Bitcoin has been in the spotlight this week largely due to two unfavorable developments. The first one is the underwhelming Bakkt launch that failed to impress the cryptocurrency community. Second, the largest cryptocurrency finally broke down from a descending triangle after months of consolidation, prompting calls for a bearish dump to $4,000 or even lower.
Regardless of these events, bitcoin’s fundamentals continue to be robust. Here are five reasons showing that the dominant cryptocurrency is maturing.
1. Bitcoin has Outgrown Other Infamous Bubbles
Staunch bitcoin critics have been saying that the cryptocurrency is nothing but a bubble. They also said that the number one cryptocurrency will soon burst and follow the footsteps of other bubbles of the past such as the Tulip Mania of 1634 and the South Sea Company of 1719.
According to James Todaro, managing partner of Blocktown Capital, these illiquid bubbles lasted only for three years. In contrast, BTC has been growing steadily for ten years and its daily volume is worth billions of dollars.
2. Futures Volume Has Grown Significantly
Another sign that the cryptocurrency is maturing is the steadily increasing volume of its regulated futures market. According to a Bitwise research paper published a couple of weeks ago, the average daily trading volume for bitcoin futures in August stood at $234,385,300. On top of that, the percentage of bitcoin futures volume when compared to bitcoin spot volume rapidly increased from less than 10% in March 2018 to over 20% in August 2019.
This is an indication of growing interest in bitcoin derivatives among speculators and traders who do not necessarily want to hold the asset directly.
3. Bitcoin has Become the Fastest Growing Currency in the World
As more people are drawn into bitcoin, the cryptocurrency is now part of the 30 largest currencies in the world by market capitalization. It just surpassed the Colombian Peso and the New Zealand Dollar. More importantly, it has a lot of room to grow as the cryptocurrency is still small in comparison to gold.
In addition, DTAP Capital founder Dan Tapiero noted that among the 30 largest global currencies, bitcoin is growing the fastest.
4. Custody of Crypto Is Now Institutional-Grade
Perhaps one of the reasons why more people are flocking into bitcoin is because they can purchase the cryptocurrency knowing that their digital assets are safe and insured by reputable regulatory structures.
With regulatory bodies overseeing the custodial services provided by platforms such as Bakkt, clients no longer have to worry about hacks or unexpected events such as the death of an exchange’s CEO.
5. Bitcoin’s ROI Outperforms the Pre-IPO Valuations of the Hottest Tech Firms
The final sign of bitcoin’s maturity is its staggering returns throughout the years. The cryptocurrency has rewarded investors who HODL’ed year after year.
Those who bought bitcoin in 2012, when meaningful infrastructure and utility was established, grew their investments by 199,527% in seven years. That number surpasses the pre-IPO valuations of tech titans such as Facebook, Uber, Lyft, Snapchat, Pinterest and Twitter.
Bitcoin’s short-term price movement may look awful but from a long-term perspective, the king of cryptocurrencies is starting to look like a mature asset.
Last modified (UTC): September 26, 2019 2:02 PM
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