Thursday, 8th November 2018
Three reasons why I’m turning bullish on Bitcoin….
Bitcoin climbed a mountain for most of 2017. Then it fell off a precipice at the end of the year. It has lost more than 65% of its value since mid-December….
Speculators who got in too late or stayed in too long got their fingers burnt….
But that’s one of the features of new tech. And one of the risks associated with investing in it. Progress is anything but reliable and straightforward….
Market prices are prone to periods of intense volatility – serious swings in sentiment and value; ups and downs that will turn your stomach; corrections and crashes interspersed with purple periods of recovery….
A month ago, we were looking at extreme volatility in the Bitcoin price – with the market not seeming to know which way to turn….
But that choppiness in the water has eased off lately….
- A narrower band….
Over the last fortnight, the coin that remains the flagship of the crypto fleet has traded within a narrower band….
This new-found calm in the action has prompted some commentators to ask whether Bitcoin has finally hit bottom. Opinions are the usual mixed bag….
Some folk see Bitcoin specifically and cryptos generally as a busted flush – never again to scale the heights of last season….
Others, think there’s still further to go in the bear market before things take a more sustainable turn….
Folk like Arthur Hayes, CEO of the Bitcoin Mercantile Exchange, the world’s largest Bitcoin derivatives trading platform. He reckons there’s still further to go….
‘My view is the volatility environment that exists right now could persist for another 12 to 18 months, the flatness. I’m just basing it off my previous experience….’
Of course, Hayes is expressing his opinion as opposed to a fact. He doesn’t know. Not for sure. Nobody does. The fanciest job title in the world doesn’t qualify a man to accurately discern the future….
And I confess that I don’t have a clue whether Bitcoin has or hasn’t hit bottom yet. Time will tell….
But what I can tell you is this: I’m turning bullish on Bitcoin – and there are three good reasons why….
- Why the Bitcoin focus?
Before I get onto my reasoning, I should highlight why my sentiments are attached to Bitcoin rather than one or more of the many other coins that exists in the crypto-sphere….
The first thing I should say is that I believe cryptocurrencies are set to play a big part in the future of money….
A decentralized and deflationary currency that is immutable and doesn’t require the use of ‘trusted’ third parties to function is an obvious improvement on fiat currencies and offers consumers and businesses clear benefits and advantages….
Big enough benefits and advantages to suggest – to me at least – that cryptocurrencies are here to stay….
Right now, Bitcoin remains the main player in the game….
Bitcoin is the most established and the most widely-used crypto in the world….
Bitcoin is also where institutional investment capital will land first….
In other words, Bitcoin will be the first and primary beneficiary when sentiment turns positive again….
- Scope for progression….
The first reason I am getting bullish on Bitcoin is the sheer scope for progression….
Some people wonder whether it is ‘too late’ to invest in Bitcoin. Last year’s huge spike in price and all the media attention and hype that went with it have left a lot of folk thinking the party is all over….
Truth is, the party probably hasn’t even begun yet. It is still very early in the day as far as the cryptocurrency sphere is concerned….
I read somewhere the other day that approximately 24-million people own some quantity of Bitcoin….
That’s a lot of people. I wouldn’t want to be catering for them….
But Bitcoin is a currency with global appeal. And on a globe that has more than 7.5 billion people running about on its surface, 24-million people is not very many….
To put the figure into perspective, 24-million people represents less than 0.5% of the world’s population….
In other words, there is quite a bit of room for Bitcoin specifically and cryptos generally to eat into….
If cryptos are here to stay, and I believe they are, then the biggest part of the growth must still be ahead of us….
And Bitcoin is going to be a major beneficiary as that growth happens….
- Millennial uptake….
That growth is not only starting to happen, but it is swiftly gathering momentum – driven by millennials….
The millennials are a hugely influential group now – and they will be the major consumers of the future….
Their needs, tastes, requirements and preferences will have a massive impact on what direction things take from here, how the future develops and what it looks like when we get there….
Recent evidence suggests that cryptocurrencies are going to play a big part in what that future will consist of and how it will work….
Millennials are buying into the crypto-currency concept faster and in greater numbers than older generations….
A survey recently conducted by Circle found that 25% of millennials want to make investments in crypto assets in the next 12 months – compared to 10% of Generation X and just 2% of the Baby Boomer generation….
Research carried out in America by You Gov Omnibus earlier this year tells us something similar….
36% of Americans surveyed believe cryptocurrencies will see widespread adoption and find acceptance as a means for legal purchases within the next 10-years….
Okay, that’s a minority. But the key thing is that 44% of those who have that belief are millennials. And 48% of the millennials who took part in the survey expressed an interest in using cryptocurrencies rather than the dollar….
Surveys are just surveys. Their conclusions wouldn’t stand up in court. But the general trend is clear. Millennials are more comfortable with cryptocurrencies than the older generation consumers they are steadily replacing….
Sooner or later a tipping point will be reached that Bitcoin will only benefit from….
- Smart money….
Finally, money is a polyglot – it speaks fluently in any language. And the smart money talks most fluently of all….
The sharpest money – the hundreds of billions managed by institutional funds – has been slow to find its way into the crypto markets – and it isn’t there yet….
Mixed signals from government law-makers and financial authorities have not helped….
Nor has an absence of the proper infrastructure, appropriate investment vehicles and instruments, an absence of proper protections; an absence of proper regulation, an absence of relevant rules and local laws….
But these things take time. Blockchain technology and the cryptocurrencies that run on it are new technology. In many respects, the legislators and the regulators are playing catch-up….
The house doesn’t just appear overnight as a finished article. It takes time to build – first the foundations are laid, then the thing is built brick-by-brick and then they put the roof on it….
Back in 1994 when I started to use the Internet, it didn’t work like it does today. It was rudimentary. It took time to get the Internet to where it is this morning….
It will take time for cryptocurrency to get to where it is going to be. The supports are being put in place. So too the means through which, and by which, institutional money can flow into the sector – comfortably and with the proper regulation and protection….
We’re not there yet. But when it happens, it will happen fast, and the money will flow both broad and deep….
Investment banks, big funds and other major investors are not going to miss out on the next big crypto bull market. You can take that to the bank….
Most likely they will be the ones firing the initial shots and providing the impetus and momentum that gets the whole thing rolling along….
And Bitcoin will be a massive beneficiary as things stand right now. I have no doubt about that….
Sheer scope for progression, a trend for millennial uptake and the imminent arrival of the smart money – three good reasons why I’m getting more bullish on Bitcoin….
That’s how it looks from here….
All the best,