After the latest crash this past May resulting in a 50% loss, crypto investors are left wondering are Bitcoins still a good investment or not, and are faced with the real possibility that the bull market is over earlier than most expected, you can read more click here.
Long-term price predictions still call for hundreds of thousands per coin but the swift sentiment change across the market now also has many suggesting a return to $10,000 or lower. But there are several factors that say otherwise. Institutions are now buying BTC, and after the halving in 2023 there just aren’t enough new coins coming into the market to meet demand.
The resulting supply shock has got the cryptocurrency this far, so let’s consider all the facts regarding where Bitcoin could be in its market cycle and answer the question on if the top cryptocurrency by market cap is still the best investment around.
The Rise Of Bitcoin, From Pizza Day To The Silk Road
When Bitcoin was first introduced to the world, it was virtually worthless. No one barely knew what it was let alone understone what it might be worth some day. The only way early users could get their hands on BTC was by mining it. Mining back then could be achieved with a standard computer, then later it required GPUs and eventually custom ASIC miners were born as difficulty advanced.
Early users often had hundreds of thousands of coins as it was a small hobbyist category filled with mostly cypherpunks and early tech enthusiasts curious about the promise of digital cash.
The first ever transaction for real world goods involved 10,000 BTC being exchanged for just two pizzas. At the price of more than $30,000 per coin today, that same BTC would be worth around a half a billion dollars. The ROI on the rise of Bitcoin is unprecedented, beating any stock, commodity, or other asset in history.
During the earliest days of Bitcoin it rarely seemed like a good investment. It took offers later down the line due to the emergence of the Silk Road dark web marketplace. People buying it then to exchange for drugs and other black market goods helped to prove the concept and begin the network effect.
The Bitcoin Network Effect Explained
Bitcoin itself and its price grows by network effect, which is made even more prominent due to the hard coded halving. Roughly every four years the Bitcoin Core code slashes the BTC that miners receive as a reward for confirming transactions and keeping the network secure.
The idea is that the change in supply and demand fuels each bull cycle and causes prices to rise exponentially. In comparison, when gold is bullish miners produce more of the metal to compensate for demand. Eventually the market comes into balance. With Bitcoin, when demand is highest, supply is slashed causing prices to bubble up and burst.
But it is the glamor, glitz, and excitement surrounding each of these bubbles that causes the network effect to continue and the userbase to swell further. Holders of Bitcoin are incentivized to spread the word about the cryptocurrency, which entices new participants to join during each wave.
The importance of this latest wave cannot be understated. The most recent bull market has finally attracted the likes of institutions, hedge funds, corporations, and well-known celebrities. During past bull markets, there was no Elon Musk, no Michael Saylor, and no Tom Brady hoping to become a “pioneer” in crypto.
The technology has been around for more than a decade now, yet is still early enough that new participants consider themselves pioneers and see the long-term promise cryptocurrencies like Bitcoin and Ethereum have to offer.
The nascent technology is indeed new and still very young. Billionaire investor Paul Tudor Jones says it’s like investing in Apple early, and Bitcoin is already trading at tens of thousands of dollars today. If these wealthy and intelligent individuals see the long term potential of Bitcoin, they will get others to believe in it also. And because this latest wave of powerful individuals have such reach and influence over their audience, the future of crypto is only growing brighter by the day.
Bullish Fundamentals Beat Short Term Bearish Technicals
Even with the recent bearish technicals, Bitcoin fundamentals are more bullish than ever before, suggesting the bull market isn’t quite over. The latest selloff and fall to support could possibly be a reaccumulation phase before the cryptocurrency soars to new all-time highs.
More and more BTC is moving off of exchanges, and on-chain analytics show that long term holders continue to grow, while the recent selloff flushed out short term holders. The result will be an even stronger impulse higher based on a strong conviction in Bitcoin as a transformative technology.
There’s more than $10 trillion worth of capital in gold yet only $1 trillion in Bitcoin. When the cryptocurrency reaches such levels, it will be worth $400,000 or more per coin. The upside in gold is nowhere near as high, and for that reason Bitcoin has been called the fastest horse in the race against inflation.
Bitcoin technicals are only temporarily bearish. The MACD on high timeframes is beginning to turn back bullish, while the Ichimoku has yet to flip bearish yet at all. Historical volatility is also extremely low for Bitcoin standards, and the target of the massive bear market symmetrical triangle has nowhere near been reached.
Finally, the hash ribbons, Bitcoin’s most profitable buy signal ever, is nearing a buy signal after what the tool’s creator, crypto analyst Charles Edwards, calls a stress test of epic proportions.
The expert is referring to the recent China FUD against Bitcoin where mining Bitcoin has been outright banned in many regions. Combined with blackouts and more, the network recently saw strain that caused the selloff. However, as always, hash rate is already recovering, Bitcoin survived, and it will continue to do so, making it an asset anyone should consider for the long term.