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February was an eye-opener for Bitcoin. On the back of BlackRock and its constituents, we’ve seen the legendary Bitcoin ETF shatter all-time ETF inflow records and surprise even the biggest BTC supporters.
For the first time in Bitcoin’s short history, Wall Street and all of its customers have no filter on the best-performing assets of the past decade, in a world where it’s increasingly difficult to make huge profits. can now be accessed. Additionally, Bitcoin’s rarity, combined with its upward convexity, makes it extremely difficult to acquire during a rising phase. Essentially, as prices rise, potential sellers are less inclined to reduce their exposure, creating an even stronger upward tailwind.
Related: Infographic: Bitcoin enters 15th year
The perfect recipe at the perfect time
A less-studied aspect of the factors that have fueled the widespread adoption of Bitcoin and other cryptocurrencies is how it impacts our relationship with money, both socially and politically. . The best way to explain this is to imagine a dystopian world without fiat currency as a result of World War II. In such a world, wealth would be fairly easy to define. In other words, those who own legal, tangible assets become rich overnight, but those who own now-worthless banknotes do not.
However, fiat money was created because barter was often difficult and impractical due to market inefficiencies, which continue to be the case today. More specifically, in a transaction between person A and person B, person A must ensure that person B values his “money”, in this case gold, apples, etc., as he does. yeah. Additionally, all money is valued differently by different parties, making it difficult to accurately assess how wealthy a person actually is.
Fiat currency was created to serve as a financial bridge to solve market inefficiencies. But in a highly fragmented world, there are infinite forms of fiat currency. This made sense when fiat currencies were backed by legitimate assets such as gold, but this is no longer the case. Instead, the value of modern money is whatever the issuing government says it is worth. Ultimately, whether that’s the case depends on whether the broader public agrees. This, combined with rising geopolitical tensions and given how precarious our relationship as a society with our governments has become over time, means that fiat currencies, as a safe store of value, may not be available for long periods of time. began to put pressure on its viability. Argentina and El Salvador are good examples.
Bitcoin is the best modern solution or alternative to “money” that exists today, and Wall Street knows it. In addition to this, Bitcoin is the closest thing to a more practical gold. It’s obviously rare, no one can control whether its owner has it, and it’s “relatively” easy to trade in exchange for goods and services.
Related: Are NFTs back? Why NFTs will make a comeback in 2024
Bitcoin hot girl summer?
While I remain incredibly bullish on Bitcoin, especially as we approach the upcoming halving event, I also maintain that a correction is likely and necessary as we move towards all-time highs. doing. That said, increased access to Bitcoin, along with additional market factors and technicals, provide a strong case for price appreciation through the remainder of 2024.
The biggest difference between this bull market and previous bull markets is that, thanks to Bitcoin ETFs, countless financial institutions are active in this space. Currently, his daily ETF inflows are more than 12 times his network’s natural supply. Additionally, portfolio managers (PMs) at asset management companies are rapidly acquiring Bitcoin, but they are not doing so to trade large amounts in the market. And why do we do that?Given Bitcoin’s track record, almost any long-term portfolio can and should We have exposure to the world’s best performing assets. Additionally, this innovative technology has a smaller market capitalization than many of the world’s largest companies and is still in its infancy.
Moreover, retail investors have not yet returned to the market despite the new highs. For context, Coinbase was the number one app in the iOS App Store at its peak last cycle. Currently, Coinbase is still outside the top 100. As a result, apart from Grayscale’s GBTC outflow, the upward pressure seen so far has been relatively uninterrupted. However, price volatility should become more volatile as retail trade and additional leverage enters the system.
Finally, upward price pressure is further increasing given that over-the-counter (OTC) desks are running low on inventory, forcing companies to pull supply from the market. With 80% of Bitcoin’s supply classified as “dormant,” there are only a few routes to acquiring this asset. Definitely HODL!
Related: How Cryptocurrency Changed My Small Business — And How It Can Help You, Too
conclusion
As a reminder, none of the above should be considered investment advice. Asset prices can fluctuate, so if you want to get involved in cryptocurrencies, do so only after doing proper research.
But we are now facing what could be the most transformative revolution of our lives. For those reading this, please understand that it is still too early and that the path to a freer, more economically inclusive world will almost certainly have ups and downs, and sometimes more downs. In the meantime, brace yourself for the disruption ahead.
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