Bitcoin bull and Morgan Creek Digital Assets co-founder Anthony Pompliano is mapping out why he believes BTC could reach $225,000 in just over a year.
In his latest letter to investors, Pompliano unveils the macro factors that may serve as tailwinds for the next Bitcoin bull market.
“The Federal Reserve has cut interest rates to 0%. They plan to keep us in a zero-rate environment for the foreseeable future. Multiple stimulus packages in 2020 now total more than $3 trillion in QE. We have another $2 trillion on the way…
The combination of the Fed’s asset price manipulation and inflation fears has driven gold and Bitcoin to drastically outperform equities and other commodities.”
The Bitcoin advocate also highlights that Wall Street has “woken up to the Bitcoin trade,” which Pompliano says has increased demand for BTC.
“We are also seeing a new trend emerge where corporations are using Bitcoin as a reserve asset for part or majority of their treasury. It started with publicly traded digital asset focused firms like Galaxy Digital and others. Then we saw MicroStrategy ($1.2B+ market cap on NASDAQ) put 85% of their $500M balance sheet ($425M) into Bitcoin. And most recently, financial technology company Square announced that it had purchased about $50M of Bitcoin for their balance sheet (approximately 1% of assets).”
As the demand outlook for BTC remains strong, says Pompliano, he shifts his focus to the supply side of the equation. He refers to the most recent Bitcoin halving, which reduced the number of new BTC entering circulation from 1,800 to 900 per day.
“Historically, these supply shocks have led to significant price increases of 20X+ in the following 18 months post-halving.”
In addition to the increasing demand and decreasing BTC supply, Pompliano highlights a key factor that he says “cements the bullish argument for Bitcoin.”
“More than 60% of all Bitcoin in circulation today have not changed hands in the last 12 months. This means that majority of Bitcoin investors stomached multiple double-digit price movements, both up and down, and continued to hold the asset…So the likelihood that the 11M+ Bitcoin that is currently being held by strong hands will trade in the short term is very low.”
With his investment thesis in place, Pompliano predicts that Bitcoin will be valued at $225,000 by the end of 2021.
“Many investors will look at the historical price increase of the digital asset and believe they ‘missed it.’ That couldn’t be further from the truth in my opinion. I believe we are at the start of another boom cycle in Bitcoin, which is likely to drive us 10-20x higher in the 15-month window.”