Bitcoin Price “Correction” Could Spur Further Cryptocurrency Adoption Down the Road

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Bitcoin Price “Correction” Could Spur Further Cryptocurrency Adoption Down the Road

There is no hiding from the bloodbath happening in the crypto markets. Pretty much every coin has been sold like there is no tomorrow. Bitcoin has been an industry standard for value, but it is getting slaughtered. Over the past week BTC broke support and traded under $4,000 USD. Many commentators compare cryptos to other financial bubbles.

The Mississippi bubble and Tulip Mania are frequently used to describe the price action in the crypto markets over the last 18 months. Other people have used the ‘dot-com’ collapse as an analogy for cryptos. One look at a chart will confirm any of these comparisons, which probably makes crypto bulls more than a little bit nervous.

Bitcoin’s Death has Been Greatly Exaggerated

Contents

  • 1 Bitcoin’s Death has Been Greatly Exaggerated
  • 2 The Long View Looks Amazing
  • 3 Who Wins the Race to a New Monetary System?

Let’s remember where BTC prices were when 2017 began.

Here is an article detailing how BTC topped $1,000 USD on January 1st, 2017, which is a level it had first achieved some three years earlier. Unlike 2014, BTC went on a wild ride to nearly $20,000 USD over the course of last year, which was clearly driven by speculative interest in retrospect.

Matthew Newton, who works as an analyst at eToro commented that,

“Of course commentators have drawn comparisons between the current bear market and the dot-com bubble of the 1990s,” and continued, “While this is inevitable, I’d venture to suggest it’s not particularly useful – it’s a bit like proclaiming the end of the FTSE 100 at the end of 2008. One of the benefits of a bear market is it weeds out people who are looking to make a quick buck, and aren’t interested in the underlying technology. Those who understand the technology and see its benefits tend to stick around, adding value to the market.”

One thing that the fabulous rise in cryptos was able to achieve is widespread public knowledge of the sector. Much like internet stocks in 1999, people all over the world were looking to cryptos to make their fortune overnight.

Bitcoin vs Dot Com Bubble

Read: Bitcoin vs The Dot Com Bubble

Of course, the ‘easy money’ story always seems to have a rotten ending, which brings us to today. BTC prices are still up more than 370% from where they were in January of 2017. Even if BTC fell to $1,500 USD, it would still be sporting a 50% gain in less than two years.

In the established financial markets, that kind of return is tough to come by.

The Long View Looks Amazing

There are numerous people in the crypto community who are long-term bullish on the sector. A positive view always sounds naive in the grips of a bear market, but the bulls have every reason to be optimistic.

Over the last two years the world woke up to the miracle of blockchain, and today hundreds of millions of development dollars are entering a technology that had been extremely obscure just a year or two ago.

Angel Versetti is the CEO Ambrosus, and he told The Independent that,

“I wouldn’t compare the current state of the crypto market to the dot-com bubble,” and, “While there are similarities in terms of overvalued new technology startups with unproven or unsustainable business models that were incessant in both dot-com and crypto, the sheer scale of crypto and dot-com businesses are not comparable. I do not believe we are, or were, anywhere close to a bubble with cryptocurrency.”

The founder and CEO makes a good point, but like many people in the crypto world, he may be overlooking the fact that big businesses aren’t going to start using unregulated technology for payments and savings.

The creation of currency has always been controlled by a government, for the simple reason that it is an incredibly powerful social tool.

Blockchain and cryptos have certainly created the possibility of stateless currency, but as China has demonstrated, the powers that be aren’t going to accept a monetary system they can’t control (China doesn’t trust the US monetary system either).

Who Wins the Race to a New Monetary System?

Much in the same way that most people don’t know how to build or program a computer, there are very few who actually understand the nature of money. Most people don’t care, and just want to be able to buy a quart of milk or bag of chips at the market.

For now, cryptos have a long way to go before they replace dollars, rubles, euros or any other fiat currency that has government support, and is backed by a central bank.

Interestingly, there are major banks that are working with both Ethereum and Bitcoin. BBVA used the Ethereum blockchain to close a syndicated loan, though they didn’t use ETH as a part of the payment process. For now, it seems like most people who are involved in cryptos aren’t holding them as a store of value, nor as a means of transaction.

If there was a waiting market for cryptos as a means of payment, or if there was widespread support for cryptos at a certain price level (above the current trading range), they wouldn’t be in free-fall. At some point, the real value of cryptos will assert itself, and the market will form a bottom.

When that bottom occurs, it will likely be the buying opportunity of a lifetime.

Original Article – Blockonomi.com

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