Lets compare the current cycle with one from the past.
In June 2011, bitcoin peaked at nearly $30 and found a bottom of $2.02 five months later, in November. It would be an additional 15 months before it returned to its former high. This might seem like a long time to some, but investors who managed to get in at the bottom would have seen their position grow more than 1,300 percent.
So can bitcoin do the same today? Obviously no one can say for sure, but what I can say with certainty is that bitcoin, like all digital coins, is highly volatile. Plus, there’s not quite 10 years’ worth of data, meaning it’s been difficult to identify trends.
Cryptocurrencies are also currently facing tougher oversight from several world governments and central banks, not to mention Facebook and Twitter’s ban on ads promoting them—obstacles they didn’t have to contend with back in 2011 and 2012.
But I remain bullish. Cryptocurrencies are still in their very early stages. To return to the comparison with tech stocks, we don’t know at this point which digital coins will be tomorrow’s equivalent of Amazon, Google, Apple and Facebook. A long-term view is key.
Finally, I still believe in the power of Metcalfe’s law, which says that as more and more people adopt a new technology—cell phones, for instance, or Facebook—its value goes up geometrically. A poll conducted in February shows that just under 8 percent of American adults report ever owning or purchasing any cryptocurrencies. Market penetration, then, hasn’t been as pervasive as some might expect, but as people increasingly become more confident in dipping their toes in the space, demand could rise and, with it, prices.