Already A Success
Looking back over the past 13 years tells a story of how an idea, over time, has become a “currency” to rival many government-issued fiat currencies. After crossing a trillion-dollar market cap people around the world had no option but to consider that there truly is more to Bitcoin than previously imagined. Using the term “currency” to describe Bitcoin is actually not an accurate description. Bitcoin can function as a currency but it is merely one aspect of Bitcoin’s design. In essence, Bitcoin is actually a new asset class in that it has multiple expressions and lends itself to already existing asset classes without being defined by any one of them. However, at this stage of the game Bitcoin is heavily correlated to risk-on assets and the stock market as a whole. We are still to witness and experience “Bitcoin’s defining moment”.
We can safely say that until Bitcoin breaks away from traditional markets it is still limited and controlled by traditional markets. Currently, we can see a strong correlation to the stock market. However, even though there is a correlation in terms of directional movement, in percentage terms, Bitcoin outperforms the stock market. Buying the 2020 bottom was way more profitable for BTC than the S&P, or any other market index for that matter. However, what we truly need to see is Bitcoin breaking away from traditional markets in terms of directional correlation. In other words, even if traditional markets were then to move lower, Bitcoin could remain free to continue higher or remain stable. Ultimately, there is only one catalyst that has the ability to ignite this adjustment.
It Has Already Begun
Countries that have suffered extreme “banking failures” have forced citizens to adopt Bitcoin and other Crypto assets. This is a trend that is still in its infancy and could ultimately drive mass adoption, as citizens have no other alternative but to turn to Crypto. All forms of censorship will act as a catalyst for this particular outcome. Privacy will also play a role in bringing this to pass. As citizens across the globe continue to face limitations they are likely to transition into Crypto. This does not necessarily have to be a complete transition. Many will most likely begin with allocating a certain percentage into Crypto, while others will have no choice but to go “all in”. An overwhelming demand is the only true stimulus that can truly enable a strong decoupling from traditional markets. Bitcoin has many faces and when it moves beyond investment and speculation and into “need” it will find the missing ingredient. The ingredient that can propel it forward into the “next chapter”.
A Pointless Safe Haven
The dollar is often thought of as a form of safe haven and shelter in times of uncertainty and declining equity markets. However, what is the use of something being “safe” in the short term if it can be confiscated or frozen by embattled banks and other custodians? Gold performs terribly over long periods of time and unless you are holding physical coins yourself, can also be frozen. Bitcoin might be volatile in the short term but is more of a safe haven asset in the true sense of the term. Currently, it is the most secure asset and over the long term provides significant returns. All of these factors are slowly being realized by embattled citizens across the world.
Corporations and institutions will obviously jump in harder at this point in an attempt to capitalize on a “heavy flow” of liquidity and action in the sector. When society is faced with “ongoing failure”, the move to Bitcoin will be the most logical move. As banks around the world continue to fail their clients they simultaneously fuel the adoption of Bitcoin. I see “dire need” as the only factor that can push Bitcoin and the entire Crypto market into a whole new dimension, a dimension where BTC is uniquely defined.