It’s not likely to move up in a linear fashion, but Bitcoin will find price support, if not significant appreciation, due to its rapidly rising adoption case.
The good news is that the adoption history for Bitcoin is looking compelling. Looking at the S-curve, which measures the adoption of new technologies, many market watchers believe that Bitcoin is exactly where it should be.
“The utility refers to the benefits that the technology offers, which is reflected in its requirements. Speculative value is when investors believe the technology is worth something based on future expectations, ”said WisdomTree Research. “Both factors are of crucial importance for the further development of a system. The utility value is unfounded if the speculative value does not grow, and conversely, the speculative value is artificial if the utility value does not follow. Bitcoin’s recent growth has been driven by both of these aspects. The ecosystem has matured and is leading to more real life applications. In anticipation of wider adoption, financial institutions began looking into the crypto space, which resulted in a large inflow of capital. “
See also: WisdomTree Files for a Bitcoin ETF
The Bitcoin adoption case is getting stronger
Companies and currencies exist roughly for the same purpose: to facilitate the exchange of value. Fiat currencies like the US dollar are positively primitive compared to the promise of blockchain and the burgeoning token economy that some technologists have called an asset operating system.
Changed attitudes at company level support a stronger adoption of Bitcoin.
“The current inflationary and low interest rate environment supports the presentation of financial assets as fiat money and bonds are less attractive to store value,” adds WisdomTree. “In addition, the company’s plans to embrace the applications of bitcoin and blockchain technology show one aspect of the utility of bitcoin. Bitcoin’s growing influence has piqued the interests of end customers to take advantage of the potential benefits of this new technology. In turn, their interests have encouraged asset managers to include them in portfolios. “
Recently, Tesla announced it had purchased $ 1.5 billion worth of Bitcoin, which is reported as goodwill on its balance sheet. With Bitcoin valued at $ 1.5 billion, the automaker has sufficient liquidity to conduct business in the cryptocurrency. However, some financial professionals are suspicious of Tesla’s move to Bitcoin as it is an investment of a large percentage of its cash – over 7% of the more than $ 19 billion the automaker had in cash and cash equivalents at the end of 2020, according to its most recent Submission.
“As Bitcoin grows organically and realizes its utility, we believe that its speculative value will gradually be established. Right now we are witnessing the dawn of a new paradigm that is moving from a quasi-exclusive retail asset to a generally accepted financial instrument, ”concludes WisdomTree.
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The opinions and predictions expressed here are solely those of Tom Lydon and may not actually be fulfilled. Information on this website should not be used or construed as an offer to sell, the solicitation of an offer to buy, or a recommendation for any product.