Bank Of America Calls Bitcoin 'Impractical,' And Crypto Community Has A Lot To Say About That

Bank Of America Calls Bitcoin ‘Impractical,’ And Crypto Community Has A Lot To Say About That

Benzinga

Bitcoin believers may have new reason to rejoice following the stimulus checks, but Ethereum has use cases on its side. U.S. President Joe Biden’s $1.9 trillion COVID Relief Bill has passed congress and stimulus checks are soon to be distributed. Early signs indicate recipients are ready to buy Bitcoin. A survey by Mizuho Securities showed that out of 235 participants who expect to receive stimulus checks from the COVID Relief Bill, 10% are interested in investing in Bitcoin. It’s a small sample size, but according to the survey investing in Bitcoin was a more popular response than investing in traditional stocks. If that kind of runaway popularity doesn’t move you in itself, consider that it could translate into $40 billion dollars running like a river directly from Biden’s $1.9 trillion stimulus package into Bitcoin. In the same week, Bank of America strategists suggested to Bloomberg that the price of BTC can be moved 1% for just $93 million. Bank of America strategists said in a note to Bloomberg on Wednesday: “Bitcoin is extremely sensitive to increased dollar demand. We estimate a net inflow into Bitcoin of just $93 million would result in price appreciation of 1%, while the similar figure for gold would be closer to $2 billion or 20 times higher. In contrast, the same analysis for the 20-year-plus Treasuries shows that multibillion money flows do not have a significant impact on price, pointing to the much larger and stable nature of the U.S. Treasuries markets,” If you take the survey and projections on face value, you could surmise Bitcoin prices will be moved by over 430% by the influx of $40,000,000 flowing in from invested U.S. COVID Relief money. See also: How to Buy Bitcoin (BTC) It seems reasonable to expect the 12 month Bitcoin bull run to continue, making it the crypto success story of 2021, right? DeFi Could Steal Bitcoin’s Thunder Before the Bitcoin bull run, DeFi was a strong competitor as the most dominant story in crypto. BTC’s new price heights have made the world’s most famous cryptocurrency again the center of attention. Bitcoin may always be the star of the cryptoworld and certainly has seen wide popularity and acceptance as a store of value, but Ethereum’s fortunes have generally kept pace with and possibly exceeded Bitcoin since the end of last year. Since December 2020, Bitcoin has risen from over $28,000 to more than $58,000 (up roughly 207%). Ethereum has traveled from more than $746 to over $1800 (up roughly %240). This week, Bank of America published a report titled “Bitcoin’s Dirty Little Secrets”. Excerpts from the report are unflattering to the world’s most famous cryptocurrency. Some of the statements coming from the report include: “The main argument for Bitcoin is not diversification, stable returns, or inflation protection, but sheer appreciation…” “There is no good reason to own BTC unless you see prices going up…” And they point out Bitcoin’s environmental impact is not desirable, stating: “we calculate that a $1bn dollar inflow into Bitcoin is equal to 1.2mn cars driven over the course of a year or 12.7mn barrels of oil.” They go on to extol the virtues of Ethereum, stating in the report: “Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain.” “DeFi does, however, show the opportunity which (distributed ledger technology) offers to finance. We believe that one of the best differences against being disintermediated by DeFi would be mainstream finance grasping these opportunities.” The Hopes and Fears of DeFi… As a digital currency, Bitcoin is simply designed with a more limited range of use cases compared to Ethereum which has smart contract capabilities. Arguably, Ethereum is the needed sequel to Bitcoin’s success. But how will their performances compare in 2021? “Bitcoin is the asset of choice for investors looking for a store of value investment characteristics in the cryptocurrency market. Success then is an ongoing price appreciation for this asset. And appreciate it will as long as investors continue to believe in the future of blockchain and cryptocurrencies. Ethereum, on the other hand, is not only a cryptocurrency. It is a network that supports smart contracts, Dapps (decentralized applications), and Defi (decentralized finance) projects. Investors that are looking to invest in up-and-coming tech should pay extra attention to this crypto asset. Over 41 Billion dollars is currently locked in DeFi projects on Ethereum blockchain compared with 4 Billion only 8 months ago. That’s what success continues to look like for Ethereum this year as well – ongoing expansion and innovation,” Tally Greenberg, Head of Business Development at Allnodes said. Phase 0 of Ethereum 2.0 – known as “Serenity” – launched on December 1, 2020. The hope for this upgrade to the Ethereum network is meant to address the needs for speed, efficiency, and scalability. “BTC is unlikely to be dethroned as the leading cryptocurrency, but the growth shown on the Ethereum blockchain is hard to bet against. They will naturally be compared ‘against’ one another although this makes little sense from a functional point of view since each is vying for separate and mutually beneficial use-cases. BTC’s ‘digital gold’ narrative is straightforward which is beneficial for attracting new users who may be intimidated by the apparently more complex and dynamically evolving ETH narrative,” Jason Peckham, Analyst at Invictus Capital said. It remains to be seen whether Ethereum 2.0 will handle the need for speed to support the DeFi range of use cases. “To me, Ethereum looks very attractive for long-term purchases, since it has a much greater technical potential for application than Bitcoin. The Ethereum blockchain programmability offers incredible growth opportunities. Bitcoin with its limited emission is rather a tool for saving and paying. Ethereum, in turn, is a tool for real usage of blockchain technology in third-party projects,” Dyanis Zabauski, CEO of Coinmatics said. But nevermind the actual real-world uses – can Ethereum compete with Bitcoin’s price performance? “I think it’s highly likely that ETH will beat BTC in terms of price performance in 2021… Ethereum has not fully realized the benefit from the growing popularity of DeFi services and NFTs. The exploding NFT market will directly benefit the value of ETH and I think that ETH has room to grow until its price encompasses the current excitement around NFTs,” Noam Levenson cryptocurrency writer and founder of Narrow Straight Writing. Some experts point to lagging performance as a reason to keep an eye on Ethereum, as we may see much more movement in 2021. “From a relative performance standpoint, ETH the second-biggest cryptocurrency is lagging Bitcoin up only 20% from it’s All-Time Highs vs Bitcoin 175%. In previous cycles, we have seen ETH catch up to BTC growth when BTC begins to correct because the profits taken from BTC are cycled into altcoins. Because ETH is one to two cycles back from BTC in its growth cycle it makes sense that return on the laggard would outperform the larger market cap of BTC from here,” Jake Wujastyk Chief Market Analyst at TrendSpider said. Until Ethereum 2.0 is a known quantity, there will be doubts about its ability to meet the already tremendous need for bandwidth to support transactions. “Ethereum might beat Bitcoin in terms of percentage gain this year. So far in 2021, ETH has increased by value by nearly 150%, while bitcoin has gone up around 90%. However, it is unlikely that ETH will take over in terms of market capitalization because bitcoin is the cryptocurrency with the most people behind it in terms of adoption and use. Many view bitcoin as digital gold and major corporations and institutional investors are adding it to their balance sheets. Ethereum is unscalable in its current iteration and acts more as a platform for decentralized applications than a store of value” Ben Weiss, president and COO of CoinFlip said. The launch of an improved Ethereum network is a testament to the strength of the project – but also represents change. Change conveys risk – while Bitcoin is simple, immutable, and constantly rising in value. “I am not yet convinced DeFi is as groundbreaking as its followers deem it to be. The idea of yield farming sounds a great deal like smart contract hot potato with investors jumping from project to project, hoping they aren’t the last ones to hold the bag,” Don Wyper, COO at DigitalMint said. Institutional investors have been key to driving the value of Bitcoin over the past 12 months. Will those same traditional investing giants turn their attention to Ethereum? “Eventually some institutional investors will acquire ETH in order to expand their crypto exposure, while others will trade the recently launched CME ETH futures (interest is still low with volumes 8% of the CME BTC Futures). Others will acquire ETH in order to utilize and experiment with some of the applications, particularly in DeFi. However, I don’t see much movement comparable to bitcoin in the near term,” Jason Lau, COO at OKCoin said. Conclusion As many respondents pointed out, comparisons between Ethereum and Bitcoin make sense from an investor point of view, but the comparisons don’t go much further than that. “BTC and ETH are different: BTC is a currency token while the ETH is a utility token. If mainstream institutional investors get into ETH, it would mean that mainstream institutions validate not only the current value of ETH, but also the Ethereum ecosystem as a whole. We have not seen signs of mainstream institutions being involved in Ethereum’s applications. So, in order for institutional investors to get on board, it would take more time and market education throughout 2021 and beyond,” Haohan Xu, CEO of Apifiny said It may take a shift in mainstream understanding – or even a mild learning curve – to get traditional investors who have tried the familiar Bitcoin to understand the power of DeFi, but it seems the mighty bull run market is raising all ships in the cryptoworld and institutional investors are already getting on board. “Institutional investors are already getting on board with Ethereum. Just recently, Grayscale, the world’s largest Crypto asset manager, purchased more Ethereum than Bitcoin for a change. Chinese public firm Meitu also grabbed 15K of Ether not too long ago. Galaxy Digital’s ETH funds raised 32 Million in less than a month. The launch of Ethereum Futures on the CME, the launch of Canadian ETH ETFs, and we’re just scratching the surface here… I anticipate a further surge of institutional investments in Ethereum. This is just the beginning,” Greenberg said. Cover image modified from photo by Mater Miliano from Pixabay See more from BenzingaClick here for options trades from BenzingaNFTs - From Digital Gold to Gold Foil Collectibles© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Crypto Mining Stocks Could Keep Beating Bitcoin in ‘Modern-Age Digital Gold Rush’

Bloomberg

(Bloomberg) – Wall Street hasn’t been this bullish about lithium in years.Investors are betting on a comeback in the metal key to rechargeable batteries as the world’s biggest automakers ratchet up their electric-vehicle lines. Miners once shunned amid supply overhangs have raised almost $3.4 billion in equity offerings in the Americas this year, data compiled by Bloomberg show. That’s seven times the total amount raised from 2018 to 2020.The change breathes new life into an industry that saw prices of its main product plunge by more than half from a record high reached in 2018. It also highlights a bullish wager that’s still available on the EV frenzy as sentiment toward electric-vehicle stocks, which surged last year, sours.Talks with investors and discussions on potential supply agreements with automotive-equipment and battery manufacturers “which were only in my dreams a year ago are now filling my calendar,” Robert Mintak, chief executive officer of Vancouver-based Standard Lithium Ltd., said by phone.Interest in the industry is resurgent as electric-vehicle targets set by big automakers and a change in the U.S. administration signal that a battery boom is finally gathering momentum. After the punishing three-year sell-off, prices of the soft silvery-white metal have started to rebound, and analysts including those at BloombergNEF expect further gains on rising demand and tight supplies of battery-grade lithium.A lithium price index compiled by Benchmark Mineral Intelligence jumped 32% this year through February, after plunging 59% from mid-2018 to mid-2020. The metal reached an all-time high in May 2018.Bigger PoolThe investor pool “is expanded to technology investors and others,” said Mintak, as major automakers’ determination to deploy hundreds of billions of dollars to electrify their fleets gives investors “that safety that there’s going to be a supply pinch.”The majority of the financing has been done by the world’s top two lithium miners – Albemarle Corp. and SQM, or Soc. Quimica & Minera de Chile SA, as it’s known formally – as they took advantage of their recent stock surges. Albemarle completed a larger-than-planned equity offering of $1.5 billion in early February, while Santiago-based SQM raised $1.1 billion in January.Junior miners, most of which have yet to produce substantial amount of lithium, are also attracting strong interest from investors. Take the case of Standard Lithium, which opened its first direct lithium extraction plant in El Dorado, Arkansas, in September, with the facility using a new technology that allows for a 90% lithium recovery rate. It raised C$34.53 million ($27.6 million) in an over-subscribed share offering in December. Investor interest was so strong that it had to turn away offers for more, said CEO Mintak.Lithium Americas Corp., which is developing the Thacker Pass mine in Nevada, raised a total of $500 million through two primary share offerings in October and January, respectively.Turning Tide“The tide is finally turning, and much faster than I thought,” Chris Berry, president of House Mountain Partners, an industry consultant, who said Wall Street hasn’t been this bullish on the lithium industry since 2017. “You see that with Lithium Americas being able to raise a total of half a billion dollars recently. This is for a pre-revenue company regarding lithium.”Sigma Lithium Resources Corp., which is developing a hard-rock lithium project in Brazil, had to upsize its private placement and increase offering price, which “says a lot about investor demand for lithium exposure, that asset, and that company’s vision,” said Berry.Junior lithium miners raised $529 million this year, Bloomberg data showed. That’s about $63 million more than the total amount raised from 2018 to 2020.Ford Motor Co. announced last month that its passenger-vehicle range will be all-electric in Europe by 2030. General Motors Co. plans to sell only zero-emission models by 2035. Volkswagen AG went further, announcing plans this week to build six battery factories in Europe and invest globally in charging stations, as ensuring scaling battery production has become a key in the EV race.Batteries make up about 30% of an electric car’s cost. And automakers around the world look to pivot to EVs, with hopes to get batteries at the cheapest price possible but also secure enough supply to meet those ambitions.Meanwhile, U.S. President Joe Biden has pledged to build back the economy after the devastation of Covid-19 with cleaner energy and a lower carbon footprint. The administration said in late February it would conduct a government review of U.S. supply chains to seek to end the country’s reliance on China and other adversaries for crucial goods.The election of Biden is “a very favorable signal to investors” as it boosted confidence that the switch to clean energy will accelerate, which along with existing favorable subsidies and regulations in Europe and China bodes well for raw materials needed for that energy transition, said Seth Goldstein, an analyst at Morningstar Inc. The U.S. is the second-largest EV market, after China.Andrew Bowering, a director at Vancouver-based American Lithium Corp., called the U.S. review on supply chains “huge” for the lithium industry as it shows the government’s realization that in order to meet clean-energy goals, it’s important for the U.S. to have a security of supply of raw materials such as lithium.“All of a sudden, after three years of downturn, you’ve got the price of the commodity starting to go up again and a change in the administration in the U.S. that’s pushing a green new deal and support big money going into the green automobile industry,” said Bowering. “That leads investors into the space.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

The CIO of a crypto hedge fund breaks down why bitcoin could rally as high as $400,000 in 2 years — and explains why he’s also bullish on DeFi and NFTs

Ari Paul is the co-founder and chief investment officer of crypto hedge fund BlockTower Capital.

Paul breaks down why he thinks bitcoin could rise to $100k-$400k over the next nine to 24 months.

He also shares the prospects and investment merits of decentralized finance and non-fungible tokens.

See more stories on Insider’s business page.

Like many investors in the traditional finance world, Ari Paul was dismissive when a smart friend emailed him in 2011 saying “bitcoin is interesting, take a look.”

“I responded definitively, bitcoin will never have value because value comes from either long-term historical appreciation of value like gold or fiat backed by guns,” Paul said in an interview.

That e-mail now serves as a humbling memory for Paul, who is the co-founder and chief investment officer of crypto and blockchain hedge fund BlockTower Capital.

Back then, as a derivatives trader at Susquehanna International and later a risk manager and portfolio manager for the University of Chicago’s then $7 billion endowment, Paul was skeptical of bitcoin.

Over time, as he began to learn more about bitcoin, blockchain, and the crypto space, he fell into the proverbial rabbit hole, but it was the resilience of the digital asset that finally turned him around.

After witnessing the shutdown of the black market Silk Road and the hacker-inflicted demise of the Tokyo-based crypto exchange Mt. Gox in 2013 and 2014, Paul bought his first bitcoin in mid-2014 for about $400 to $500 apiece.

“Bitcoin clearly was surviving and thriving in spite of that,” Paul said. “Even though the price was correcting, I thought maybe this is a good entry price. At least I’m not buying the top, I’m buying a 70% discount from the top.”

Bitcoin could rise to between $100,000 to $400,000

Paul’s experiences working as a trader and asset allocator explain why he was drawn to the world of cryptocurrency.

He said in traditional finance, trading has become extremely competitive where traders are constantly fighting over milliseconds of latency or the second decimal point of models.

However, crypto trading is still “very blue-ocean” and wildly inefficient.

“It’s a very level playing field where you are not competing against incumbents like a Citadel or Renaissance Technologies with many years and many billions of dollars of sunk cost into their hardware, infrastructure, and their expert networks,” he said.

From an investment allocation perspective, Paul was excited by the “100x” potential of the nascent asset class versus the traditional buy-and-hold investing approach used by university endowments, for example.

Aside from its investment merits, he is also attracted to the decentralized and defensive nature of bitcoin in that it could help individuals hide their wealth from the reaches of totalitarian regimes.

“This is a technology that empowers the individual against an army or a state or a mob,” he said. “Someone with a desktop computer or an iPhone can encrypt communications in a way that the state government can’t read. Bitcoin is the money version of that and it empowers people living under a totalitarian state to flee that country with their wealth.”

The appealing attributes of bitcoin have sent the digital currency to as high as $61,000 a week ago from $20,000 last December, but they have also contributed to its notorious volatility. Bitcoin is hovering around $58,500 in Friday afternoon trading.

Paul believes that the volatility is a natural byproduct of bitcoin’s growth phase.

Specifically, as more institutional investors such as Morgan Stanley and BNY Mellon come to embrace bitcoin, the bitcoin bulls would bet on the price of the digital asset and sometimes in a levered way, leading the price to appreciate dramatically.

The flip side of that is once the price goes down a little bit, investors would rush to liquidate, causing a fast and sharp correction in price.

“As long as bitcoin is still in this growth phase and until it reaches maturity where basically the entire world is choosing actively to be long it or not,” he said, “it’s probably going to keep following this curve of extreme volatility as it goes higher.”

Because of bitcoin’s wild fluctuation, instead of setting a specific price target for bitcoin, Paul is estimating that the digital token will rise to between $100,000 to $400,000 in the current crypto bull market that is likely to last another nine to 24 months.

Bullish on DeFi and NFTs

BlockTower Capital applies almost every traditional hedge fund strategy to the world of crypto, which means betting on catalysts, making event-driven trades, or betting on which protocols and projects could accrue usage and value over time, according to Paul.

As a result, he is also bullish on two of the hottest trends in the crypto space right now — decentralized finance and non-fungible tokens.

At the most basic level, DeFi is comprised of decentralized exchanges and decentralized lending, which together have locked in billions of dollars of value.

On the exchange side, the bull case has become extremely compelling since Robinhood and other brokerages decided to restrict retail investors from buying GameStop shares after its short squeeze-fueled run-up, Paul said.

Even before that, the laborious process of transferring assets among different exchanges, whose closure during the weekends adds to the inefficiency, has made the modern exchange infrastructure feel “very outdated.”

“What email was to communication — instant, free, global, 24/7 — bitcoin is that for money; you could transfer it anywhere in the world 24/7,” he said. “And DeFi is email for exchanges, for lending, and for banking.”

As for NFTs, despite the skyrocketing interest in digital art and sports collectibles, Paul thinks that the broad concept of NFTs can be applied to everything from real estate ownership to equity and debt ownership.

But the NFT frenzy among internet-native millennials and Gen-Z is worth noting. In a world where fake goods and fabricated items can look as good as the authentic ones, a cryptographic signature that proves the authenticity and exclusivity of something is “incredibly important,” Paul said.

“It’s really tough to be comfortable buying a $40,000 watch when I know that I can’t tell the difference between that watch and a $2,000 knock-off even on close inspection,” he said. “If I can’t tell the difference, how do I justify paying the extra $30,000? So I think cryptographic authenticity and provenance are also meaningful improvements.”