There is a general consensus in the crypto community that a Bitcoin bull market is imminent. This belief is based on prices stabilization and growing interest by banks and investment funds. This assertion is reinforced by the stream of news regarding funding of new projects or the involvement of new financial entities into the market. For example, this week alone it was announced that Yale university was investing $400 million into a new crypto fund. And that Circle Financial launched “Collections”, a platform designed to give investors choices of crypto collections to invest in.
This is in addition of the biggest news if the year – the application by the CBOE for a Bitcoin ETF. And the formation of the Bakkt exchange by ICE, backed by Starbucks and Microsoft. The number of crypto start ups and investment amounts is as varied as it is numerous. All based on the promise of a rapid growth in the market that will see Bitcoin prices rise as high as one million dollars. However, as successful as the next Bull run promises to be, it will also be short; just as the previous one did. And the reason is the same: lack of adoption.
In order for any asset to remain valuable it must be profitable. It must produce some kind of results, service, or return on investment. Bitcoin sitting inactive on wallets across the world produce no results, and in time it will become a liability more than an asset. I’m order for Bitcoin to be valuable it must have a market audience who believes it’s worth something. In a recent presentation Charlie Lee, the creator of Bitcoin defined Bitcoin’s Intrinsic Value as “censorship resistance, transaction immutability, cost of production, and Fixed money supply.”
This definition served as the basis for the 2017-2018 market boom. However, after Bitcoin prices corrected, all these attributes weren’t enough to justify massive losses and the public dumped their positions. This is exactly what might happen in a 2019 Bull market rally. Not much changed in 2018 to justify a sustained market growth. Bitcoin remains the same project it was nine years ago. As of yet it has failed to Gain adoption or produce any significant advantage over fiat currency. And its scalable solutions are a year or two away.
In order for the crypto market to expand Bitcoin must gain some form of adoption. It must play a role in a forming, new global economy. Without it, the entire market will lack foundation and prices will fall just as they did before. And as the bubbles recur, Bitcoin will lose value with every cycle. In time liquidity and derivative permutations will also diminish and fail.
These pragmatic views are derived from the fact that money alone is not sufficient to effect a global financial transformation or create of a new asset class. Bitcoin must be more than a theoretical concept; it must become a fully fungible crypto currency capable of on-chain transactions, fast, fee-less, and devoid of fractional trading. Until then, the market will continue to be a speculative space filled with vision but with little real life application.