BTC remains volatile, although the price movement may be more tolerable.
- Bitcoin (BTC-USD) has a high correlation with the rest of the market.
- Despite the fact that Bitcoin is well-known, real-world ownership reveals that there is still a lot of space for growth.
- With the dollar's uncertain future, Bitcoin may emerge victorious in the war of "risk-off" assets.
Bitcoin (BTC-USD) has reached puberty. However, instead of being rebellious, the digital currency appears to be the epitome of compliance. In the last 30 days, it has increased by around 5%. This outperforms the S&P 500 Index, which is up 3.6 percent. And, after a 5% rise in the previous month, gold has now given up those gains and is now back to where it started.
As a result, Bitcoin is a standout among risky assets. A 5% rise, on the other hand, isn't indicative of the volatility that many cryptocurrency investors have grown to expect. However, this might be the start of a new Bitcoin normal. The use of digital currency is becoming more widespread.
That isn't to say that Bitcoin will become a widely used medium of exchange. However, if Bitcoin's future growth is more predictable and less unpredictable, it's possible that mainstream investors will gain confidence in the currency.
The 'Value Store' Argument Has Taken the Lead
It's no secret that millennial and Gen-Z investors are more interested in Bitcoin. Inflation, on the other hand, has reached levels not seen in 40 years. That means that at least two generations of investors have never had to consider inflation when making investment decisions.
As a result, proponents of gold have reminded investors that precious metals serve as a store of value. Bitcoin investors, on the other hand, are now part of the conversation. In reality, you can watch supporters for any asset make their views on social media on any given day.
However, the debate over Bitcoin vs. gold will continue beyond this economic cycle. What's more evident is that Bitcoin appears to have a stronger case for being a "store of value."
Room for Growth
A recent poll by StarkWare uncovered an intriguing statistical point regarding bitcoin usage. Cryptocurrency was deemed "the future of finance" by the majority of respondents (53 percent). For the age categories 25-34 and 35-44, the percentage was over 60%.
And, among those aged 25 to 34, 28% say they have invested in cryptocurrency in some way. I can't comment on how representative the sample is because I don't know how the survey's participants were chosen. However, despite the fact that a significant majority of people believe bitcoin is the way of the future, just 28% admit to having cryptocurrency.
One reason some potential Gen-Z investors may be hesitant to engage in Bitcoin is a rising understanding of its environmental impact, according to the survey. Bitcoin won't be able to do anything about it. And, by definition, once all 21 million Bitcoins have been mined, the influence will be reduced.
On the other side, Bitcoin may have a huge chance here. The coin's relative stability could be one of the reasons behind this.
Bitcoin Could Be Winning the Battle Against Risky Assets
One of Warren Buffett's pearls of wisdom is that the first rule of investing is to avoid losing money. The second guideline is to remember the first one.
It would be difficult for me to disagree with Buffett that avoiding losses should be the first priority for any investment. However, many investors, notably Bitcoin investors, have not adopted a loss-avoidance approach. After all, bitcoin appeals to many investors' speculative urges. And, for the most part, speculative investors who hung on to their Bitcoin during its steep declines have reaped the benefits.
However, for some investors, the same volatility made Bitcoin an impenetrable investment. Especially when there was money to be made and an infinite number of stocks to choose from. Even among speculators, there were a number of cryptos that promised a "better" return.
However, investors are increasingly discovering the age-old lesson that investments do not always move in the same direction. While research suggests that investors aren't completely "risk averse," Bitcoin is rapidly seeming like a secure bet.