Although the price of Bitcoin has been largely directionless since the start of summer, that hasn’t dampened the spirits of many of those most committed to the first viable digital monetary system created. These analysts still believe that the Bitcoin market has a lot of room to grow.
Illustrating this is James Todaro, the Managing Director at cryptocurrency management and analysis firm Blocktown Capital. Todaro has posted a series of uber-bullish charts to Twitter showing just how small the Bitcoin market is relative to other assets.
Is Bitcoin Really a Bubble?
The first chart addresses a common critique of Bitcoin – that it is nothing more than a purely speculative bubble, akin to the South Sea Company in the eighteenth century, or the Tulip Mania that occurred in Holland the previous century. The Blocktown Capital data shows that Bitcoin is not that much like the other two spectacular market crashes in that it has gone through multiple rises and falls over the course of 10 years. In the other two examples, there were no such dramatic recoveries that took the price to new all-time highs in a cyclical fashion.
After discrediting that already repeatedly discredited narrative that Bitcoin is “just like the tulip bubble”, Todaro then discusses the gains that people would have made by monthly dollar-cost averaging into Bitcoin with $1,000 over the course of each of the years since its creation.
In 2010, purchases of just over $83 per month of Bitcoin would today be worth $73,000,0000. At the other end of the spectrum, 2018, one of the worst market crashes in Bitcoin’s history, would still have seen investors making a profit of $300 on their $1,000 total year’s investment. Every single other year, including 2019 (so far), would have seen those choosing to dollar cost average into the market turn a profit too. If someone had managed to not miss a single monthly $83.33 purchase over the entire history of Bitcoin, they would now be worth around $76.22 million.
Naturally, with such huge percentage gains over the years, the return-on-investment of Bitcoin as an asset has absolutely dwarfed investments in any of the hottest tech stocks. In fact, even rapidly growing firms like Netflix, Amazon, and Nvidia haven’t been able to outperform the cryptocurrency.
Todaro’s fourth chart shows Bitcoin’s market capitalization versus those of other currencies. It is still a very small market, larger than that of the Colombian peso or New Zealand dollar, yet smaller than that of the Czech koruna. To put it into perspective versus some of the largest currencies on the planet, Bitcoin’s less than $180 billion is minuscule in comparison to the likes of the US dollar and Chinese yuan, which are worth $14.5 trillion and $28 trillion respectively. Gold too, which some Bitcoin advocates argue is the asset most like the cryptocurrency in terms of monetary policy, makes Bitcoin look tiny. The current market capitalization of the precious metal is around $7.5 trillion.
“There is tremendous room for bitcoin to grow into a global store of value.”
In his fifth “insanely bullish” Bitcoin chart, Todaro states that the leading digital asset has leveled the playing field in terms of which individuals can realize enormous gains by investing in various assets. He states that 10,000%+ returns were only available to accredited (high net worth) investors. Bitcoin, he argues, with its permissionless, open network has changed this, allowing all those with a curious mind the opportunity to realize such an ROI.
What do you think about Todaro’s charts? Do you agree that Bitcoin still has a lot of room to grow?
Images are courtesy of Twitter, Shutterstock.