Since 2012, Bitcoin’s price has demonstrated an exponential increase in value amidst a rapid rise in global adoption, growing demand from institutional investors, and significant maturation of international markets.
Bitcoin is a Well Performing Asset
A well-known cryptocurrency researcher with the online alias “Jack Sparrow” released their findings on how long it took Bitcoin to reach certain price benchmarks (all values in USD):
- $0 to $1,000: 1,789 days
- $1,000 to $2,000: 1,271 days
- $2,000 to $3,000: 23 days
- $3,000 to $4,000: 62 days
Extrapolating from the information above, it took seven years for Bitcoin’s price to increase from US$0 to US$2,000. However, for the price to increase an additional US$2,000 from the US$2,000 mark took only 85 days, less than three months in total.
Many of the largest multi-billion dollar financial institutions including Goldman Sachs, JPMorgan and Fidelity Investments have expressed their optimism toward Bitcoin. Fidelity has been operating both Bitcoin and Ethereum mining equipment in order to better understand the two cryptocurrencies, while Goldman Sachs has encouraged its clients and portfolio managers to invest in Bitcoin because the US$140 billion cryptocurrency market can simply no longer be ignored.
Still, conventional economists and traditional investors such as Peter Schiff continue to call Bitcoin a bubble, regardless of the market and the confidence of investors in Bitcoin. Schiff’s negativity towards Bitcoin is understandable, since his businesses and clients almost entirely rely on the performance of gold. However, considering Bitcoin’s rapid growth and the sheer magnitude of the cryptocurrency market, it may be a bit naive to describe either as a bubble.
By definition, a bubble is an abrupt increase in the value of an economy or asset that strongly exceeds the asset’s intrinsic value. It can be argued that almost every asset or currency in the world lacks intrinsic value, because value is subjective and depends on the demand of the market.
Bitcoin has been able to demonstrate such exponential growth and increase in value due to global acceptance of the cryptocurrency as digital gold, a safe haven asset, a long-term investment, and a digital currency. Multi-billion dollar institutional investors have begun pouring money into Bitcoin due to its high liquidity and established networks. Additionally, mainstream media including CNBC, The Wall Street Journal and Bloomberg have started to provide extensive coverage of Bitcoin alongside reserve currencies and gold.
During its rise from US$0 to US$4,000, Bitcoin has established an international user base and experienced significant global adoption. In the upcoming years, some analysts expect the Bitcoin price to surpass the US$10,000 mark and eventually enter the US$100,000 region. One way for the Bitcoin price to enjoy a meteoric rise in value would be by facilitating and addressing the rising demand from institutional investors.
Previously, Saxo Bank and its analyst Kay Van-Petersen revealed their US$100,000 prediction for the price of Bitcoin.
“This is not a fad, cryptocurrencies are here to stay. There will emerge two to three main ones. Bitcoin will be one of those. And the reason is the first-mover advantage, the scale and the pioneering,” Peterson told CNBC.
Already, leading Bitcoin exchanges and major markets including Coinbase, Gemini and the Chicago Board Options Exchange are actively working on developing infrastructures for institutional and retail investors.
“Gemini’s key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors,” Gemini founder and CEO Tyler Winklevoss stated.
Bitcoin may only just be beginning its greatest increase yet.