I’m Ashton Addison from EventChain.io and this is the Crypto Coin Show. Where I decrypt the facts to keep you on track in the crypto world.
Is Bitcoin (and the cryptocurrency industry as a whole) currently in a bubble that’s going to pop?
I’m going to try to dive passed the fear and uncertainty manufactured by mainstream media and get straight to the facts to tell you which direction I think Bitcoin is heading in the future. Of course it will depend on many factors as it will react to the stock market, housing market, and the state of traditional economic affairs but I believe Bitcoin will prevail because it is more than just a currency, it is a socio-political movement.
With the cryptocurrency industry growing over 1 billion dollars a day and reaching 115 billion dollar market cap so far this year, a lot of crypto traders are worried about a Bitcoin bubble. Many consider Bitcoin a better store of value than traditional currencies, and want to get into Bitcoin for a better return, but are afraid the price might crash. Today I’ll explain why the fear is overhyped and mainly manufactured by mainstream media outlets mentioning Bitcoin in a bad light.
But first, Ethereum and the other altcoins have made huge gains this year. Ethereum has surpassed over 80% of Bitcoin’s market cap and is expected to jump ahead of bitcoin in the coming months. Is the industry in a bubble altogether? I wouldn’t worry about it too much…
Crypto coins are very volatile and when they rise too fast there is always a price crash in the opposite direction. If you can’t handle the volatility, you should probably stay out of the game. In the long term the trend has always been up and I believe that as young as this industry is it has more potential to grow exponentially rather than to crash and plummet.
Here’s five reasons why I believe Bitcoin is not in a bubble (There’s many other reasons, but let’s focus on the big five for now).
Firstly, the Bitcoin supply system is more predictable than the American dollar and can’t be manipulated. This relates to the fact that it is a decentralized infrastructure compared to the traditional centralized monetary systems. The central banks controlling fiat currencies have the ability to add or subtract dollars into their economies Money Supply at their will. While this can be useful for trying to stimulate the economy, it can also cause recessions through. Money Supply manipulation instead of letting the market sort itself out.
Bitcoin’s supply is limited, and we know that currently 6.5 bitcoin enters the market every 10 minute bitcoin block, and the distribution rate/miners reward will halve approximately every 4 years. In the American economy, the Federal Reserve can print dollars at will, making the supply very unpredictable which can depreciate your dollars overnight. Bitcoin supply manipulation can’t be done easily if no central authority governs Bitcoin. There is a better chance that the American dollar will crash rather than Bitcoin In part because of the supply manipulation.
Second, Money is nothing more than a way to keep a record of who owes who. Bitcoin is actually an improvement to the current cash system and we can all see the transactions right on the blockchain. Just yesterday the Australian opposition leader Bill Shorten declared that bitcoins is fueling criminal activities and wants to halt its use. We all need to tell Bill to wake up. Cash can easily be obfuscated, hidden, counterfeited and used in illegal ways with no record whatsoever, And people try to blame Bitcoin for criminal activities, when actually its cash.
Third, Bitcoin acts as a hedge for traditional investments. Like gold and silver metals, there is somewhat of an inverse relationship between how the economy is doing and the price of gold, silver, and bitcoin because they are negatively correlated to the dollar. When traditional currencies start crashing like with the Japanese Yen, people flocked to these traditional investments as a safe haven for their investments.
Fourth, The stock market and housing market could also be considered to be in bubbles and Bitcoin could grow in the long term if any of the other markets crash, which are way bigger right now, but not what I would consider too big to pop.
Fifth, While there was talk about creating a Bitcoin ETF which could include derivatives of Bitcoin on stock exchanges similar to purchasing gold and silver derivatives. Holding actual Bitcoin means the Bitcoin blockchain accounts for everybody’s funds in real time, and the fact it’s portable makes it better than gold. While Bitcoin is supreme, It’s still good to contemplate having gold and silver as a portfolio diversification tactic alongside cryptocurrency.
Bonus point: Where else outside of cryptocurrency can you transfer money across the world and receive it in minutes with low fees? We are upgrading from slow, centralized, insecure financial systems. This is a huge technological improvement.
These five reasons are all positive attributes towards Bitcoin’s future. The current United States Money Supply is $13.5 trillion, and the market cap of cryptocurrency industry is $115 Billion, a mere fraction of one percentage. This alone shows there is room for growth and many people are still unaware of what Bitcoin is and the benefits it provides. Most of us are early adopters at this point, and Bitcoin in the long run will rise, even if there are bumps along the way, which we know there will be.
What are your thoughts on this alleged Bitcoin bubble? Let me know in the comments section down below.
I’m Ashton Addison, CEO/Founder of the EventChain Smart Ticketing platform. See EventChain.io for our whitepaper and to join the community.
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Look out for next weeks update, when I decrypt the facts to keep you on track in the crypto world.