Bitcoin Needs No Bailout

Those who’ve been in the space long enough know that as soon as Bitcoin heats up, counter-narratives start raging as well. 

JPMorgan – an early sceptic of Bitcoin – recently alerted the investment community to the fact that money was flowing out of gold and into Bitcoin. Now, the firm is warning that Bitcoin may never see the price rise above $40,000 USD again. 

Across the crypto community, statements like these are either taken as attempts to generate fear and doubt (FUD) and drive the price down for better entries, or as a sign that Bitcoin still makes some institutions uneasy and they might need more time to see how Bitcoin really behaves over the long term.

Questions of the day

1. How has fiat currency performed over the long term?

2. How have banks behaved over the long term?

In the meantime, for the past twelve years, a growing community of retail traders, everyday people, and increasingly smart institutional investors have begun to integrate their finances and investment portfolios with digital assets.

Newbies might be shaken by headlines that read “Will Bitcoin go to ZERO?” But we have to be aware of the politics of investment and realize that ‘financial experts’ who speak out against Bitcoin often have a stake in gold or another cryptocurrency for that matter. 

Over these past few years, Bitcoin has been pronounced dead by the media and skeptics more than 395 times. 

Will Bitcoin Die? (Hint: Don’t Ask The Banks)

It’s all quite simple actually. 

Up until 2009, the only real money that existed was gold. Over the centuries, the purchasing power of gold has not changed that much. An ounce of gold, a few hundred years ago, would have bought some high-born a nice robe and some proper shoes for the next gala. Similarly, an ounce of gold today would be good for a proper suit and some neat shoes. This is not the case with the US dollar, or any fiat currency for that matter.

Since 2009, next to gold, Bitcoin emerged as a new form of money. We already know Bitcoin holds all of the same characteristics as gold from a technical standpoint. It is scarce, divisible, fungible, portable, durable and so forth. 

This doesn’t mean “gold will die” or “go to zero”. It just means that investors who see merit in Bitcoin and prefer price appreciation over stability will add Bitcoin to their portfolio – perhaps diversified with gold. 

Let’s have a look at this logarithmic chart of Bitcoin and try and answer the question about Bitcoin’s potential price direction. 

As we can see, each time Bitcoin has reached it’s all-time high, there has been a period of depreciation, stagnancy and consolidation, before proceeding. This chart is from the end of 2020. 

Who can look at this chart and still ask if Bitcoin is going to ZERO? 

Since March 2020, we’ve seen institutional investors buying Bitcoin, and scanning the news now, we are seeing only more of the same interest for the same reasons. MicroStrategy’s Michael Saylor is inviting his corporate clients and contacts to learn about Bitcoin and how to practically go about allocating a portion of a company’s treasury to the digital asset. 

Furthermore, as we’ve learnt during this pandemic, there is no stopping the digitalization of society. Bitcoin is part of that progress and increasingly people around the world are beginning to understand that Bitcoin is not some get-rich-quick-scheme, but rather a get-your-money-to-safety-in-the-long-term-scheme. 

Everyone Loves Drama

Let’s take a look at some of the negative coverage over the past few years, just so that we can determine what value we should place on statements by banks, investment firms or gold whales that want to save the world from Bitcoin.

2015, BTC: $450, https://www.profitconfidential.com/forex/could-bitcoin-prices-hit-100-this-is-why-bitcoin-is-doomed/
2017, BTC: $13,700, https://www.businessinsider.com/morgan-stanley-on-bitcoin-value-2017-12
2018, BTC: $3600, https://seekingalpha.com/article/4228832-bitcoin-decline-is-fundamental-unsolvable-and-end-of-btc
2019, BTC: $4000, https://gizmodo.com/bitcoin-surges-15-overnight-because-nobody-learned-the-1833737971

As an exchange, we do not give investment advice. As an exchange, we earn revenue when users trade on our platform.

However, we do believe very strongly in the future of digital assets and Bitcoin as a store of value, and we think it is very important for newbies to this space not to be too easily intimidated by negative news coverage and warnings by the big banks.

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