To start this post off, it is important to know that nothing in this post can or should be considered financial advice or consulting. Simply one person’s opinion on Bitcoin and the future of digital assets. With that being said, let’s dive into it.
Is Bitcoin a Good Investment
Most people these days have at least heard of, if not looked into, Bitcoin one way or another. Assuming most people at least know what it is, we are going to skip that part. If you do not know what Bitcoin is, then please check out this article.
Why is Bitcoin a good investment? For starters, it has a history of bull runs every 3 to 4 years. This means that every 3 to 4 years it has grown more than 10x its value. Currently, it is on the second year after the last bull run of 2017. We can assume with this information that this is likely to happen again before the market reaches trillion dollar levels and starts to cap off. This is not that large of a feat considering Amazon, one single company, has a market cap of a trillion dollars. The entire cryptocurrency market is still under $200 billion as of May 4, 2019. You can keep up with the growth here at coinmarketcap.
Where is the Market Headed
Saying the cryptocurrency market will grow into the trillions over the next 5 to 10 years is a relatively safe assumption. Here are some reasons why:
- The Nasdaq, one of the largest markets in the world, has reportedly been gaining crypto and blockchain based start-ups to launch their own digital asset trading platform for multiple financial instruments.
- The largest companies in the world like IBM, Facebook, Fidelity, Marsh, UPS, Fedex, DHL and a long list of others are all not only considering blockchain technology, but heavily starting to invest in research and development.
- The top blockchain projects are constantly being developed on and for the future of IOT, the internet, quantum, scalability and data storage and protection.
- The industry as a whole has seen exponential growth in recent years as developer jobs open up, ICOs are launched, hedge funds grow and investor knowledge increases. Every day, more data is obtained to better solidify the market as a whole in the traditional scene enabling new options, derivatives and potential
These are just a few of the highlights over the past year or so. Overall the industry is thriving and starting to impact multiple industries. Easily, the entire market cap of cryptocurrency as a whole could reach to several trillion if things continue to progress as they have been.
Back to Bitcoin
Using historical data as a metric for Bitcoin, we can project that Bitcoin will maintain between 25% – 50% of the entire market cap. up through the first $1 to $2 trillion levels. We saw in December 2017, Bitcoin spiked along with the rest of the market. At the peak of the bullrun in early January, altcoins surged pushing the entire market cap through the $800 billion levels. Even at this level, Bitcoin maintained a 30% – 35% market cap share.
Numbers Do Not Lie
Assuming we agree that the crypto market will reach trillion dollar levels with the next 5 to 10 years and nothing will oust Bitcoin as the grandfather of the new industry, then we have a nice conclusion. On the low end between 25% – 30% of market share, Bitcoin should still reach a marketcap value of over $550 billion dollars. The price of Bitcoin would easily reach levels of $30,000 a Bitcoin.
There is another secret to the madness that must be considered. Traditionally, Bitcoin spikes before the altcoins do. For instance on December 17, 2017 right before the January pop, Bitcoin surged to a market cap of $330 billion whereas the entire crypto marketcap hovered around only $587 billion. This means Bitcoin held around 56% of the entire cryptocurrency market share.
Assuming this trend of Bitcoin spiking and then altcoins following continues, a $2 trillion dollar market cap could spell a different story. Essentially, Bitcoin could spike first maintaining around a 50% marketcap share and reaching a price of over $60,000 before the investors short sell into altcoins for the following market spike on the next bullrun. Essentially, if you invested into Bitcoin on this last market dip in December 2018, you could potentially be looking at nearly 20x gains over the next 5 years on Bitcoin alone if you sell at the potential top.
This is all entirely speculation, but we must remember Bitcoin is also the least volatile asset in the crypto market at this point besides stable coins. This is due to the increase of exposure and liquidity. Take for example Cardano that reached a market low this year of around $.03 cents a coin. If it were to maintain a top 10 spot in the crypto market on this next bull run and you bought in around the $.03 cent level lows, you could potentially be looking at 100x gains. This is of course assuming the project stays relevant in the coming years and maintains a top market position.
Concerns and Questions
There are obviously numerous concerns and questions about this line of thinking. For one, nobody knows or can predict the future. It is safe to say that governments will probably not attempt to “stop” the growth of the crypto market, but they may continue to slow it down as they have historically. Additionally, no one knows what technology, development or market phase will come next.
Currently, scalability and use-cases seem to reign supreme throughout the industry. Things like Proof of stake announcements (Cardano and Ethereum), anonymous transactions (Litecoin) and media hype still seem to manipulate investors or sway the market. Over time we should start to see new trends emerging like the initial exchange offerings (Atom on Binance) and Security token offerings take the spot lights.
What About.. you know…. Bitcoin
Bitcoin has the least possibility out of all of the cryptocurrencys in the market of going anywhere. For one it has the highest running uptime with the largest node network in the world. It has the widest adoption and exposure base and obviously has investors bias behind it to always keep it relevant. If you are risk-adverse and simply want to play in the crypto market, then Bitcoin is as safe of a bet that you can make as any. Open up a Coinbase account and start buying.
Bitcoin is a Good Investment
In conclusion, we can safely say that Bitcoin is a good investment. This is based off of historical trends, media exposure, underlying technology, investor sentiment and risk wise. It checks off all of the boxes that an investor should look for and then some if you are looking to enter the crypto market.
As always do you own research and learn about Bitcoin, Ethereum, ripple and some of the other top assets. Then make a choice for yourself which digital asset suits you, if any. At the end of the day if you can’t explain what Bitcoin is to your mom then you probably should not invest. Knowledge is power.