Why the Bitcoin price is surging

In case anyone is wondering why Bitcoin is going through the roof. Here’s my explanation.

1) The gigantic liquidity wave of 2020 has 'exhausted' traditional equity markets. Multiples have exceeded what most people feel comfortable further pouring money into. Tangible assets are expensive. Commercial real estate is having a bad time, and the supply for private real estate is tight. A vaccine will help with recovery, but the time to full economic recovery is uncertain. It’s time to look for other ways to increase returns

2) Institutional money is making a big appearance in Bitcoin. Companies and funds publicly admit that they invested. MassMutual, Microstrategy et al. have triggered FOMO on an institutional level. Funds don’t want to potentially miss out, so they simply allocate their small high-risk percentages. Further, everyone wants to be able to claim they were involved “early” in case it really becomes a second gold. The inherent scarcity of bitcoin amplifies this effect.

3) All asset classes are expensive (see 1), and bitcoin still has a relatively small market cap of “only” USD 500B vs gold which has roughly USD 10T. That’s 20x. Much easier to make a dent. Small investments can yield higher returns. Rotation out of gold and other investments. If it all works out, the fund manager is a genius and visionary, if it doesn’t, it doesn’t matter. 

Will Bitcoin continue to grow? If I trust my own logic, most likely yes. Will it become a new “store of value”? Maybe. 

If asset custody and security will not become an issue, there is no reason why people would not put the same trust in Bitcoin as they put trust colored paper or digital ownership certificates of gold bullions.

I am not arguing for or against crypto and Bitcoin, I only offered an explanation for the price movements. 

For scale

 0.5T Bitcoin

1.65T Amazon

2T US Dollar in Circulation

6T US Treasury Bonds

10T Gold