The current Bitcoin price levels and runs make many people (including myself) extremely excited and optimistic about Bitcoin's future, but what will the price level look like if Bitcoin does gain practicality and adoption?
I am beyond excited with Bitcoins recent performance around the globe and what that alludes for Bitcoin's future, but when I think about that 'future' of Bitcoin, it makes me realize just how much larger Bitcoin can actually grow. Although the trading volume has been in constant excess of 200 million dollars daily and the total market capitalization exceeds 20 billion dollars, but most of this investment and trading volume is made up of speculators and 'short-term' traders and those individuals who are investing in Bitcoin long term, are investing the the future value and uses of bitcoin rather than it's current use. Although this may seem obvious, its important to point out and recognize when considering how much room to grow bitcoin actually has. I am obviously excited and happy with the current pricing levels, but I maintain the belief that if bitcoin is to gain adoption the price would be astronomically higher than it is currently.
What if Bitcoins advantages as a low cost payment method for retailers and consumers finally took hold?
I imagine that once Bitcoin gains adoption the amount of Bitcoins for sale will become drastically lower initially, but will eventually level out at a reasonable price level. The supply of 'liquid' Bitcoins on orders on an exchange is largely made up of short and medium term traders who are taking advantage of the opportunities of short term profit. There are still a very large amount of Bitcoins held by a relatively small number of different individuals, who all have been known to be holding extreme Bitcoin balances. I'm sure that if the pricing level increased enough there would obviously be an initial 'dump' in sellers selling their coins at that price, but I maintain the belief that after the initial 'dump' of sellers who are willing to sell at these levels sell, the supply will decrease drastically. The reason that I maintain this belief is that the increase in global demand for Bitcoin still wouldn't be great enough to bring all of the Bitcoins to the market, simply because many of the largest stake holders have very rarely ever parted with their personal investments of Bitcoin.
Can you imagine what the volume, price, and demand would look like if consumers and retailers were incentive to use Bitcoin for payments? If the demand for Bitcoin was based on individuals purchasing it for practical use rather than investment in the future, the price would likely be at a level than even the most optimistic Bitcoiners though they wouldn't see for years. This is likely a ways down the road, but if and when it happens the pricing level will likely eventually settle out at a number that depends on the percent of adoption, time factors, ect. Most of the individuals who are currently buying Bitcoins for actual use are people who really believe in Bitcoin and go out of their way to use it as an online payment method, or are individuals wishing to gamble, but imagine what it would look like if individuals who were trying to buy bitcoin intended to use it for everyday purchases.
Is it still a good time to buy Bitcoin?
I have been asked this question and disscussed it with numerous friends over the past several months, and I have still come to the conclusion that yes I would still consider it a good time to invest in Bitcoin, but first you must consider some conditions of investing in Bitcoin currently. The first thing that I would say would obviously be never ever invest more than you could reasonably loose, which seems obvious to many but is still widely ignored by many. The second thing that I bring up is the fact that in my opinion the best investment in Bitcoin is a long position, which is by nature illiquid. What I mean by that is that you must realize and be okay with the fact that you should not plan to access the invested amount until you decide to close your position.
You must be okay with volatility and maintain a long term mindset, because although the price appears to be making continual gains as it has been, it could always make a major retreat very suddenly like it has before. You obviously want to keep up to date on the price of Bitcoin if you are invested in it, but if you bought in now at 1800 and next week the price is at 1500, in my opinion you must be okay with that and continue to hold your position. Investing into Bitcoin is all about investing in the future application, and by future application I assume we are looking at numerous years, and you must be okay with that. Obviously this is just completely my personal opinion and my beliefs on the best position to take on Bitcoin.
Another argument that I hear all of the time is when someone brings up one of the issues with Bitcoin, such as blocksize, Seg-wit drama, ect, because many mainstream news outlets have used this drama as a way to continue to instill doubt in the minds of many about Bitcoin legitimacy. Could it be another cryptocurrency that ultimately gains mainstream success and adoption? Of course it could, but that by no means equates to Bitcoin being worthless, and individuals would still likely be able to recognize the success of the other currency and make an investment early into that.
I really hope that you enjoyed this post and I urge any comments, discussion, or input below! Thanks for reading!