Prior bitcoin bull markets, which fueled epic gains for the largest digital currency, were largely powered by story, but the next bitcoin rally will need to be a more even mix of story and utility.
That’s the sentiment of Galaxy Digital CEO Mike Novogratz, who recently made comments to that effect at the Token2049 conference. The 2017 bitcoin bull market saw the digital coin run from to $1,000 to $20,000, and Novogratz noted that the surge was largely a story result as younger investors — Millennials and Gen Z — flocked to crypto for the first time.
He added that the next bitcoin bull market — the one that carried the cryptocurrency to the all-time high of $69,000 in November 2021 — was fueled largely by the coronavirus pandemic and that move was “80% story, 20% utility.”
Obviously, bitcoin is in a bear market this year, burdening exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO ) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC ). The next bitcoin bull run needs to be a 50/50 split of story and utility, said Novogratz.
“It’s people building applications, people building systems a) that are fast and scalable and b) that are user-friendly. We don’t have them yet — that’s why we’re where we are. But in the next few years, they’re coming,” he said at the conference.
Story-based runs are nice because bitcoin prices appreciate, but as noted above, those rallies have shelf lives and often aren’t rooted in fundamentals. On the other hand, a story-backed crypto rally implies that fundamentals are turning for the better and the vital usage case may be improving.
Those are relevant factors for funds such as BLKC and SATO. In the case of BLKC, which follows the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index, the fund’s 61 holdings check the bitcoin utility box in a variety of ways.
Beyond the ETF’s assortment of bitcoin miners holdings, the fund is also home to companies that see value in embracing crypto as a form of payment. Additionally, several BLKC member firms, while not dedicated crypto firms, are levered to the theme of blockchain expansion and infrastructure. Overall, the fund could benefit as bitcoin utility rises. As for Novogratz, his comments may be worth listening to.
“As previously reported by Cointelegraph, Novogratz has made some successful predictions about Bitcoin. Back in 2020, Novogratz predicted that Bitcoin would end the year above $20,000, which turned out to be an understatement, with Bitcoin nearing the $30,000 price mark by the end of 2020,” reported Helen Partz for the publication.
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