Booking.com goes crypto (Photo by Filip Radwanski/SOPA Images/LightRocket via Getty Images)
Travel industry giant Booking.com has partnered with Crypto.com highlighting the growing commitment major retailers are making to the digital economy. Bitcoin’s breathtaking rally beyond $35,000 kicks off 2021 on a high following above expectation institutional interest with banks and hedge funds now aggressively seeking to expand their bitcoin holdings.
As the travel industry starts the preparation for the inevitable post-pandemic rush among holiday-makers, and with the approval of several vaccines likely to expedite that process, the partnership comes at an opportune time for both parties.
Kris Marszalek, CEO of Crypto.com said, “In 2020, our Crypto.com Visa Card program grew to become the most widely available card of its kind and we now serve over 5 million users around the world, who are eager to travel again in 2021.”
Marszalek indicated that the latest partnership will be followed by similar alliances with enterprises dominating other consumer industries.
Bull Run Inspires FOMO as Investors Buy In
Nimrod Lehavi is the CEO of fiat-crypto payment processor Simplex, which recently became a Principal Member of Visa in Europe. Commenting on the current crypto market outlook, he notes “The surging demand among new retails investors, along with the dramatic price surge in BTC, is creating a constant feedback loop that is pushing demand for altcoins as well.
“At Simplex, we see an increasing demand for cryptos across the board, with the BTC rally being the catalyst. Yet, the dominance of BTC in that demand has significantly dropped in the past few days, as retail investors seem to be looking for ‘the next BTC’ as well.”
Although bitcoin has generated most headlines, Lehavi is correct to highlight the success of altcoins; in recent days the likes of ETH, LINK, XLM, and NANO have all rallied strongly.
Inevitably, the rally has motivated a wave of private investments with widespread fiscal stimulus packages strengthening bitcoin’s “digital gold” narrative. While central banks can inject liquidity into a sluggish economy, Bitcoin adheres to a fixed monetary supply: there will only ever be 21 million bitcoins, with 18.5 million having already been mined. The final bitcoin will be mined in 2140, with many experts claiming the asset is posed for growth in the decades ahead.
Bitcoin’s $715 billion market capitalization, the combined market value of all coins in circulation, recently surpassed Visa’s $511 billion market cap and placing it ahead of Tesla at $700 billion. The number of crypto wallets containing at least 1,000 BTC has hit a record high, a sure sign of feverish institutional interest.
One River Asset Management is one of many investment managers taking a big position and going long on bitcoin. The firm, which manages assets for some of the world’s largest institutions, recently made a substantial purchase, what leading exchange Coinbase called “one of the largest digital asset trades in history.” Data indicates that 55,000 bitcoin left the exchange on January 2 – valued at $1.65 billion.
A day later, One River CIO Eric Peters published a lengthy blog post speculating that “the value of bitcoin can surpass that of gold… Holding these assets over the long-term aligns yourself with the macro mega-trends of technological advance and currency debasement, both of which appear to be accelerating.”
This buoyant sentiment was echoed by a new AAX research paper that suggests bitcoin’s value could reach $55,000 within the first quarter of 2021. A leaked report by Citibank went even further, suggesting a high of $318,000 before the year is out. Little wonder we’re witnessing unprecedented interest from wealth managers, private banks and other major players.
Why the Current Bull Market Is Different to 2017
Optimism around bitcoin and other cryptoassets ultimately stems from an abundance of liquidity, negative yields on fixed income, concerns of further economic volatility as direct result of COVID-19, and many real-world investors with deep pockets who now have an uncomfortable sense of FOMO. Ultimately, in the search for yield, bitcoin has demonstrated that it has been the best performing asset for the past decade, outperforming all other asset classes.
10 Year Asset Class Returns
Whether it’s Italy’s largest private bank providing bitcoin custody to its customers, trade volume hitting its highest level on record, or new partnerships like the one between Crypto.com and Booking.com, the market is maturing. No-one seriously believes this bull run is similar to the last one.
“The 2017 run was largely driven by speculation,” says Joel Edgerton, COO of Japan’s leading exchange bitFlyer, “Now you have institutional investors allocating capital into bitcoin, which provides retail investors with a lot more confidence in the asset. The same can’t be said about other coins just yet.
“Over the last few weeks, we’ve seen the distribution between buy and sell volume narrowing, and sometimes sell volume being greater as some retail investors look to start capturing profits. With that said, our buy volumes remain high and our number of new account registrations continues rising, which shows increasing interest from new retail investors and potentially more growth to come.”
Improvements in network effects and infrastructure have also occurred since 2017, with users now able to buy, sell and spend cryptocurrency easier than ever before. In October, PayPal announced that over 300 million customers would soon be able to buy and sell virtual currencies on its platform, with the ability to spend them at 26 million merchants.
Bitcoin was born following the Financial Crisis as an antidote to a financial system driven by central bank money printing and excessive and often volatile debt in the banking system. With most long-term outlooks supporting higher highs, expect further big players, investment managers, and banks to board the bitcoin bandwagon in 2021, and the digital assets and derivative ecosystem to grow.
Don’t underestimate the FOMO power of the bitcoin bull market, sentiment drives most markets, not fundamentals. Ironically, with the best 10 year performance of all asset classes, bitcoin fundamentals deliver a compelling investment case to professional investors that is a slam dunk.