Bitcoin is kind of like that neighbor that moved in a year ago, but you never really got to know them or how cool they were until last week. Just think about all the gossip you’ve missed out on. Bitcoin on the other hand, has been around since 2009, but it seems like we’ve only just gotten acquainted with the crypto king.
Bitcoin made its grand entry to the world in 2017 as it began to gain mainstream media’s attention. Running all the way from $2,000 in May 2017, to almost $20,000 last December, we saw it 10x right before our eyes, and then... everyone forgot about it again for 3 years.
Despite this though, Bitcoin stuck around, and all the believers in decentralized finance, whales and small-time hodlers alike, seem to have been proven right for now. For the foreseeable future, it appears Bitcoin is here to stay, and it’s taught us some important things along the way.
Volatility is a part of the adoption
Bitcoin’s journey has been anything but a linear one, with the name becoming almost synonymous with volatility over the course of its life. V-shaped crashes and returns of over 20% or more on any given day have become the norm in crypto-land and a phenomenon that long-term investors are not phased by because they understand patience.
When you introduce an entirely new asset class to the world, something shrouded in skepticism and instability, volatility is just part of the process. Bitcoin doesn’t have a near objective, longstanding, agreed-upon value like the dollar or other traditional assets. FUD and any inkling of bad news are enough to spook off speculative investors, and that it does.
Bitcoin is also like an extremely low float asset in comparison to most other stocks. While there is over 18 million bitcoin in existence, some estimate that the free float of this is actually only around 2-3 million, making whale liquidations result in even bigger splashes.
Patience is required
Accepting its volatility is therefore a part of the acceptance process, and patience is a virtue when it comes to awaiting its stabilization. No one knows when Bitcoin will outgrow its overly dramatic price movements, but it’s likely to be after the Bitcoin that’s been stuck in cold storage for years gets liquidated, large wallets sell, and the price rises accordingly as more and more retail investors join.
A crypto monopoly of sorts
Bitcoin obviously has the highest market cap of all cryptocurrencies on the market. Sitting at about a $1 trillion market cap, the only other crypto that comes close is Ethereum, which has a market cap north of $350 billion.
Therefore, Bitcoin essentially is the crypto market, and although other competitors can provide some valuable and useful alternative projects in the future as this area of technology progresses, it appears that Bitcoin is currently king, and the one crypto with strong institutional following.
Bitcoin and DeFi are probably here to stay
Bitcoin doesn’t just exist for the sake of itself, or because its anonymous creator wanted to create a new commodity with a trillion-dollar market cap for fun. The entire thesis behind Bitcoin was to begin work on the idea of decentralized finance, and it has accomplished just that.
The uses for blockchain technology and decentralized financial assets and currencies have shown their value to the world in more ways than just exponential gains in the crypto market, and this perspective on money and personal finance is something that’s left an impression on the world for good.