- Almost out of nowhere, the bitcoin price surged by 40% within a matter of hours.
- The rally brought out the bitcoin bulls, along with their starry-eyed price forecasts.
- But what if this historic bounce is also the last one the cryptocurrency will ever see?
After dropping for months,bitcoin’s pricespiked 40 percent when China’s president announcedthe country’s embrace of blockchain technology.
This marked the third-biggest 24 – hour rally in bitcoin’s history and sent the cryptoverse into a frenzy . Bears turned into bulls. According to TheTIE,bitcoin-related tweets popped percent. Blockchain stockszoomed higher.
Some say this latest pumpconfirms the bull market. Next stop: $ 20, 000.
What if this isn’t a new bull run? What if this is one last FOMO by exhausted enthusiasts — the last gasp of a dying technology?
Don’t get the wrong idea — I believe inbitcoinand cryptocurrency . I wrotea book about a country that runs on cryptocurrency!
I really want it to succeed, and I think it will. Nothing would make me happier.
I have found that when everybody expects something to happen, it usually doesn’t.
Before we get wrapped up in the coming bull market, can I offer a contrary view? “Eyes wide open,” as they say.
Lightning Network has lost 25 percent of its channels since July 2019. Capacity has fallen 20 percent, and the overallrate of growth has slowed significantly.
Despite spiking up over the weekend, Google Trends shows bitcoin searches remain barely as popular as they were during the late 2018 “crypto winter.”
In the largest global survey of cryptocurrency sentiment to date, Crypto Radar found overwhelming numbers of people plan never to buy bitcoin. Barely any plan to buy it at all.
In a separate report, Grayscale found75 percent of all investorsstill associate bitcoin with crime.
After more than ten years, almost nobody uses it as a peer-to-peer electronic cash system. Its advocates now call it a “store of value,” which basically means “buy it because the price will go up.”
A hammer searching for a nail
For sure, bitcoin matters for many people. But its market is totally speculative.
In speculative markets, facts don’t matter. It’s all sentiment. When people see bitcoin’s price go up, they buy. When people see bitcoin’s price go down, they sell. Nobody stops to think about what’s really going on behind the prices.
Substantively, nothing changed when the price moved from $ 3, 200 to $ 14, 000. No great innovations, no big developments, no mass adoption.
We have Lolli, Lightning Network, smart contracts, side chains, Bisq, altcoins, and dozens of other innovations from developers and businesses. Is it possible they’re working on technology and services nobody’s asking for, all in an attempt to force bitcoin into the mainstream?
If bitcoin’s so great, shouldn’t it have come a lot further by now?
And for all the progress we’ve made, what does it matter if we are only trying to figure out ways to make ourselves rich?
But, but. . . The Bitcoin Halving!
You may expect bitcoin’s price toexplode when the halving hits next year.
After all, the market’s already absorbing 1, 800 BTC each day. When you cut that number in half, prices willhaveto go up!
What makes you so sure that will happen?
But, but. . . institutional investors!
You may think bitcoin will boom because large investors have started buying it and investing in other cryptocurrency ventures.
Let’s put that into context.
Institutional investors hold at least$ 22 trillion in US-registered investment funds, much more abroad and unregistered . To date, they have put almost none of that money into bitcoin. VC investmentsdropped over 50 percent from (to).
Bakkt? So far, it’s done about 1, 100 contracts on its best day. CME does about 2, 000 on an average day. Compare that to the 240, 000 daily volume for the Dow’s “e-mini” contract.Fidelity? When it finally opened its cryptocurrency custody platform to the public this month, its CEO said: “it’s not really that big of a deal.”Peter Thiel, a Forbes (billionaire,recently put some money into a renewable energy bitcoin mining farm. His stake is probably about $ 2 million, certainly less than $ 50 million. That’s pocket change for a guy who’s worth $ 2.3 billion.Jack Dorsey, the multi-billionaire Twitter CEO and bitcoin champion,buys $ 10, 000 of bitcoin each week. Over the course a year, that’s only0. 02 percentof his wealth. His bitcoin development team consists of only five people, and Square Cash makes up a tiny portion of his business portfolio.Harvard bought $ 5 – 10 million worth of tokens from Blockstack , a new dApp platform, andeveryone went crazy.
For Harvard’s $ 38 billion endowment, $ 10 million is literally a rounding error — it’s. 00000025 percent of the total endowment. That’s like a millionaire buying $ 2. 50 worth of bitcoin or your average American plunking a dime into a crypto tip jar.
But, but. . . bull market!
Every bull market starts the same way: darkness followed by a bump up, drop down, then explosion. You see this in all markets over all time periods. It takes months — even years — for people to realize what’s going on.
Sometimes, though, that bull market is really just a long, drawn-out bounce.
Consider Japan’s stock market.
Look at the log chart of the Japanese stock market since (****************************************************************************************:
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