In January this year, $1,000 was the milestone Bitcoin owners were eager to reach. The digital currency hit that, overcame it and increased ten-fold to over $10,000. This year has been filled with good news for digital currency, from another Asian market boom, to Bitcoin’s integration with the Square App, the launching of regulated futures markets and growing mainstream adoption. Despite being laughed off for years, Bitcoin is only just beginning to become a force to be reckoned with in the global economy.
Cointelegraph had the opportunity to speak with several experts and ask them the question: “How did Bitcoin get to $10,000?” We have shared their responses below.
Hedge funds, pension funds, family offices and the like have shown extraordinary interest in Bitcoin this year. Such “institutions” control vast amounts of money. As an example, the UK-based hedge fund Man Group, which has expressed interest in trading Bitcoin, controls assets exceeding $100 bln.
Simon Yu, CEO of StormX, said:
“The Bitcoin price is at an all-time high is due to institutional money finally starting to flow into the cryptocurrency market. Recently, announcements from the South Korean Bank Hyosung in support of Bitcoin, from CME Group announcing they'll be launching a Bitcoin futures market, and from Square Cash announcing Bitcoin will be supported caused bullish behavior in the market, pointing to a major shift.
“The general public is starting to realize Cryptocurrency is beginning to be adopted to mainstream markets and will continue an upward trend as they see the potential for more companies to adopt cryptocurrency.”
Christopher Grey, COO of Caplinked, agrees with Yu’s statements, but is far less Bullish in the matter:
“Investors unfamiliar with crypto are piling new money into Bitcoin right now, making the situation highly unstable as investors expect the price of Bitcoin to keep going up. Any declines could be exaggerated dramatically because they are not stable owners of Crypto.
“Alternatively, the price could continue to rise parabolically, drawing in enormous sums in the tens of billions of dollars from other risky liquid investments like growth stocks and junk bonds. This could cause the prices of those investments to weaken as a result of this liquidity moving out of them and into Crypto.”
“Either way, this situation is not stable and cannot continue for an extended period of time. Something needs to give in one of the risk markets, as liquidity in these markets is not infinite and nothing here is being created, just moved from one risk market to another by speculators. This didn’t matter when total crypto value was small, but at these levels of hundreds of billions in value, it becomes a substantial user of global risk capital.”
Newcomers are still early adopters
In 2014, when Bitcoin hit its first real mainstream swing with Coinbase and other exchanges upping their user experience, people were already asking: “Is it too late get into Bitcoin?”
Those questions persist today, and recur every time Bitcoin’s price rises another $1,000. However, since only an estimated half-percent of the global population uses digital currency, there is still plenty of time to be an early adopter.
Jon Chou, CEO of Bee Token says:
“People often complain that it's too late to get into Bitcoin, that most of the early adopters have been in since 2010 and there's no more or little room for upside. I'll offer an alternative long term-angle; this is not financial advice. According to Blockchain.info, there are approximately 700,000 Bitcoin addresses as of November 2017.
“One of the main problems Bitcoin claims to solve is the issue of remittances, basically globally distributed access….Well, there are seven billion people in this world. Assuming a 10% penetration rate and if everyone owns just one address, then there are still 700 million address potentially in the future. That's a potential 1000x in user base. Regardless of fluctuations in price in the short term, it's important to realize how early we are in the Blockchain space as a whole.”
Sol Lederer, Blockchain Director at LOOMIA echoes Chou’s point, stating that Bitcoin is still in its infancy, and that Bitcoiners from 2010 and earlier are now starting to be vindicated rather than victimized.
“Long-time Bitcoiners finally feel vindicated that their currency that has been ridiculed for years, is at last being taken seriously. Naysayers may still say Bitcoin is a bubble, but very few would argue it’s worthless or a scam, yet only a year ago this was a common narrative.
“Bitcoin’s future is still uncertain; it faces the same serious technical challenges it has for years, and faces stiff competition from newer, more sophisticated Blockchains. But even if it were to crash, it’s apparent that Bitcoin is here to stay. Whether it trades at $10,000, $5,000, or $500, it’s not going away.”