Crypto is not for the fainthearted. It takes heart to endure the massive pump and dumps that characterize this market. It’s worse for altcoins, most of which never followed Bitcoin (BTC) in its 2019 recovery. While this situation may look unfavorable in the short-term, the future outlook for crypto is bright. Here’s why.
Bitcoin (BTC) holds water as a store of value
One argument that is often made against Bitcoin as a store of value is that, it is too volatile. With dumps of up to 30% at a time, it is easy to argue against BTC as a store of value. However, one only needs to zoom out the charts, to understand why Bitcoin has been a very successful store of value. Since its launch, it has been on a bullish trajectory. In spite of the massive dumps, it always swings back higher. In 2011, it crashed after hitting a high of $31. It then rebound, and made new highs, before crashing again in 2014 following the shutdown of Mt. Gox. Again, it bounced back again to make new highs, and later along tested the historic highs of $20k in 2017. Its recent rebound past $10k is a positive indicator that it has the potential to break past its 2017 highs. By using its long-term charts as a basis, Bitcoin is easily one of the most successful assets of the 21st century. Going forward, there are a number of factors that will make the case for Bitcoin as a store of value. The most important one is ease of use. One of the most common store of value assets is Gold. However, unlike Bitcoin, gold is not easy to use. It is cumbersome to transact in physical gold, and rarely will you find a store that accepts gold as payment. On its part, Bitcoin has the attributes of gold, such as scarcity and security, and it’s much easier to use. That’s because, it is digital, and highly convenient to transact. You can buy and sell anything using Bitcoin with a few clicks on the screen. This ease of use will continue to drive demand for BTC as a gold alternative, and as a consequence push up its value long-term.
The global economy is shaky
The global economy is slowing down, and analysts believe that a recession is imminent. This is quite evident in the increased flow of capital into bonds and other low-risk assets. While the China-U.S trade war is partly to blame, rising sovereign and individual debt is also a factor. So complex is the situation that, central banks are even testing out negative interest rates. This is an indicator that in case of a global meltdown, traditional monetary policy tools may not work. The result would be a collapse of most fiat currencies through hyperinflation. Countries like Argentina and Venezuela are already experiencing massive devaluation of their fiat currencies. When this happens at scale, people will not have an option but to run to safety, and what better safety there is than, Bitcoin (BTC), the digital gold. It is scarce, secure, and is not controlled by any State. The next global recession could easily usher in the era of digital currencies led by Bitcoin (BTC).
Adoption is happening
The crypto market may look like a ghost town at the moment, but looks can be deceiving. Adoption is happening at an exponential rate, beneath all the FUD and mass disinterest. Cryptos like Bitcoin (BTC) and Litecoin (LTC) are now accepted in multiple stores across the world. Platforms like Bakkt will also bring in lots of institutional money into this market. As adoption grows, so will the value of the crypto market.