Bitcoin Price ‘Could Go from Bad to Worse’: Bearish Analyst
The most potential use case of bitcoin today is the store of value.
But an analyst thinks otherwise. Stephen Innes, head of Asia Pacific trading at Oanda, a New York-based forex firm, believes that the world’s leading digital currency is due for another drop because it hasn’t provided the world a “significant use-case” yet. The Bitcoin hype, according to Innes, is far ridiculous than the one seen during the Tulip mania bubble.
Since its all-time high at $19,500, bitcoin has plunged more than 80% this year. Since mid-November itself, the digital currency has noted a 48.5% fall owing to specific macroeconomic crypto factors. Just recently, it established a new yearly low near $3,200, which is 83.5% lower than its good days’ peak. “It’s has been a disastrous year for cryptos,” Innes explained, “and by all indication, the current bear market could go from bad to worse with no fundamental or underlying reasons to buy BTC even more so when the only support offered up is a squiggly line on an analyst chart.”
A History Lesson
Either bitcoin cannot be anything. Or, it can be everything.
The digital currency upon its introduction in 2008 posed itself as an alternative payment system that raised its stakes against the popular payment mechanisms. True, bitcoin was much faster, cheaper and totally decentralized than any of its traditional counterparts. But its evolution brought several use cases on the sideways. Sooner, bitcoin was more than a payment mechanism. To some, it was a tradable asset; and to some, it was a currency of underground online marketplaces. The characteristics of bitcoin changed with every user. But, in a larger context, the digital currency remained a multifaceted technology.
Innes is right in pointing out that bitcoin hasn’t offered the world a significant use-case yet, because all succumbed to only one thing: price volatility. Had bitcoin been lesser volatile than it usually is, the digital currency could gain more trust as a payment medium, more so as a store of value. But aren’t we judging it too early, especially when we can always look back at the chapters of other assets that achieved stability only after a considerably long time? Let’s talk about Gold.
In 1971, when the President Nixon government ousted Gold from being the global value standard and replaced it with the US Dollar, the mighty fiat reserve with an infinite supply, the commodity experienced a period of huge volatility. In 1974, the gold bullion rose 73% against the US Dollar but lost 25% of its gains in the very next year. Another instance is rooted in the year 1981 when gold lost 33% of its value after witnessing a 121% pump prior to the fall.
How is bitcoin any different, you decide. The naysayers do not want to define it as a store of value, expecting that it should remain steady to be one. But they shouldn’t forget that older definitions cannot describe the characteristics of newer assets. Bitcoin, for all its technological issues, is still more likely to attain the status of a store of value, given its volatility goes down as people hold it more often than lose it on the first selling sentiment. And, at the same time, its appreciation should slow down after a rapid pump.
That’s how Gold behaved. And that is how bitcoin is acting in its current state. Then again, does Gold have a use case? Only 10% of it was used for industrial purposes. Get more info on this amazing Quora thread.
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