Bitcoin is on its way to becoming the best-performing asset in 2020. Andreessen Horowitz believes that there will be a new surge in the cryptocurrency ecosystem.
Bitcoin will become one of the best-performing assets of the year. However, its price is still far from reaching an all-time high in USD 20,000 of late 2017.
Andreessen Horowitz, the Silicon Valley investment capital company, has foreseen the fourth cycle in cryptocurrencies, which could send the price of Bitcoin much higher.
Andreessen Horowitz partners, Chris Dixon and Eddy Lazzarin said that the 2017 cycle produced dozens of exciting projects in a wide range of areas, including payments, finance, gaming, infrastructure, and web applications.
Last April, Andreessen Horowits announced the addition of USD 515 million (in Bitcoin and other cryptocurrencies) to the fund of USD 300 million that it had launched in mid-2018.
The 2020 fundraiser, which smashed the original goal of USD 450 million, will be dedicated to blockchain and cryptocurrency projects. These include the areas of decentralized finance, next-generation payments, and decentralized Internet.
Although crypto cycles seem to be chaotic, they have been able to promote the growth of new ideas, codes, projects, and initiatives, which are the main drivers of software innovation, according to Dixon and Lazzarin.
They added that those who have been involved in cryptocurrencies for a long time see the ecosystem as though it were growing in cycles, alternating between periods of high activity and crypto winters.
The venture capital (VC) company identifies an underlying order in the first three cycles in cryptocurrencies in the years 2011, 2013, and 2017. First, the price of Bitcoin and other cryptocurrencies increased, leading to new interest and activity in the social networks.
New users are involved, contributing new ideas and codes, as well as creating projects and initiatives. These project launches inspire more people, finally culminating in the next cycle.
The Bitcoin and cryptocurrency price innovation cycle model is based on anecdotal information and evidence, according to Dixon and Lazzarin.
Dixon and Lazzarin say that they have had hundreds of conversations with cryptocurrency founders. They report that some investors first heard of cryptocurrencies when prices went up and everyone was talking about it.
The executives added that some of them thought that this was just about money. However, they note that they have started learning about the potential of this technology, and eventually fell in love with it.
The company has also analyzed 10 years of data, including comments on subreddits about cryptocurrencies on Reddit, Github’s allocations to repositories, and financing information from Pitckbook.
Meanwhile, the Bitcoin and cryptocurrency community is still readjusting after the halving. This event led to the reduction by half in the issuance of coins.
Regarding the amount of Bitcoin that those who maintain the network receive, there was a reduction from 12.5 BTC to 6.25 BTC earlier this month.
Many have warned that the price of Bitcoin could plummet as a result of the third halving. However, most analysts seem confident that the price of Bitcoin will eventually increase.
By Alexander Salazar