A different perspective for you to consider
What a week. Plunging through every support level, the price of Bitcoin continues to hit new lows that no one could have thought of this time last year. People who bought Bitcoin at it’s high of $20,000 without cashing out are crying themselves to sleep. Blood is out on the streets. Skeptics are boasting that this confirms what they have been saying about Bitcoin all these while- That it is a scam. A significant number of people are even saying that Bitcoin is essentially worthless and its price will eventually drop to zero.
Are all these statements really true though?
While the price of Bitcoin has certainly been inflated for a good period of time, is that reason enough to claim that the price of Bitcoin will go down to zero? How about the fact that there are whales that hold onto an awful lot of Bitcoin and have (possibly) been manipulating the markets? Does this mean that Bitcoin is actually a scam?
These are questions that I hope people will think about and have valid answers to before they make such claims and spread more fear to the market. While I cannot say for sure whether Bitcoin will get back to the price level of $20,000 or even exceed it, I would like to give a different perspective to why the chances of Bitcoin being worthless is really slim and would like to hear your perspective on this topic as well. Read on for more.
The Market Moves In Cycles- Up AND Down
Let’s look at the 100-year historical chart of the Dow Jones provided by Macro trends. The market crashed over a number of times over varying periods. Some for only a few months, some as long as a few years where prices kept dropping before finding a bottom and moving upwards. However, the market has been going in a general direction- up.
While the market will probably experience a crash soon (a topic for another article) the new bottom will probably be higher than the previous lows. As more people become more knowledgeable financially and want to start investing, the demand for stocks will rise, leading to an overall trend of increased prices.
Take any commodities and valuable currencies and you will probably get the same upward trend over a long period of time. As with any market, there is bound to be both fear and greed. When prices are high people lament not entering when the prices are low. However, when the prices are actually low they cannot wait to cash out and “save whatever money is left”. Which brings me to my next point.
Bitcoin- Dead 323 Times Only To Be Alive
How many times has Bitcoin been declared “dead” or a “scam” by prominent figures and articles?
A grand total of 323 times.
According to 99bitcoins, at least. You can find the bitcoin obituaries here. How can something that has been declared “dead” 323 times actually still survive? Unless it is actually here to stay. No matter how you categorize Bitcoin, be it as a currency, as digital gold or as some form of an investment asset, there are still people who see value in it.
Take for example countries that suffer from inflation, such as Turkey and Venezuela. If you are a citizen there and your hard earned money is losing value rapidly as time goes by, won’t Bitcoin be a good alternative to keep the value of your money? (at least before the recent dramatic price drops)
Firstly, it is difficult for the government to control access to Bitcoin as well as the supply for it, which they can probably do for foreign currencies such as the US dollar. Secondly, if your family is in one of these countries, won’t Bitcoin be a good alternative to carry out remittance? It is fast, secure and much faster than western union or any other remittance services.
The way I see it, with inflation being a constant concern amongst people, there will always be value for Bitcoin.
What Will Spark A Revival?
“While that is all well and good, what will it take to spark a revival in the prices of Bitcoin? I want to make a profit off it!”
I personally do not think there will be one all-encompassing reason. Rather, it will probably be a combination of different push and pull factors that will spark a revival, if there ever is one. If I were to speculate myself I would say these a few possible factors that come into play:
- The launch fo Bitcoin ETFs and Bakkt, the Bitcoin futures platform started up by Intercontinental Exchange, which in turn owns the New York Stock Exchange
- A financial crisis that makes citizens lose confidence in their country’s currency
- Bitcoin is made accessible to the man on the street who is not as technologically savvy
Even if these were to happen I believe it will be over an extended period of time. Who knows, the timing of these events hitting their climax may be close to each other, giving that crucial push towards mass adoption and therefore spark a revival in the prices of Bitcoin and cryptocurrencies.
At The End Of The Day…
Know your own investment appetite and do not ever put in money you cannot afford to lose in any form of investment, least of all in cryptocurrencies. Money is always made with logic, never with emotions.
No one knows if and how long before the price of Bitcoin will start moving upwards. It is good to always think of going in the opposite direction of the market (if you are considerably confident of being right) Afterall, nobody made real profits by following the market. It is always by going against the market.
Hang in there, and I wish you all the best!
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Will The Price Of Bitcoin Hit $0? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.