Recently, the price of Bitcoin (BTC) exceeded the psychological barrier of $10,000, and reached $11,000 on June 22. Currently, BTC prices have remained above $10,000. I think the price trend of BTC reflects an important trend: BTC is being accepted by the global market.
What is driving the current BTC price increase? In the field of cryptocurrency transactions, 99% believe that the bear market in 2018 is over.
I personally think that this BTC price increase is still different from the bull market at the end of 2017. Through my observations, I also got a conclusion: Now is a good time to buy BTC, we will not see BTC of 6,000, 8,000 or even less than 10,000 US dollars.
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In the following, I will give four reasons to demonstrate this conclusion.
1. Retail funds and institutional funds: value storage dispute
Recall that in 2017, when the BTC broke through the $10,000 mark in November of that year, media hype began to sprout.
Various mainstream newspapers have published articles about the rise of Bitcoin and what the blockchain is. Social media is full of bitcoin information, followed by various investment proposals for cryptocurrencies.
When the mainstream society learned how to buy bitcoin, the price of bitcoin had reached $14,000; a few days later, the exchange began accepting KYC (know your user) certification for these people, at which time the BTC reached $18,000. At that time, the trading volume of the exchanges soared, so that Binance, Coinbase, Kraken and other trading platforms took several days to completely "digest" the orders of these novices.
However, unfortunately, when the BTC reached nearly 20,000 US dollars, it began to decline, and the whole 2018 was basically in a downward trend. Some of the investors who entered the market became "setters", and many people suffered heavy losses.
Before the mainstream society also believed that cryptocurrency was a huge opportunity, the arrival of the bear market broke the trust of the mainstream society. After many people invest in losses, the bitcoin fluctuations are too large to be a stable means of value storage.
What is the truth, is Bitcoin really not suitable as a value store?
In fact, it is unwise to buy Bitcoin only in the last crazy phase of the bull market in 2017 (end of year). In the history of Bitcoin's 10 years of development, this unwise purchase period is less than 0.3% of the total purchase time of Bitcoin.
As shown in the above figure, the red box represents the wrong time to purchase BTC and the late 2017 bull market, the blue background represents the development history of Bitcoin for more than 10 years.
In other words, in all other periods when Bitcoin exists, buying Bitcoin is actually a good idea when you consider future possible returns.
Take the picture above, it is not wise to buy BTC near $19,000 in the short term. We now think it's not wise, just because BTC fell after reaching $20,000. But if the BTC reaches $20,000 or even higher, is this not a wise move?
Bitcoin is and will be a means of value storage in the future, and this view is now widely accepted by financial institutions. If the bull market in 2017 is driven by speculation and retail funds, the current price increase is more the influx of institutional funds, and they are long-term.
2. Geopolitical environment
At present, the international political climate is becoming more and more unstable, and tensions are escalating: the Sino-US trade war, the Iranian drone incident, the Brazilian populist election, and the vicious inflation country Argentina's 2019 election.
In addition, the domestic situation in Venezuela is turbulent, and the relationship between the United States and Venezuela continues to be tense; France and other European countries have continued to increase their large-scale protests against economic inequality.
What are the consequences of geopolitical turmoil?
The price of gold rose by $50 a few days ago. It is a clear sign. It also shows that financial institutions and individuals are looking for safe havens to store their funds as confidence in the dollar has fallen.
It is not just gold that people can choose, but bitcoin is slowly entering the public eye. Despite its greater volatility, it is still considered a safe and reliable means of value storage.
People are recognizing and accepting it: the underlying network of Bitcoin cannot be closed; the community is open source; prices will continue to rise.
Although Bitcoin is unlikely to be a world-class means of paying for digital currency, it may become a world-class way of value storage that may replace gold in future technology.
Gold currently has a market capitalization of $7 trillion, and Bitcoin has a market capitalization of only $200 billion.
Although there is still a long way to go, a lot of institutional funds have entered Bitcoin and the Ethereum ecosystem, indicating that the mainstream society has recognized the cryptocurrency and lit up a green light, which also proves that the cryptocurrency has a large appreciation. potential.
3.Facebook incoming encryption field
Mark Zuckerberg's entry into the encryption world is a positive sign for Bitcoin and the entire cryptocurrency sector.
In Facebook's recent white paper, the words "cryptocurrency" and "blockchain" were used, and with the overwhelming news propaganda, the interest of the mainstream society was further stimulated, and it was possible to generate trust in the cryptocurrency and ultimately accept.
Imagine that when Facebook's project makes the cryptocurrency really work, it will help break the barriers of centralization and achieve true decentralization. By that time, Libra may become an important tool for mainstream society to use cryptocurrencies.
(Odaily Planet Daily Note: On June 18th, Facebook's encryption project Libra went live and released a white paper. According to the white paper, Libra's main direction is cross-border payment, click to jump to related reading )
A survey conducted by Kaspersky Labs in February 2019 showed that about 13% of people use cryptocurrency as a payment method.
The study collected feedback from more than 12,000 consumers in 22 different countries. However, the report does not show how many people are using cryptocurrencies in hyperinflation countries that really need cryptographic payments (there will be a problem later).
Coinmap data shows that since December 2013, the number of companies receiving bitcoin worldwide has increased by 702%.
(Libra will increase public confidence in cryptocurrencies)
When millions of users start using Facebook and Whatsapp as a means of payment and value storage, the frequency of use of other payment methods will be rapidly reduced outside of these applications. Once people figure out how fast, safe, and easy to transfer with a mobile app, millions of people will use Facebook instead of PayPal to transfer money and eventually enter the digital banking era, thanks to Facebook.
4. The number of people who really need Bitcoin increases
Another force driving the growth of cryptocurrency prices and their application comes from people who are in hyperinflation or are frozen by the government, and the number of these people is growing, not afraid of bulls and bears.
In fact, the timing of the purchase of Bitcoin by some Argentines is the time (0.3%) mentioned in the previous article that is not suitable for purchase. However, compared with the national currency, the Argentine investment in bitcoin has a lower depreciation and better preservation.
Twitter user Josu San Martin said: "If an Argentine buys bitcoin at the highest point of the "biggest bubble in history" in 2017, his situation is definitely better than putting money in an Argentine bank account. So tell me once again, bit The currency is a terrible means of storing value."
Data from coin.dance shows that the weekly bitcoin trading volume in Argentina continues to rise, reaching a record high. This trend is not surprising in countries like Venezuela, which are all in the same hyperinflationary situation.
At the same time, more and more online and offline retailers offer encrypted payments in these countries. In fact, the BTC acceptance heat map in northern South America is quite different from that of six years ago.
(6 years ago)
(6 years later)
At present, a large amount of legal currency has entered the cryptocurrency market through financial institutions in some countries, but on May 11, a $14 million legal currency entered the market from Argentina. Although this figure is insignificant compared to the funding of large institutions, these numbers will increase in the future.
why? Due to the growing geopolitical uncertainty, Venezuelans, Sudanese, Zimbabweans and even Turks will store their hard-earned money in things that cannot be seized and censored by the government.
Facebook will now be an option for these people. But one day, this group of people eventually found that Facebook is not a good choice – because Zuckerberg can also confiscate or freeze their money – at this time, only the real decentralized cryptocurrency can become their financial haven.
People in countries with hyperinflation need cryptocurrencies to achieve value storage. Logically speaking, as the number of these people increases, the mainstream society will gradually adopt cryptocurrency.
Bitcoin has recently broken through $10,000, but due to the above reasons and motivation, this bull market is more sustainable than 2017.
I hope you can understand that buying bitcoin has always been a good idea. Although the era of encryption has arrived, deep down, I still hope that the cryptocurrency will remain youthful, rebellious and unpredictable.
Editor's note: This article is from Medium , author Lucien Lecarme , compiled by Odaily Planet Daily Qin Xiaofeng, edited by Lu Xiaoming, please be sure to indicate the source when reprinting.