Reasons To Be Cheerful About Bitcoin
Bitcoin might have taken a 30 percent plunge in recent weeks, not to mention an onslaught of negative headlines that have sent investors retreating into bear mode. If you look at the bigger picture, however, you can see that Bitcoin’s value is still 300 percent higher than it was a year ago. Zoom out over the past years and you can see further that these kinds of obstacles are nothing that Bitcoin hasn’t successfully hurdled before. So let’s be optimistic and look at three reasons to stay cheerful about Bitcoin.
#1 The Market Will Find Its Bottom
Ever the Bitcoin bull, Michael Novogratz’s latest remarks on the current Bitcoin price drop can be taken as a sage warning to keep the faith, while bracing ourselves for a long road ahead:
“Humpty Dumpty never gets put back together in two days … when he cracks. It’s going to take a while. The market will consolidate. It will find a bottom somewhere.”
At the time (May 19) Novogratz’s prediction was that the market bottom would be between $36,000 to $38,000 so he might have been a little optimistic there, given that the price has already dipped to near $31,000, but even so as the price continues to yoyo above this, it looks for now like that bottom has potentially been found (let’s see) and Bitcoin could be back on the long road to recovery.
#2 Price Corrections Are Par For The Course
The crypto marketplace is no stranger to price volatility and we’ve written in the past about how it is unlikely to stabilize until crypto becomes widespread enough for people to start using it regularly as an actual currency.
2017 was a particularly volatile year for Bitcoin, with the price surging and dropping numerous times. As severe as those price corrections may have been at the time (and we’re talking about 30 percent or more price drops on multiple occasions throughout the year) the market always recovered and went on to see a staggering growth in Bitcoin’s value of 1900% before the year end. As they say, corrections are a healthy part of a bullish market.
#3 The Bubbles Could Be a Product of Bitcoin’s Programming
One of the biggest arguments against Bitcoin is its unpredictability. In an article published by Pete Rizzo in Forbes earlier this year, however, the author asserts that there is a growing body of evidence to suggest that Bitcoin’s patterns are anything but random and are actually cyclical and predictable.
His first argument is that Bitcoin is a software technology, not a price, the price is rather set by its buyers and sellers. Next, he reasons that the software intentionally impacts this price through Bitcoin’s programming and scarcity and that it has three fundamental differences from any other global economy that set it apart, namely:
- A fixed supply
- A continual reduction in the rate of supply into the economy
- A lack of central ownership
Bitcoin’s value has always rebounded regardless of euphoric media headlines one moment and negative backlashes the next, and points to Bloomberg’s realization that Bitcoin had one of its strongest ever rallies when no one was actually talking about it.
It is precisely the first two constraints on Bitcoin’s code, argues Rizzo, that lend Bitcoin a predictable stability with a remarkable ability to continually stimulate the economy and kickstart new cycles regardless of market manipulation.
This, he concludes, is why we can believe in cryptocurrencies and why Bitcoin investors have good reason to plan for the future.
There are clearly strong arguments to look on the bright side with Bitcoin and even long-time skeptics would agree. At Consensus 2021 this week Bridgewater Associates founder, Ray Dalio, admitted to owning some Bitcoin and seeing the digital currency as increasingly attractive.
Good reasons indeed to remain cheerful about Bitcoin.
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