Early adopters who saw Bitcoin’s potential in the last decade have been waiting this year for their entire life as crypto-investors.
The recent volatile corrections in Bitcoin’s volatile prices (BTC) could evoke images of the 2017 crash in their minds, or even the crash caused by COVID-19 in March of this year. But the fact that Bitcoin has reached $20,000 for the first time in history is no reason to raise the alarm.
Despite the fact that the price of the world’s most valuable crypt currency has gone up by more than 225% this year, the current rally we’re experiencing doesn’t look like the Bitcoin bubble we saw in 2017. Far from it. There are four key reasons for this:
- Institutional investment in space is at an all-time high.
- There is little or no media attention catapulting the price tag this time around.
- Central banks and governments are beginning to see what is written on the wall.
- Retail investors in emerging markets are investing in what they hope will be a revolution.
These four reasons aren’t just relevant now; they’ll all continue to play a role in Bitcoin’s future growth. Consider this breaking news. Bitcoin no longer lives in a bubble, and soon, the traditional financial world is the only thing that’s going to explode.
Institutional Investment in Bitcoin Soars in 2020
Bitcoin is no longer just for young tech-savvy millennials. Governments, central banks and large corporations can no longer ignore its value. That’s exactly why some historic investments by Bitcoin’s major sponsors made headlines in 2020.
A publicly traded business consulting firm called MicroStrategy now owns 38,250 Bitcoin, currently worth just under $640 million. The BTCs were originally purchased for about $250 million earlier this year. Thanks to the huge scale of the purchase and its profitability so far, company CEO Michael Saylor has become a true Bitcoin evangelist. Aside from large investment funds, no company owns more Bitcoin than MicroStrategy.
Saylor and his company join Square CEO Jack Dorsey in his enthusiasm for Bitcoin. Dorsey bought about $50 million of the crypto currency for his company. What’s more important than that $50 million investment, however, is that estimates suggest that both Square and its payment competitor PayPal are swallowing more than 70% of the newly mined Bitcoin that goes into circulation. Square allows customers to use cryptomoneds as payment; PayPal allows customers and sellers to buy Bitcoin directly from their PayPal accounts. Both portals are currently creating a windfall for Bitcoin market capitalization.
Retail investors are no longer just following a mainstream media trend
In 2017, it would have been hard for you not to hear about Bitcoin. Whether a friend or family member told you about it at Christmas, or you heard about it on the news or in TV ads, the fact is that almost all the major media outlets were covering the price boom at that time.
If you look ahead to today, you can take a look at Google Trends to see that searches for the word Bitcoin Trend App have been trending high lately, but aside from specific television programming about the investment world, you don’t hear as much about Bitcoin in the mainstream media, with some exceptions of course.
This means we’ve reached a new milestone in adoption. More and more people know about crypto currencies than ever before, and they’re now following the asset class more closely.
Central banks and governments have no choice but to join the
Russia, China, Canada, the European Union and many other countries are already working on their own digital central bank currencies or publishing White Papers detailing their intentions to do so. Moving away from paper money and plastic credit cards is the next natural step for the world as payment technologies continue to advance. But as crypto-currency enthusiasts know, a digital currency built on a Blockchain owned by a central bank or government is not the same as one built on a decentralized technology.
This is obviously a sign that the powers that be in the old financial world are seeing the writing on the wall. They are doing everything they can to protect a system that favors those in control. But CBDCs and tighter government regulations will only continue to blur the lines between government-supported digital currencies and Bitcoin. It’s only a matter of time before society chooses the latter over the former.
Emerging Market Retailers Count on the Bitcoin Revolution
Not only are Google searches for the word Bitcoin at their highest, but the two countries with the greatest increase in search volume at the moment are Nigeria and South Africa, both developing countries with unique challenges. It turns out that search volume isn’t just a sign of new crypt investors doing research; it’s leading to large amounts of capital flowing into space.
Marcus Swanepoel, CEO of Luno, an exchange serving emerging markets, recently tweeted that purchase volumes at the exchange have tripled among retail investors in Nigeria, South Africa, Malaysia and Indonesia.
While institutional investment is certainly a driving force, pushing Bitcoin’s value higher, people around the world, who can no longer trust the economies they used to depend on, are putting their capital to work and betting on a Bitcoin revolution that will change their future for the better.
The future is bright for Bitcoin
Make no mistake about it. Certainly there are many challenges yet to come for Bitcoin and other crypto currencies. Earlier this month, Coinbase announced the suspension of its margin trading due to a change in government regulations. The news is a reminder that governments will continue to try to regulate everything, and detractors will continue to denounce the fundamental value of Bitcoin.
Still, the future of Bitcoin and all other cryptosystems is bright. Cameron and Tyler Winklevoss believe that Bitcoin will be worth more than $500,000 per coin in the next 10 years. A Citibank advisor sees a $300,000 Bitcoin long before that.
These numbers may seem overly optimistic, but remember, it wasn’t that long ago that a $25,000 Bitcoin seemed impossible, and now we’re almost there. Except that from here on out, the road to mass adoption is no longer about educating new investors, but about getting people, corporations and eventually governments to finally put their capital where the cryptos are – and everyone will do so sooner than you think.