Bitcoin price seems to have stabilized somewhat, and the current price is somewhat over $37,000. However, the next moves will be critical.
Mid May saw Bitcoin sink below $40,000. It has since vacillated between $32,000 and $38,000, never quite establishing sufficient support to recapture $40K. Many analysts believe that should the support of $35K keep up, there could be sustained movement towards $40,000, and more. However, should this not happen, the same group sees Bitcoin moving into a new price level on the lower end.
What might be the future for Bitcoin?
Volatility Is to Be Expected in Any Emerging Technology
CEO and founder of DeFi Technology, Walter Witvoet, believes that the current price doldrums that Bitcoin is caught in is nothing more than a phase. Witvoet firmly believes that Bitcoin’s price will not only recover, but will exceed all previous highs.
Witvoet believes volatility is something to be expected in any new emerging technology or asset class. He suggests paying particular attention to the adoption rate of the networks. He went on to say “If the network continues to grow, then its value rises.”
Using this metric, it is fair to say that crypto in general, including Bitcoin of course, has the fastest adoption rate of any technology that has gone before. Studies show that the adoption rate of Bitcoin is faster than the adoption rate of the internet. It is important to note that the current price of Bitcoin is still up ten times over the low of 2020. Analysts do not see the current dip as a concern.
Bitcoin is a natural hedge against the rapid and never-seen-before expansion of the money supply in the U.S. Institutions are buying Bitcoin at rates not seen before. This activity speaks volumes of a long-term bullishness on Bitcoin.
Oleg Kurchenko, founder of Binaryx has suggested that if there are not periods of sharp drops over several days, there cannot be periods of rapid growth over a short time as well.
Once the risk has been removed, crypto will be no more or no less boring than other assets including metals and other traditional assets being traded daily on large exchanges.
Bitcoin over the next Five-year Period
Bitcoin will not always show such wild and extreme volatility. Eventually, big drops in price will not be possible. For this to happen, Bitcoin has to reach a point where the market cap is comprised primarily of institutional and retail holders.
The question begs, “When will Bitcoin reach this point?”
The Founder of the Canadian merchant bank Gulf Pearl thinks this scenario could happen sooner rather than later. Shidan Gouran has noted that during the past year alone, Bitcoin has gone up by more than for times. Bitcoin actually went up over eight times before the current fall.
Gouran points to the past performance of Bitcoin, suggesting it is realistic and reasonable to assume that the price of a single Bitcoin can hit upwards of $1 million in the not too distant future. Gouran suggests a maximum time frame of five years.
Conflicts Abound on How Bitcoin Derives Its Value
Serious questions are being asked by people involved in the world of traditional finance about the way Bitcoin derives its long-term value. As a result, Gouran for one is against people investing in Bitcoin.
Many analysts believe that Bitcoin gains in value because it acts as a hedge against fiat money inflation. Gouran thinks the main support for Bitcoin comes from either people who feel as if they are disenfranchised or by those who are motivated by greed.
Beyond the arguments of how Bitcoin derives its value, is the environmental reckoning perhaps brought on by Elon Musk. Concerns about the huge consumption of power have happened quickly, and have become an unforeseen problem.
The issue of power consumption is by no means new, power consumption is something that has been known for a long time. With this being the case, David Russell, VP of TradeStation Group sees how the issue has dampened enthusiasm and hurt sentiment. The concern is that the proof-of-work model used by Bitcoin may not be best suited for environmental, social, and corporate governance factors.