Bitcoin is the most well-known and valued cryptocurrency in the world. Many crypto enthusiasts routinely assert that Bitcoin will soon reach $1 million per coin. However, Bitcoin remains one of the most volatile cryptos in the world, and its price isn’t going up as predicted.
Bitcoin’s price isn’t increasing because of competition from alt-coins; it has limited real-world use and thus little prospect. Therefore, institutional investors aren’t investing in Bitcoin; thus, its price isn’t going up.
Needs New Investor Money
Bitcoin price will only go up if a new investor comes and buys Bitcoin from old investors. In this scenario, the old investor will only sell if they believe that Bitcoin’s price will not go up anymore, and they will bail out. At the same time, the new investor has to believe that Bitcoin has tremendous potential in the future.
Retail investors don’t have billions of dollars. They can hardly invest millions of dollars. Thus, to move the price needle of Bitcoin, large institutional investors must invest in Bitcoin.
However, most institutional investors don’t believe that Bitcoin has a future, except for a few. Many outright think it’s a scam, MLM, or pyramid scheme. For example, Warren Buffet says that Bitcoin is rat poison, and he will not buy it even if someone offers him all the Bitcoin for $25.
Bitcoin is a highly volatile asset. However, prominent investment banks want to invest in something that will give them a guaranteed return. Bitcoin is a risky asset, and many institutions don’t want to participate.
As no new investor is buying Bitcoin, its price is not increasing.
Bitcoin has Competition
Bitcoin is the first cryptocurrency that effectively used blockchain technology and became famous. It has a group of genuine followers who religiously believe in it.
However, many new cryptos known as alt-coin have come into existence over the decade, such as Ethereum, Dogecoin, XRP, Solana, etc. Now, dozens of cryptocurrency have strong followings as Bitcoin.
Bitcoin was the first crypto but had many inherent problems. The newly created alt-coins, such as Ethereum, Solana, etc., are trying to fix those issues. For example, all the NFTs and Defi applications are built on Ethereum, not Bitcoin.
As a result, new investment has shifted to alt-coins over the years.
Bitcoin isn’t a Stock
Apple, Tesla, Google, Amazon, etc. companies share trade on their business fundamentals. Each share represents a fraction of ownership in the company. If the company does good business, its stock price will rise because many potential investors would be interested in buying the company shares. Whereas, if a company performs poorly, people will get rid of its shares, and its price will tank.
Sometimes, many established companies pay dividends to current shareholders, such as Walmart, Apple, Ford, etc. These companies disseminate their profit to current shareholders every quarter.
Therefore, company shares or stock prices are directly associated with a company’s business performance. In contrast, Bitcoin has no underlying value.
Bitcoin is only pricey because many investors believe it has value, like paintings. Sometimes, modern art will sell for millions of dollars, but many consider it junk. Many NFTs sell for millions of dollars, which has no underlying values.
Bitcoin is nothing but a digital currency. But its transaction speed is slow, fees are high, and use cases are limited. For example, using a USD debit or credit card, we can buy anything anywhere. The transaction is instantaneous, and fees are nonexistent.
Whereas only a handful of online stores accept Bitcoin, the confirmation isn’t instantaneous, and the fees are very high. Thus, it’s not a good alternative to current debit or credit cards. Bitcoins’ only benefit is decentralized, it has limited supply, and no one controls it.
Due to limited acceptance, popularity, and use, many investors refrain from Bitcoin, and thus its price isn’t going up.
Bitcoin Doesn’t Solve Any Monetary Issue
A product will become successful only if it solves a current problem that other products can’t. When the iPhone was announced, it was a revolutionary product. No phone company gave a phone that Apple was offering at that time.
When Netflix was launched, it was revolutionary. No company had streaming services. Over the decades, it enjoyed continued growth. When Netflix came into existence, Blockbuster was dominating the DVD movie rental business, but they failed to anticipate the future of the internet and streaming potential. Thus, they went bankrupt.
People will only subscribe to Netflix if it has good shows. Nowadays, Netflix has many competitors such as Disney+, Hulu, HBO Max, TubiTV, etc. As a result, its growth has slowed down.
Similarly, when Bitcoin started, it was revolutionary. It had no competition and enjoyed continued investment. However, nowadays, newly created cryptocurrency has more potential. Thus, Bitcoin’s growth has slowed down.
Bitcoin was created to protest the 2008 Wall Street induced housing market crash. At that time the government used quantitative easing — a fancy term for “printing money” — to bail out wall street banks and big companies. But the US government didn’t help house owners who lost houses due to the market crash that wall street banks created.
Printing money is detrimental to the general people. It creates inflation and wipes out savings. It’s an indirect way to tax savings accounts. Therefore, not only people lost jobs, houses, and businesses during the 2008 recession, but they also lost their savings due to inflation. As a result, Bitcoin was created.
Bitcoin has a fixed supply of 21 million coins, thus no inflation. No single entity controls it, and it’s unchangeable. However, its benefit ends here.
Many consider Bitcoin as a store of value similar to Gold. However, these two aren’t comparable. Gold is precious because it’s not only being used as highly coveted ornaments; the chip industry also requires Gold for chip manufacturing. It has a limited supply but a lot of use; thus, it’s expensive. However, Bitcoin is neither good as a store of value nor as a currency.
Bitcoin doesn’t work without the internet. Thus it can’t be used offline and will never become a global currency. Its price is highly volatile, so many retail businesses don’t accept it. For example, a few years ago, Tesla famously announced that it would accept Bitcoin as a payment form but later scrubbed it. Even though they said, they aren’t accepting Bitcoin anymore because it uses too much energy and is harmful to the environment. However, the real reason is Bitcoin’s volatility and transaction cost.
Therefore, less adoption means minimal prospects. Thus, new investors are not buying Bitcoin, and its price isn’t going up.
Bitcoins’ price has increased dramatically over the years. However, unless something dramatically changes with Bitcoin, its price will not go up.