The next five years

I am an ultrabull in the long run. I feel very confident that we will see a $5 Trillion crypto market capitalization in the next 30 years, and that's a very modest estimation. But Bitcoin has the reasonable potential of hitting that in the next 5 years and will be closer to $50 Trillion in the 30 year timespan if it meets certain bench marks. Institutional investors are waiting to see two things. Bitcoin has proven that it is secure throughout this decade long stress test of the tech. Security will always be a concern but much less so than it was 5 years ago. Volatility is also not much of an issue so long as the price increase in the long term. The volatility is likey more a symptom of Bitcoin's youth rather than an inherent feature.

So what are the institutions waiting on? They want to see if Bitcoin is uncorrelated in two key respects. First is, of course, inflation. During inflationary periods assets rise in value, which Bitcoin is seen as an asset. It's the correction that is troublesome. If rates go to their market rate during an inflationary period, it pulls capital from assets and assets that are dependent on credit will contract. This last happened when the fed took its foot off the peddle under Volkher in the 80s. Bitcoin has never experienced rates above 4 or 5%, so we still don't know what will happen when it does. But it needs to hold its value during periods of high inflation and high rates to be seen as a hedge.

Next Bitcoin needs to be uncorrelated with the stock market and an economic downturn. Since 2008 we haven't had a true blue recession. So we don't know how Bitcoin will react during a recession. Bitcoin needs to be uncorrelated with the overall economic climate, similar to how gold performs.

So why is this all important? Why are the next five years key? Well we're due for a recession. This is the longest period without one ever. Secondly we're likely to see run away inflation soon. The two could combine and we will see stagflation. The world will be watching to see how Bitcoin responds.