We are still early
Or at least that's what we've been telling each other for the past 15 years. Every time there's a huge dump, we cope by saying hey this is just a setback, in the long run we'll be thankful we had so much conviction and we held strong, in the end we are still early.
But does this statement still hold true to the meaning?
Or has the Bitcoin spot ETF approval effectively rendered the "being early" truth into being incorrect?
I think there's a case for saying we are no longer early, and for those unfamiliar with the term, here's a generic chart that shows roughly each of the stages in innovation:
So was the Bitcoin Spot ETF approval the chasm?
Let's deep dive on this topic, analyze it from four points of view, and find out if it was.
Adoption and Awareness
A tiny percentage of the global population owns Bitcoin. A crapton of people have heard of it though. For comparison, using data from the US which is the main market and has definitely higher numbers than in the 3rd world, 14% of the population have stated they own crypto, and 89% that they've heard about crypto.
The main argument for being early is that only a small percentage of the population has adopted the innovation, and while this is true to some extent, judging earliness based on user count isn't good enough.
For example, High-End art collectibles have very few market participants, primarily due to people being priced out or simply not being interested in collecting expensive art, so measuring adoption of high-end art based on how many people own a piece vs the total population would be skewed, we should compare this numbers against people who an afford them and the supply of high-end art collectibles. The adoption numbers will definitely rise.
It's the same with Bitcoin and crypto. Let's say that 5% of the total population in Mexico owns crypto. In a country where tech innovations are not popular, and most people cannot even make ends meet every month, and 99% of the population cannot afford to invest I would say 5% of adoption is simply huge and probably reaching a ceiling.
According to a 2023 survey, about 318M people worldwide are crypto users or just under 4% of the global population. But what percentage of the world population can actually afford to buy bitcoin without sacrificing having food on the table?
By these metrics, we are still early, but I'm inclined to say I'd want to see more data on how many people have actually invested on anything, and then compare the BTC adoption against the total investor population.
Technology advancement
While Bitcoin was created in January 2009, the most significant web3 innovations have happened in recent years.
In 2023 alone, many great things have happened on the blockchain.
• Ordinals were born and became #1 in trending volume in the NFT industry
• Bitcoin had a fantastic year, yielding a 163% return
• Solana was the dark horse and pumped 567%
• RWA became a real thing, with chainlink at the forefront of the technology
• SocialFi was a thing with friendtech and many other copycats
For example, many newer chains also rose to new heights, with AVAX dominating the gaming sector.
We are in a buoying wave of technology, and we should expect the trend to continue for several years as the number of users increases during the next cycle. More users also mean more developers, which in turn fuels further innovations.
Market opportunities
The S&P 500 has averaged 8% returns for the past 20 years.
Bitcoin has averaged 1,576% over the last 10 years; although there is a strong diminishing return at play, we can still expect a 2-500% return over the next few years; why?
• BTC Market cap is currently sitting just shy of $900B
• Gold Market cap is at $12T
In other words, if BTC catches up on Gold, there is another 1300% on the horizon. How long will it take to reach those numbers? Nobody knows, but it's becoming increasingly more likely.
Many other smaller tokens have higher return potential, including Ethereum, with a $300B Market cap. It isn't easy to see regular institutions compete with those figures. If you also add the shitcoins, nothing can compare to the crypto volatility and potential ROI, both positive and negative.
Regulations
With the recent BTC ETF approval, it would be easy to think this is. It is slightly more complicated than that, however.
Bitcoin is the first crypto to have an ETF, meaning others will follow. It's not an IF but a When
This thread's most contentious point and the one where my technical knowledge is the lowest, but here are a few thoughts.
• Regulation usually comes early on the wave of adoption
• Post ETF in 2004, Gold went on an 8-year positive cycle, from $430/oz to $1800/oz
• Gold saw a 10-year bear market from 2012 to 2022, with a 40% low from ATH
It's clear to me that this ETF only signs the beginning of a very long upward trend, but don't be fooled; there will also be severe corrections in shorter time frames. However, when in doubt, zoom out.
More regulations will come in over the next few years, and that's good. The safer the crypto market becomes, the more people will invest.
The only real danger to me is tax implications, self custody and freedom of transaction.
More regulation usually means higher control from government entities, which is the opposite of what decentralisation is about. However, it remains necessary for the growth of the ecosystem.
Are we still early
Overall, my sentiment is that we are on the cusp of mass adoption, with many innovations to come, as well as many new regulations, and this feels like the definition of still being early.
Yes, Bitcoin will not see another 10x every year; as a market leader, it will quickly become the most stable token with the lowest ROI. Many great contenders are ready to solidify their spot in the top 10 with exceptionally high return potential.
NFTs are still in their infancy, with only a few projects that can be labelled as businesses and only a fraction of the population owning any. However, NFT technology will become prevalent in our daily lives over the next few years.
I look forward to seeing where Crypto and NFTs will be by 2030.