mining due to its environmental impact. However, back in the US, Senator Ted Cruz has reportedly been discussing the possibility of setting up entire crypto states where cryptocurrencies can be used for everyday transactions. The first possibility would obviously be very bad for Bitcoin (and pretty dreadful for the entire EU), whereas the arrival of crypto states would be a huge boost.
We recently saw the launch of the first Bitcoin Exchange-traded Fund (ETF) spark an all-time high, which has been followed this week by rather more negative news from the United States Securities and Exchange Commission (SEC), which rejected an application by asset manager VanEck Investments to launch its own Bitcoin ETF.
It looks more or less certain that crypto’s journey towards the mainstream will continue, but a few unfortunate bans could halt this historic process in its tracks. So right now, it’s a case of watch this space… which we’ll continue to do in next week’s roundup of news from the blockchain.
