Being well aware that making these statements expose us to Murphy's terrible law which is only waiting for someone to expose himself in order to be able to strike him mercilessly, I think there are several reasons to say that we have not reached the maximum value of Bitcoin and that it will be able to reach much higher values.
It certainly makes it look like an asset, although crypto-asset can go from $3000 to over $16000 in less than three months, especially considering that less than three years ago it was at $800, so multiplying by 10X the money of the lucky investors who believed in advance in this fast-growing market.
I found this image of 2013, the year in which I got to know about Bitcoin and (unfortunately) I had analyzed the phenomenon briefly defining it as a passing bubble... As you can see the Bitcoin is not new to these rallies (very strong growths) that have multiplied its value. Then I also found this image much more recently and clearly made by the same author, where we can see the same phenomenon.
The most vigilant ones could point out that from 2013 to 2015 Bitcoin has lost value and not multiplied by n times the value as before or after; obviously the is a risk involved, but those who have followed Bitcoin in recent years will remember the various problems that cryptocurrencies and the system have suffered, from the failure of Gotex, one of the biggest exchanges that suffered a huge IT theft which led to its end to the disorderly attempt of several governments to prohibit or at least limit the spread of the cryptocurrencies.
In 2013, the price had risen much more than the numbers of users following it and above all with a reduced number of traders and/or investors with speculative objectives. Today it is possible (thanks to google trend) to understand how the principal interests of Crypto-assets holders are distributed and although they are the part with the highest percentage, investors or people linked to the financial system are not yet predominant.
At the recent Lantern Fund Forum roundtable discussion in Lugano, where I was a speaker representing the companies of the industry that are working in some way on the CryptoCurrency sector, they conducted a survey among those present (who were many and all associated with the world of financial investments and they were asked:"Are you planning to offer investment services in cryptocurrencies?
The answers were as follows: The data shows that there are still few operators in the financial sector (particularly Swiss, which is the most advanced in the world) offering cryptocurrencies services, but above all the interesting data is 57% of participants who are interested in offering them in the future, which together with those who are already planning and offering them, indicates that 85% of financial operators are now positive about this new investment asset. Another very interesting question was whether the operators in the sector have received any investment requests in cryptocurrencies from their customers:
The graph clearly shows that the final customers are still not very sensitive to cryptocurrencies, but this is not surprising because finance has always been a "push" sector towards customers, that is where operators offer to customers and not vice versa.
WHY WILL IT GROWTH?
But returning to the reasons why I am optimistic about the growth of cryptocurrencies at least for the coming months are mainly based on the demographic phenomenon that leads to the creation of financial bubbles. Financial bubbles arise when there is greater demand than supply, combined with a demographic growth in demand.
The cryptocurrency world has all these characteristics: 1) Scarcity of coins in circulation; 2) More people who want to buy than those who want to sell; 3) Increase in the number of investors who enter this asset. At this point to understand if we are at the end of the bubble, halfway through the bubble or even in the early stages of the bubble, you need to understand how many people are investing in cryptocurrencies today. A study by Harvard University which can be found on the Internet estimates that 5.8 million people in the world have a wallet with cryptocurrencies, which is less than 0.1% of the world's population. For those who are experienced in marketing, there is an adoption curve for a new product that is well described in the following graph:
As you can see, innovators represent about 2.5% of the world population, while early adopters are about 13%.
Leaving aside the other categories of people who will enter the market much later, it is reasonable to think that even if the cryptocurrencies are growing at a more than exponential rate (a very clear indicator that the market is in the financial bubble according to the mythical Dr. Sornette of ETH Zurich), the growth margin is still huge, even if we considered only the category of innovators in the world.
A good number of people like to study the past, to understand the present and imagine the future, it is fundamental to understand if we are at the end of the rise of the Bitcoin cycle or we are still at the beginning and therefore it is still possible to invest hoping to at least take a portion of this incredible bullish trend that is offering to those who believed in this new type of digital currency from the beginning.
A very similar phenomenon in terms of size, effects and growth rates has been the recent (20 years is a triviality with respect to the history of the world...) phenomenon of the new economy, where any company linked to the new internet technology received colossal financing from the Venture Capitalist and collected mountains of millions of dollars when they entered the stock exchange. In the first phase, the Venture Capital funds benefited from it (fully illiquid speculative investment funds and in the hands of very few people), then came the traders who bought the shares on the stock exchange, earning a lot of money from the various IPOs (initial Public Offering) or quotes of the companies on the stock exchange; finally, the mutual funds arrived, which for a few months have achieved captivating performances (I remember the JP Morgan Fleming US Technologies fund, which rose from $5 in 1999 to $50 in March 2000, and then returned to $5 the following year) and finally, when thanks to the mutual investment funds the street investors arrived, the bubble burst which unfortunately created a series of significant losses to those who arrived late.
Apart from the graphical analogy of Bitcoin's growth in volumes with respect to the S&P500 index, this graph shows that Bitcoin has a remarkable growth rate in volumes due to the increasing number of people who face this intriguing new world dominated by technology.
But then the question to be asked is:"how long will the number of investors in cryptocurrency still continue to grow, assuming an exponential rate, to reach 13% of early adopters in the world?"
CONVERGENCE OF INTERESTS
It is clearly an intriguing and empirical hypothesis, but the surveys carried out in Lugano, although in a bias environment due to a conference of interested parties in the crypto world and therefore not a representative sample, but it shows that there is a strong interest from many financial operators in entering this new world and to involve their customers accordingly.
So let's expect that these cryptocurrencies, starting with Bitcoin, still grow very much due to the influx of money that day after day are coming into an ecosystem which is still very small, as the introductory image of this post, although a little bit old, shows. I am always willing to discuss the topic on social networks or this blog, I hope that if you find this topic interesting you will share it on social networks.