A Bullish ($1 Million) Bitcoin Forecast as Year of Ox Begins

Editor’s Note: Happy Chinese Lunar New Year! First Mover will not publish on Monday, February 15, which is Presidents’ Day in the U.S. Cryptocurrency markets will be open, as they always are.

Bitcoin (BTC) was lower, after pushing early Friday to an all-time high price of $48,925, based on CoinDesk pricing. 

Market activity was quiet due to the Lunar New Year celebrations across Asia and the upcoming Presidents’ Day holiday in the U.S. on Monday, according to Craig Erlam, senior market analyst for the foreign-exchange brokerage Oanda. (It’s the Year of the Ox, by the way, which is seen by some traders as bullish, in case you missed the story last week by CoinDesk’s Muyao Shen.)   

In traditional markets, U.S. stock futures were lower, with one investor telling Bloomberg News that “investor exuberance has somewhat waned.” Gold weakened 0.5% to $1,817 an ounce. 

JPMORGAN FEELS BITCOIN BURN: JPMorgan employees hounded senior trading-division management during an internal town hall meeting about when the largest U.S. bank might get into bitcoin, CNBC reported.    

RESERVE CURRENCY STATUS? ECB President Christine Lagarde said it’s “very unlikely” that central banks will hold bitcoin in the near future. “I would say it’s out of the question,” Lagarde said during a conference call hosted by The Economist. 

GIVE THE PEOPLE WHAT THEY WANT: U.S. Securities and Exchange Commissioner Hester Peirce, sometimes known as “Crypto Mom” because of her sanguine views on the digital-asset industry, said the country’s capital markets are ready for a bitcoin exchange-traded product. The SEC has refused to approve a bitcoin exchange-traded fund despite multiple applications. People are already eager to trade a bitcoin ETP, and “so if we don’t give them the natural way, which I think would be an ETP, they are going to look for other (less optimal) ways to do it,” Peirce said Thursday on CoinDesk TV. 

CANADA ISN’T WAITING: The first North American bitcoin ETF was approved Thursday by the Ontario Securities Commission. “Perhaps they’re normal and SEC too conservative,” tweeted Eric Balchunas, senior ETF analyst at Bloomberg. “Either way U.S. usually follows shortly after.”

FINANCE EXECS DEMUR ON BITCOIN: Top financial executives at Verizon, Cisco Systems and Mozilla see risks and accounting challenges in putting corporate money into bitcoin, the Wall Street Journal reported. Such anecdotes challenge the investment narrative that the cryptocurrency is set to benefit from a wave of new demand from companies.  

BAIR’S A BEAR: Bitcoin prices are at “nosebleed levels,” said Sheila Bair, former chairwoman of the U.S. Federal Deposit Insurance Corp. and now chairwoman of the government-owned mortgage-finance company Fannie Mae. “Stay away from it,” she said late Wednesday in a Bloomberg Radio interview. “It’s volatile. It’s at nosebleed levels now. We don’t know how sustainable that is.” 

INDIA GRACE PERIOD: Policymakers in India will provide a transition period if a proposed ban on cryptocurrency usage is passed as expected, Bloomberg reported. After that, cryptocurrency usage in all aspects will be banned via a new law set to be introduced in the current parliamentary session via the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.

How bitcoin gets to $1 million in 11 years, in one analyst’s scenario

First Mover ran some back-of-the-envelope math earlier this week to illustrate just how scarce the supply of bitcoin might be for the bevy of new institutional investors and corporate treasurers now ostensibly considering an allocation to the cryptocurrency, following Tesla’s announcement earlier this week of a $1.5 billion purchase. 

Now comes Charlie Morris, chief investment officer of ByteTree Asset Management, who has run his own calculations along similar lines, making First Mover’s amateur efforts look like the doodlings of a toddler. 

Some 363,500 bitcoins will be awarded this year to cryptocurrency miners for helping to secure the blockchain network, Morris estimates. He assumes the miners “will presumably sell most because that is their business.”

Further extrapolation leads to a figure of $18.17 billion: This is the amount of new bitcoin demand that would be needed this year to “sustain a $50,000 BTC price,” according to Morris. 

For context, Morris writes that gold exchange-traded funds attracted $41…