Tough times for the “buy Bictoin and get rich quickly” masses. Some are selling everything and try to accept their loss and forget about crypto. Bitcoin was sold at the beginning for $ 1 cent/ 1 BTC. Now that is has a support of $6k, or even lower, people are panicking. Calling it a scam. Bitcoin is dead they say.
What is the actual value of Bitcoin?
BTC price had a lot of volatility, but also huge growth, in the last years. This brought a lot of media attention, government attention and so happens that regulators begun to stick their nose in the crypto space. But considering all the scams that were out there and the people’s naivety, that is not an actual bad thing. Digital currencies were the small talks people had in cafes, at parties, at work, on the streets – everywhere. Everyone was talking about the early opportunities they had, and lost.
So where does the BTC value come from?
The latest price movements, meaning the exponential growth we saw in 2017, got people to think that cryptocurrencies are a magical market, where you throw in some money and you get huge gains in a short amount of time. But that sounds like a ponzi scheme, putting it that way, isn’t it?
That is not how things go around here. At least, not on the long term. The Bitcoin value, as much as any other crypto asset, is determined by the following factors:
- People’s investment, as a store of value
- The community use of BTC
- Mining distribution of new Bitcoins
- The exchange opportunity (ease of use, transparency etc)
The same thing applies to any currency, euro, yen, dollar – if people would stop using them and attribute utility to them – then the value would drop consistently.
Since 2009, there have been a lot of price movements in the BTC price. I went for $1 to $29 and then back to $2.1. Media started to speculate and gains on 30x were rolling out on investors eyes. Some of them had good strategies of buing cheap again with the expectation to sell higher. And some did actually bought at $2 after the crash and sold at gains of 20x or 50x or whatever.
But HODL-ing would have been a more profitable trade on the long term. But where’s the adrenaline in that? Some are comparing trading to a gambling addiction – you have to be in the game, to get that dopamine in their brains.
Bottom line, people were trying to predict BTC price movements and get rich trading this asset. And many managed to get rich.
The BTC price will be influenced again by the media, on some level, and market cycles will have their ups and downs, taking their tolls and some people’s money along.
In the end, the actual use of Bitcoin will dictate it’s price. We will see if investors will use it as a store of value, or as a trading currency. Or mostly for speculative reasons. Huge companies started to accept BTC and other crypto coins as payment options. That helps a lot and is necessary to bring more and more utility to all crypto assets as a use of conventional currency for buying and selling.
What price can we see for Bitcoin in the future?
The most accurate answer you can get is: we can’t tell. It all depends by the questions above. Market adoption will dictate that. What we have to keep in mind is the great opportunities we get using cryptocurrencies:
- Peer to peer transfer
- Instant transfers
- More control
The bottom line is, people have to stop using cryptocurrencies as speculative investments. And they should start to actually benefit of the awesome utility that blockchain brings.
Are you ready to do this? Leave you thoughts in the comments below.