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Still Don’t Know Why To Buy Bitcoin? Here Are 23 Reasons To Own It.
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Still Don’t Know Why To Buy Bitcoin? Here Are 23 Reasons To Own It.

Ras Vasilisin
by Ras Vasilisin
19. October 2020
Still Don’t Know Why To Buy Bitcoin? Here Are 23 Reasons To Own It.

Bitcoin has survived for nearly 12 years (its “birthday” is Jan. 3, 2009, the date the genesis block was created). 

It didn’t die in early 2014, when the exchange serving 80% of Bitcoin trading, Mt. Gox, collapsed

It survived hackers that stole large amounts of Bitcoin from exchanges. 

It survived an 83% crash in 2017 from $20,000 to almost $3,000 as media called Bitcoin a bubble that had burst and left it for dead.

And it didn’t just survive. It became more resilient and robust. 

It’s antifragile. 

For example, this year, Bitcoin is the best performing asset class, with a 66% increase year-to-date. 

However, if still in doubt, here are 23 reasons why you should buy more Bitcoin. 

1. Demand for Bitcoin is growing 

The number of people investing in Bitcoin is growing every day. Open interest on Chicago Mercantile Exchange Bitcoin (CME) futures reached a new all-time high at $841 million in August. Options market signal bullishness as well. All the major Bitcoin option exchanges such as Deribit, CME, or Bakkt carry a gradual and consistent growth trend. Similarly, the total number of functioning Bitcoin ATMs is rising to 8,000, a more than 90% increase since 2019.

2. Store of value as money printer goes brrrr 

More dollars have been printed in the past months than the previous two centuries combined. It seems obvious that people are beginning to look for hedges against inflation. 

Prominent American economist Peter Schiff recently warned that these excessive amounts could put the US into a hyperinflation state.

With hyperinflation and negative interest rates becoming a reality, Bitcoin is an easy and straightforward solution to preserve your wealth. It is proving time and time again that it is a store of value. 

3. The total supply is limited to 21 million

Unlike traditional fiat currencies, Bitcoin cannot be printed by governments. There is a limited number of Bitcoins available because the total supply is 21 million units. Currently, around 18.5 million Bitcoin have been mined. This leaves less than 3 million that have yet to come into circulation. Additionally, more than 30% of Bitcoin was lost. The more people get involved in it, there will be a price rise. So, scarcity is one factor that shows it’s not too late to invest in Bitcoin.

4. More investing legends trust Bitcoin

One of the most notable converts is billionaire hedge fund manager Paul Tudor Jones. Tudor has said that Bitcoin in 2020 reminds him of gold’s role in the 1970s. His BVI fund has invested between 1 and 2 percent of its assets in Bitcoin futures contracts.

Social Capital Founder Chamath Palihapitiya opposed Warren Buffett’s rather adverse perception of Bitcoin and urged people to invest at least 1% in the asset.

Cathie Wood and her ARK is the most successful investor over the past five years. She recommends an allocation to Bitcoin, ranging from 2.55% to 6.55%. 

5. CBDC (digital dollar) will push the price higher

Central bank digital currency, for short CBDC, is not just some dystopian future anymore. It’s already here. 

The Fed recently announced a partnership with MIT to build its digital dollar. The European Central Bank is launching proposals for a digital euro.  And China’s central bank has already issued 10 million yuan worth of digital currency to 50,000 people in the Shenzhen area as a test. According to a BIS report issued in March, at least 17 governments consider or test out some digital currency form.

So what does it exactly mean for Bitcoin? The introduction of the digital dollar, euro, or yuan will be extremely beneficial. People will realize that with Bitcoin, they will still be able to receive, transfer, and store money without any authority stopping them from it. 

In comparison to CBDC, Bitcoin will be an easy choice to make. 

6. Lindy effect

Bitcoin has survived for nearly 12 years.

According to something called the “Lindy Effect,” Bitcoin’s hard-won survival suggests it will endure for at least another decade.

The Lindy Effect essentially states that the future life expectancy of a non-perishable thing, such as a technology, is proportional to its current age. 

If the Lindy Effect holds, Bitcoin could achieve the trust and use required to push prices close to $1 million. However, investors will need to be patient. It might take a couple of decades.

graph

7. Bitcoin holds above 200-week moving average

As you can see in this chart, Bitcoin’s price has never fallen below the 200-week moving average. It rises significantly above the average in the bull markets and has bounced off the 200-week moving average in bear markets. 

Additionally, according to the 200-week moving average of Bitcoin, the asset is currently sitting at an all-time high in price. 

graph bitcoin

8. A record number of consecutive days over $10k

In 2017, Bitcoin climbed above $10,000 and stayed there for 62 consecutive days. Yet, it wasn’t sustainable. It was a classic blow-off top in a market that had reached overbought levels.

This time is different.

As of last night, see Bitcoin has established a new all-time high of 102 days. 

btc consecutive (2)

And it’s a big deal for Bitcoin.

 

9. Increased awareness

Bitcoin and cryptocurrency as a whole are becoming more mainstream. During the current global economic crisis, mainstream media has often highlighted Bitcoin as a potential safe haven.

Crypto firms integrated with some of the largest companies on the planet, like Microsoft, Google, and NASA. Recent crypto partnerships with Visa, Mastercard, and PayPal mean it is now easier and more accessible than ever to get involved and integrate crypto in everyday use cases. This general awareness was accelerated even further by Facebook’s efforts to launch its own Libra cryptocurrency. 

As more people hear and learn about Bitcoin, the chance increases that a portion of those individuals eventually decides to dip their toes into Bitcoin and purchase a small amount. And it’s a big deal for Bitcoin.

10. Increase merchant adoption

Hundreds of merchants are starting to accept Bitcoin for purchases. Major companies like WholeFoods, AT&T, and Overstock already accept bitcoin as payment. Further, progress with scaling solutions like the “Lightning Network” continue making bitcoin transactions faster and cheaper to improve the currency’s viability for small payments.

11. Stock-to-flow model predicts $288,000 price

An investing model called Stock-to-flow (S2F) quantifies the scarcity of a commodity. Stock represents the total supply in circulation, and flow represents the amount of new supply per year.

Because Bitcoin is open-source software with a fixed supply schedule, it is possible to measure Bitcoin’s S2F with 100% accuracy. Following Bitcoin’s third halving in May, the current S2F of Bitcoin is 56, roughly the same as gold. However, after the next halving, Bitcoin will be twice as scarce as gold.

A pseudonymous quant trader calling himself PlanB created the Bitcoin S2F. He argues that Bitcoin’s growing scarcity will increase its value. In terms of a Bitcoin price prediction, this model says that the Bitcoin price could reach $288,000 in this cycle if the model continues to hold.

cross asset model bitcoin

Just look at what a July 2020 report by Fidelity, the U.S. investment house, said, “Commodities with a [high S2F] have historically served as superior stores of value. 

Given the possibility of such high returns, perhaps it would be prudent to have a small amount of Bitcoin, just in case.” 

12. Wall Street adoption

Multi-billion dollar institutions are now allocating 9-figures to Bitcoin.

Stone Ridge, a $10 billion asset manager, now owns $115M in Bitcoin. Paul Tudor Jones publicly revealed that he had put 2% of assets into Bitcoin. Billion-dollar public company Microstrategy Inc. raised Bitcoin holdings to $425 million after the second purchase. The largest digital asset investment manager, Grayscale, saw record inflows of $1 billion in the third quarter and now has almost $6 billion in total assets. 

Fidelity and the Intercontinental Exchange (ICE) successfully launched cryptocurrency trading offerings for institutional investors in 2019. Just this month, Fidelity said, “Bitcoin is a unique investable asset, and it could be a beneficial addition to a portfolio.”  Fidelity is suggesting people increase their Bitcoin allocation to 5% or more. 

In May, America’s largest retail bank, JPMorgan, announced that it had begun processing Bitcoin transactions. The bank also plans to create JPM Coin, a digital currency tied to the U.S. dollar. Goldman Sachs has emerged that they are considering its own crypto asset, most likely a stablecoin.  

13. Potential ETF approval

Yes, Wall Street is gearing up, but there are only limited ways for large investors to purchase substantial Bitcoin amounts. Without exchange-traded funds (ETFs), many large funds are prevented from getting exposure to Bitcoin. 

One powerful example of the impact an ETF can make is gold. The first Gold ETF was approved in 2001 and marked the beginning of a 6-year bull run, resulting in a 700%+ price appreciation.

potential approval

It is not unlikely that regulators will soon approve the Bitcoin ETF. And if they do, it would offer an effective vehicle for funds and larger investors to get exposure to Bitcoin.

14. Can’t be confiscated

The 2008 financial crisis has taught us that financial institutions are not immune to failure. The bank can freeze your fiat currency, or the government can seize your assets with little to no warning. Bitcoin is different.

Holding some of your wealth in Bitcoin allows you to maintain custody over your own funds and makes it easy to travel with your wealth across borders. 

With Bitcoin, you can be your own bank. As long as you don’t share your private keys with other people, police, and government regulators included, nobody can confiscate it.  

15. Bitcoin is still the largest cryptocurrency

Compared to the rest of the crypto market, Bitcoin is the longest-running, with the most robust network. On top of that, it continues to lead in market capitalization and transaction volume with a more than $10 billion daily transaction volume. This figure eclipses Ether (ETH) and Litecoin (LTC), which see daily transaction volumes below $500 million.

16. Infrastructure is evolving

Wallet numbers are just one part of the story. The number of people holding Bitcoin in their wallets is minuscule compared to the retail investors leaving their Bitcoin with a custodian such as Coinbase or Square’s Cash App.

Thanks to technological development in blockchain, Bitcoin’s underlying technology,  entire economic sectors from banking and energy to transportation go through a revolution. 

17. Crypto regulation is developing positively

Back in 2010, regulation on Bitcoin was nonexistent. Then came countries banning Bitcoin and cryptocurrencies. These days only a few countries outright ban Bitcoin. We still don’t have mass adoption, but we could see it happening soon with a globally regulated regulation.  The SEC, for instance, published a framework for digital asset classification. EU is determined to develop its framework in four years. Improvements like these help legally define Bitcoin, which in turn helps mass adoption.

18. An excellent alternative to gold

Lots of people see Bitcoin as digital gold. But Bitcoin is even better. 

It’s easily portable, more accepted at restaurants, hotels, etc. than a gold brick, and capable of international transfer. Bitcoin can also be used as a universal store of value accessible anywhere with a phone and a Wi-Fi connection.

btc vs gold

19. Consistent price appreciation

Although Bitcoin can be volatile, it has outperformed many of the traditional assets in the long term. The chart below shows the annual compound returns. For example, if you held Bitcoin in the last nine years, it returned an impressive 90% annually. 

graph

20. Bitcoin is easier to use

Have a family abroad? Bitcoin is also easy to send to others. Companies like Western Union can take 5-10% of the international transfer, while the recipient may have to travel out of the way to receive the funds. Bitcoin allows you to send funds easily and quickly from your phone to theirs. Bitcoin is the next generation of money and is the foundation of our future economy. 

21. Diversification to the new asset class

Trade wars, money-printing, zero-interest rates, banking machinations are a new normal. The global financial system is on the verge of collapse, and trust in the traditional financial system is fading. Stocks, real estate, gold, and bonds usually move in the same direction in booms and busts. Bitcoin has come up as a rescue because it is a non-correlated and free from politicians and central banks. 

Most of us will agree that Bitcoin is a different asset class altogether. It is not just a viable alternative investment class. With cryptocurrency adoption doubling by around 100% a year, Bitcoin certainly has immense potential for the next ten years. 

22. Bitcoin halving is bullish 

Bitcoin has historically performed exceptionally well 12-18 months after the first two halvings. The reduction in new supply or flow of coins, in the face of growing demand, historically pushed the price up.

Here’s Bitcoin’s historical price chart in logarithmic form, with red dots indicating the earliest price point close to launching and halving.  All of which represent the start of the four Bitcoin market cycles so far. 

bitcoin halving

Bitcoiners will need to be patient, though. If this chart proves prescient, it will take a couple of decades for Bitcoin to achieve the trust and use required to push prices close to $1 million.

23. Philosophical choice

The early adopters of Bitcoin were visionaries and philosophers. They wanted financial liberty. They saw that big banks playing fast and loose with people’s money triggered the 2008 financial crisis. They saw that governments worldwide bail the banks out using your money to give exit bonuses worth tens of millions of dollars. 

Therefore for some, the question “should I buy Bitcoin?” is less about the price and more about Bitcoin’s philosophy. Bitcoin is a movement. Bitcoin’s fundamentals mean that “big brother” can’t control, censor, or confiscate your money. 

So what is Bitcoin, if not a great philosophical belief? A belief towards financial liberty, inclusiveness, and transparency. 

Conclusion

All of these reasons show that it’s not too late to invest in Bitcoin.

Getting 1-5% of your wealth into Bitcoin is a good idea. You’ll protect and preserve your wealth and be in control of your own money. 

So, sit back. Grab a drink. And get ready for one of the most incredible firework shows you have ever seen over the next couple of years.


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