Bitcoin’s Bear Market Is Strengthening Its Investment Thesis

Putting aside those that are in it ‘for the tech,’ everyone investing in Bitcoin sees it, in some capacity, as a speculative vehicle. Whether someone believes it will become a store-of-value in the long term or not — nearly everyone expects a higher future value for Bitcoin.

Cryptocurrency Rollercoaster

Cryptocurrencies, in general, are still regarded as a high-risk asset class. Considering the novelty of what this asset class represents, the high risk is also associated with high expectations. With every bull run, these expectations translated into a high return-on-investment for those that took the risk. Still, after every upward trend, Bitcoin’s relevance was put into question. As a result, the associated risk was always that Bitcoin could still go to zero. However, the 10th year of Bitcoin’s uninterrupted activity could become, in retrospect, a crucial one for its consolidation as an investment vehicle. While the bear market has slashed over 80 percent of Bitcoin’s value all-time high, the belief in the network’s long term success seems to have been reinforced among investors. This could have come at the expense of other cryptocurrency projects failing to meet expectations. The cryptocurrency market is in its discovery phase and many of the projects still have an experimental nature. However, these experiments (or their failures) have undoubtedly contributed to raising the social trust in Bitcoin as a resilient investment vehicle. [bctt tweet=”When social consensus regarding ‘Bitcoin never going to zero’ is achieved, adoption will accelerate exponentially.” username=”beincrypto”] Moreover, the past year has seen increased regulatory clarity regarding Bitcoin. While several ICO projects have been subject to securities law, it has become clear that Bitcoin cannot be regulated and, most importantly, financial regulators also came to this conclusion.

Bitcoin’s Attractiveness

Considering how all of these factors played out and the current price of Bitcoin, the downside of an investment is relatively limited – even almost non-existent. At the same time, the potential return on investment remains very high — not only in relation to the all-time high of around $20,000 but also new levels it could reach.

Still Bullish 1/6:
As early Bitcoin investors, we used to speculate about how it was an 'asymmetric investment opportunity' … i.e. you could lose 80% OR make several multiples on your investment

— Alistair Milne (@alistairmilne) January 19, 2019

History has shown that every subsequent adoption cycle pushes markets to new highs. Even though 2018 has killed the cryptocurrency enthusiasm for many, the Bitcoin investment thesis at the moment is very attractive. Bitcoin — being down 80 percent from its highest price level, surrounded by positive buzz, increased regulatory clarity, and increased interest from institutional investors — could be in a prime position to be considered the best investment asset class at this moment. What do you think? Is Bitcoin the best investment possible right now? Did the ICO deflation strengthen Bitcoin’s position as an asset class? Tell us in the comments below! 

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Image courtesy of Twitter, Shutterstock. [Disclaimer: This article is not financial advice and should not be construed as such.]