The cryptocurrency market is running a little hot these days. If shitcoins and ICOs are the sand grinding and crunching in the gears, then Bitcoin is the oil that’s keeping it all from burning up to a screeching halt. The late 2017 crypto currency mania was an anomaly in the sense of every metric, both inside the world of cryptocurrency and out. But the kind of euphoric action witnessed during the great bull of 2017 is not the last of the steam of the cryptocurrency market, and just as there can be irrational bull runs so can there be irrational bear runs. In fact, I believe sometime in the next 3-5 years we will see such sudden and explosively rapid growth that it will make the 2017 bull run look like a blip on the radar. Here’s 5 reasons why we’ve yet to see the real breakout happen…
1. The on ramps are getting wider
Depending on how long you’ve been in the crypto space, you may or may not be aware of the bottle necks in the existing 2nd layer crypto infrastructure. A common complaint in late 2017 was
the difficulty would be cryptocurrency customers were experiencing in trying to sign up for, verify identity and purchase cryptocurrency for the first time. In many cases, these potential investors were dissuaded or entirely preventing from ever buying into bitcoins due to overwhelming demand placed on exchanges and fiat to crypto on ramps. Considering the surge in demand for crypto which took place on the tail end of a steady exponential growth in market cap, few exchanges were prepared to handle the accompanying exponential growth in users that came with it. The fact of the matter now, is that the exchanges which survived through icy bear market of the last 6 months have been expanding and improving the width of their channels. Battle scars have been earned. This means that the next time around an explosive growth of potential new customers come around, with bitcoin wallets in hand, the exchanges and on ramp services will be better equipped to handle the load. Expect bottle necks to happen again, but more volume will surge in before that can happen.
Institutional money is stomping its feet on the sidelines waiting to crusade its way into crypto. Follow the meta…there is continual positive news and developments on all things crypto on a daily basis. Infrastructure is being built to facilitate this giant new industry. The global economy is in a boom cycle, inflation is driving equity growth, everyone is making money, everyone is taking out loans. But the bust squeeze always comes, and this next one could get ugly on a more global scale…but there’s no time for doom and gloom.
Keynesian monetary policies be damned, we have Bitcoin!
2. The UI is improving
There’s no denying that as cryptocurrency evolves on the backend, so does it evolve on the front end. Wallets are becoming more intuitive, exchanges are becoming more user friendly, and the concept of cryptographically secured digital currency is becoming, ever so slightly, more mainstream. You will know this cycle is complete when the average bitcoin user doesn’t even have to think about the mechanisms of blockchain to enjoy the benefits of cryptocurrency. The coming future of Bitcoin and blockchain will be in the same way a user of the IMAP or POP3 protocols doesn’t have to look under the hood to send an email, bitcoin users will not ever have to think about hashing functions to send and receive sound money. Users will continue to find it less and less cumbersome, as well as more and more user friendly to engage with and use cryptocurrency, in contrast with the earliest days of Bitcoin where GUIs were non-existent and a paper wallet was a necessity of security. Soon the learning curve for crypto will be no greater than downloading a piece of software or sending a text message.
Imagine a day when the users of Bitcoin applications don’t even realize they are using Bitcoin to send money. That day is closer than you think.
3. There’s growing alternatives to buying and hodling
Have you been following the meta? The big money institutions are stomping their feet on the sidelines to get into Bitcoin and other cryptocurrencies. Hedge funds are being built, futures markets are fleshing out, ETF frameworks are being laid, and start ups are getting acquired. The road is being paved for massive traditional market capital to begin making its way into the crypto space. As the institutional money moves in, all others will follow. The average 401k fund manager won’t be worth his salt unless he’s insuring his clients are getting at least some exposure to this new asset class. Money will be coming into the market from all angles. In addition, the more traditional investors will no longer be relegated to buying and holding the assets themselves but will be capable of buying and trading cryptocurrency much like the stock markets of today. The physical stock certificates will never change hands but the numbers on the screen will change continuously. Trading and buying and selling cryptocurrency will be easier than ever before as the responsibility for its security can be offloaded onto a 3rd party…whether you ideologically support it or not, this is an inevitable change that will happen (maybe even in 2018).
For us long term hodlers, the quiet accumulators, the stoic dollar cost averagers…this means we only have one direction to go, and that direction is up.
4. The tech is being refined
If the majority of your crypto research involves pump and dump telegram groups and shitty youtube channels then you might not be aware of just how much working is going on behind the
scenes, particularly in the Bitcoin network (For real, start following the developers and innovators in the space). It’s easy to lose sight of the forest for the trees in this market, but crypto has yet to see it’s adoption for real world use case implementation, these are the days of speculative investment, venture capital, if you will. You are still way in front of the power curve on this market, it has decades of growth ahead of it and we are smack dab in the middle of the pit of despair.
Lightning network is going to be unlike anything the world has seen and it will do to money what email did to communication. The scale it will bring to the Bitcoin network will turn the entire financial industry on its head. Scale is the last piece of the puzzle. Right now, while the markets are irrationally red, it is quietly being slid into place. Just as we talked about earlier with improvements in UI making the average user less and less aware of the inner workings, so are we seeing refinements in front end lightning applications that will prevent users from ever having to worry about channels and liquidity pools and nodes. The only thing they will ever have to think about is turning on the app and sending that money.
The entire third wave of blockchains (DAGS) is being developed, things that will revolutionize the way businesses structure themselves from the top down, change the way we think about inter-connectivity and privacy and record keeping. Sure there are governance, security, and consensus problems to sort out, but its happening, right now as we speak. This is still only the beginning of what Bitcoin and blockchain will do. We are in the emerging days of a nascent technology. Data Dash has colloquially termed it “The Protocol Wars”. The storm is brewing.
5. The float is getting thinner
If you’ve never had the satisfaction of watching an accumulation period take place on a light float stock or a crypto and then the inevitable blast off afterwards as everyone holds on for dear life…then you’ll want to take my word for this one. There is no greater feeling than positioning yourself on the opposite side of the market and then watching the rocket launch take place as new money scrambles for table scraps.
As crypto continues to expand, more and more strong hands come into the market. We are talking about investors who are looking to hold bitcoins for the next 20 years, maybe the next 50. Everyday the crypto space brings in more new faces and more new money, Bitcoin and its components continue to be accumulated and settled into stronger hands on a daily basis… The longer the consolidation phase we have take place now, the smaller the trade-able float gets and the bigger the eventual blast off later.
Think big picture here.
It’s not just about the investors, consider the numbers…Most of the bitcoin that will ever be mined are already in existence…More than 80% of the bitcoins that will ever exist and already in circulation as we speak!! The next halving takes place in mid 2020 and historical a major bitcoin price hike takes place around the time of a halving.
Bitcoin will continue to consolidate into strong hands. The already tight float will continue to get smaller and smaller. There will come a day when the idea of owning one whole bitcoin or even a half of a bitcoin is no longer a reasonably attainable goal for the average joe.