Bitcoin suffered a devastating blow on Black Thursday alongside the rest of the financial world. But unlike other assets, the top cryptocurrency has grown enormously since, and become the best performing asset of 2020 bar none.
Emergency assistance checks dispatched to American taxpayers meant to stimulate economic activity only served to stimulate Bitcoin’s bullish momentum, and months later, the asset is trading at well above its previous all-time high. Here’s what investors earned by putting their stimulus check into Bitcoin along with why investors are even more likely to do so again with the second round of government funding.
It was for this reason that Bitcoin was created in the first place, and was designed to be both decentralized and non-sovereign. By separating money from the state, citizens are freed from the control fiat currencies offer governments through central banking.
The dire need for a way out wasn’t made clear until recently when the money supply spun out of control, led by central banks seeking to give the economy a shot in the arm.
To hide the fact that the government is printing more money left and right that citizens will pay the tax on one way or another, politicians have snuck in a $600 direct payment to American taxpayers.
But the more money the government prints, the faster inflation will spiral out of control, and very quickly the initial $1,200 and the second round of $600 begins to look more like a “loan” handed out to taxpayers that they’ll spend the rest of their lives paying back.
This is just one of the many reasons, why investors fed up with paying for government-caused inflation and taxation, are putting their stimulus money in Bitcoin.
Bitcoin's chart compared to when stimulus money was issued through today | Source: BTCUSD on TradingView.com
Investing in Bitcoin in 2020 is a no-brainer. The cryptocurrency is enjoying greater acceptance than it ever has before, it has entered a new parabolic phase and bull market, and according to analysts, this is just the start.
Making the decision even easier, is the fact that the initial $1,200 check invested into Bitcoin would have generated a $3,000 ROI above and beyond the $1,200 put down. Turning $1,200 into $4,200 is extremely appealing, and another $600 invested into Bitcoin could be even more profitable considering the asset’s momentum and expectations to reach $100K or more within a year.
But beyond even just the returns on the stimulus money, which makes sense given the fact it will attribute to inflation for the next few decades, there are more reasons to put the fiat funding into crypto.
Breaking down where the new stimulus money is going, shows a trail of flow into other countries and into the US military. If US taxpayers will pay for this $600 check indefinitely, then the benefits should go to them too.
This is just yet another way that proves just how poorly the US government is handling monetary policy, and the only way to opt-out of this broken system is to buy Bitcoin.
So while the government is giving you money that you’ll pay for likely forever, use it to solve the issue and protect the money you’re being given.
Featured image from Deposit Photos, Charts from TradingView.com
Author: Editor’s Choice
Crypto Analyst Nicholas Merten Says Altcoin Cycle Approaching, Tracks State of Bitcoin, Ethereum and Litecoin
Popular crypto strategist Nicholas Merten is keeping a close watch on Bitcoin, Ethereum, XRP, and Litecoin.
In a new edition of DataDash, Merten maps out to his 363,000 subscribers the levels to watch for BTC.
“We are in uncharted territory. This is a first for where Bitcoin is in its price history. So, we can see here right now that we’re holding generally around [$22,250]. You can see we dipped a little bit lower here but right now we’re roughly holding the support range we’ve had back here through December 17th to the 18th and it will be a question here whether we can maintain this level.
If we do start to curve back over here [$21,900], I would feel a bit of a warning sign’s coming out of the market; that we are going to dip down and do something that a lot of people don’t want to see and that’s a breakdown towards $20,000 or to the upper $19,000 range where the official all-time highs were previously from the last cycle to make it new support.”
Merten says that Bitcoin is already overextended and that we might see a shift in liquidity as investors rotate their profits into leading altcoins.
“Are we going to see altcoins start to see yet again altcoins start to take some of that market valuation, some of that liquidity, some of the market dominance? I really think that’s the case.”
The crypto strategist is looking at Ethereum (ETH/USD) and highlights that it is far from its all-time high.
“When I look at Ethereum, it’s in a much more healthy cycle. There’s not some absolute major overshoot. It’s not in its all-time highs.”
Merten also tracks the performance of Litecoin (LTC/USD) and notes. that the coin is maintaining its steady uptrend.
“Litecoin, holding up very healthily here. Nothing too crazy.”
Although the broader crypto market is currently going through a correction, Merten says that an altcoin season is in sight.
“What we saw back in the summer was not the altcoin cycle. We have yet to hit that altcoin cycle but we’re getting very, very close. We’ve had our precursor rallies in a lot of these altcoins and I can tell you all, you want to keep an eye on those major altcoins because some of them are starting to hold nicely.”
Merten emphasizes that LTC/BTC is trading near critical support at around 0.004 where it pumped 3x to 5x based on its historical price action. He’s also keeping a close watch on ETH/BTC which he says is also trading at a key support level.
“In this case, what we’ve got are discount opportunities where altcoins are really cheap right now. This is again where you see capital cycle in and out of different markets within the crypto space.”
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Why Stocks of Bitcoin Miners CleanSpark, Marathon, and Riot Blockchain Were Up Again Today
Shares of CleanSpark (NASDAQ:CLSK) shot higher on Tuesday on news that it had acquired more equipment to mine bitcoin. The company is a technology company in the energy sector, but it expanded its business into bitcoin when it acquired a bitcoin mining operation called ATL Data Centers earlier in December. More equipment allows more bitcoin to be mined, which is why CleanSpark stock was up 18% today.
Bitcoin miner Riot Blockchain (NASDAQ:RIOT) also announced it’s increasing its operations. It was able to buy 15,000 Antminers from Bitmain for $35 million using cash on hand. The move increases the company’s capacity by 65%, so the stock’s 33% jump today was somewhat understandable.
Finally, fellow bitcoin miner Marathon Patent Group (NASDAQ:MARA) might have moved just based on these two other stocks. It upgraded mining operations earlier in the month, but there was nothing newsworthy to explain its 22% spike today.
Image source: Getty Images.
For those who don’t know how bitcoin works, here’s a simplistic overview. The network is designed to facilitate the movement of tokens, with a ledger recording who owns which bitcoin at all times. Known as blockchain technology, computers voluntarily join the bitcoin network to process transactions, recording them on the blockchain. This means the bitcoin network is decentralized: Computers can be anywhere, and they aren’t all owned by any one individual or company.
Computers race to record transactions first, because the winner is issued a brand-new bitcoin as compensation. Unlocking new bitcoin is known as mining. It’s an expensive process. Companies invest in equipment powerful enough to outdo the rest, facilities to house the equipment, and energy to run and cool equipment.
Once it’s deployed its new mining equipment, CleanSpark says its mining capacity will be 300 peta-hashes per second (PH/s). For its part, Riot Blockchain will have 3.8 exa-hashes per second (EH/s). Marathon will have 3.56 EH/s. For perspective, 1 exa-hash is 1,000 peta-hashes. Without diving too far in the weeds, suffice it to say that Riot Blockchain and Marathon have more than 10 times the capacity of CleanSpark. But this makes sense because CleanSpark’s main business is something else.
Bitcoin believers obviously like to see companies investing in bitcoin mining equipment. After all, many think bitcoin is poised to surge in 2021, which would lead to increased mining revenue for these companies. Just how high could bitcoin go? No one knows for sure. Indeed, it could plummet for all we know. But many excitedly project the future value of bitcoin using something called a stock-to-flow model. Championed by a Twitter user going by PlanB, the model projects bitcoin could be worth more than $200,000 by 2024.
I’m not suggesting the stock-to-flow model for bitcoin is an infallible framework. I’m merely pointing out how bullish some are about the future price of bitcoin. This bullish sentiment raises their outlook for many cryptocurrency stocks, including bitcoin miners. In summary, investors believe bitcoin can keep soaring, and the increased capacity will lead to windfall profits for miners. That’s why these three stocks are up today.
Image source: Getty Images.
Yesterday when bitcoin mining stocks soared, I pointed out that all bitcoin miners have unique cost structures and therefore should be considered on a case-by-case basis. This is exemplified by CleanSpark’s entry into the bitcoin mining space. The company’s business is primarily software for microgrids: small, decentralized, self-sufficient power systems. Basically, CleanSpark is in the energy optimization business, and that could be useful for bitcoin mining.
CleanSpark believes it can reduce its power cost for mining bitcoin below $0.0285 per kilowatt hour (kw/h). That sounds low. But for perspective, that’s the cost that Marathon has already achieved at its primary facility. While one would expect CleanSpark to have a competitive advantage, that doesn’t appear to be the case.
Reducing energy consumption and cost are among the few things bitcoin miners like CleanSpark, Riot Blockchain, and Marathon can control. But the most important factor is the price of bitcoin, which is entirely outside of their control. For that reason, bitcoin-mining investors will likely keep their eyes fixated on bitcoin and not the fundamentals to these businesses.
Author: Jon Quast