Alarm and panic are usually the common reactions whenever Bitcoin and other cryptocurrencies plunge. Considering that Bitcoin peaked last December at almost $20,000, it is hard to grasp for many investors that Bitcoin is currently trading around $6,000. Meltem Demirors who is Coinshares’ chief strategy officer thinks that the Bitcoin bubble may have already popped. However, she thinks that this is not totally bad news. The real traction is yet to come.
She spoke on CNBC saying that “I think the hard part about bitcoin is the narrative around bitcoin is still ready hard to grasp and I think the crypto community is really struggling with narrative right now”.
Early Days of Tech
She then proceeded to compare Bitcoin during the early days of tech giants such as Microsoft and Amazon. She mentioned that “If we look at Amazon, Amazon at its peak took nine years to recover from peak, troff, back to back. So you had to be in Amazon for nine years to recover your value. If we look at Intel, 15 years. Microsoft, 17 years”.
She explained that “new technologies that shift the paradigm take a long time to really understand”. And true enough, Bitcoin is only around 9 years old. It was created as a reaction to the 2008 economic crisis.
According to her, “I think what we saw in crypto is we saw this massive run up where everyone got fear of missing out and what it caused was this speculative bubble”. She added that “We have talked about bubbles and capital formation a lot but all of that capital is now getting deployed into building real businesses that serve a real purpose”.
Adoption is Key?
If you are going to ask the likes of Vitalik Buterin, he is pointing out that adoption is needed for the long-term growth of cryptocurrencies. In addition to this, he pointed out that people are putting too much emphasis on the possibility of a Bitcoin ETF.
Remember that one of the reasons why Bitcoin slumped recently below $6,000 was due to the fact that the US SEC rejected the Winklevoss Bitcoin ETF application and decided to also postpone approvals or rejection of other crypto-related ETFs.
Speculators are Driving Price Swings
For the Joseph Lubin, another Ethereum co-founder, he believes that speculators are driving price swings. He mentioned that “trader types” are those that are driving volatility in the crypto market. However, he isn’t concerned at all with the slump in prices since these things will not slow down the development of core infrastructure as well as the adoption of cryptocurrencies as a whole.
Many are still anticipating the entry of institutional investors at this point. Things are somewhat looking good as regulators worldwide started making the necessary changes in the niche to cater to their crypto market.
The US Securities and Exchange Commission, for instance, decided to call Bitcoin and Ethereum as commodities. In addition to this, you have the possibility of having a Bitcoin ETF coming true in the coming months. Are we going to see crypto price to come up any time soon?