While institutional investors continue to buy bitcoin retail investors seem to have created an opinion dichotomy as far as the industry is concerned. Some believe Bitcoin is here to stay, and buy Bitcoin steadily in order to participate in the revolution. In general, there are many differing views on the future of cryptocurrency.
Others, especially investors who have seen lots of investing success in traditional financial markets are in disbelief. How can a digital currency possibly be so valuable? It is erratic to say the least. They continue bashing crypto investors without understanding the real reasons behind this massive wealth shift.
This is exactly why we wrote this article. Below we analyze the reasons behind this dichotomy. Through a series of points that we believe are worth mentioning, we hope to help you understand what you can do to bridge the gap between the two parties.
Ready to delve in? Let’s get started.
Note: before buying bitcoin or other cryptocurrencies, be sure to conduct your fair share of due diligence. Investing always comes with it risks so be sure you understand them all.
What is the motivation behind entering the crypto markets?
Unlike the previous bull markets that Bitcoin experienced, the market is now way more mixed. Investors are no longer only motivated by quick profits.
The economic uncertainty we experienced over the past few months, paired with the lockdowns, has motivated many high-net-worth individuals to place part of their portfolios in Bitcoin. They are doing this to protect their wealth from financial risks such as potential inflation or even hyperinflation.
Aside from that, we also have investors who are more visionaries than profit-driven. These are the buyers who have what Twitter users refer to as diamond hands.
They do not necessarily need to sell their coins for profit, and are not focused on short-term economic instabilities. Instead, they are working in the crypto industry and are trying to build a better financial system for the future.
Investors need to understand the technology to have a better picture of the future of cryptocurrency.
The diverse perspectives on the crypto markets are also very much affected by the level of technological expertise that investors have. Those that are not able to understand the drawbacks of our traditional financial systems and the technologies that empower it will most likely stick to the narrative of a dangerous gamble instead of a fundamentally strong opportunity.
Those that have an better understanding of blockchain technology are those who have a more positive outlook on the future of cryptocurrency and blockchain. The alternative form of money that has been introduced to the economy has already exposed the flaws of the US economy. Plus, it is only gaining more traction as time goes on.
When you manage to understand Satoshi Nakamoto’s whitepaper and the problems Bitcoin is trying to solve, you will most likely start to embrace the purpose and price of bitcoin.
How do you compare crypto with traditional investment markets?
Experienced, or better yet, traditional, investors that come from other financial markets tend to compare their volatility with that observed in cryptocurrency. These people often fail to understand that Bitcoin is completely unlinked with other financial markets.
The strongest proof of this statement can be seen in the recovery of Bitcoin and other cryptocurrencies compared to the stock market (or precious metal market) shortly after the Black Swan market crash of March 2020.
While all traditional markets sluggishly continued their stagnation path, Bitcoin recovered swiftly. It was only after governmental intervention that the stock markets managed to gain traction once again. From here they headed back to their prior levels.
Those who understand that Bitcoin is an asymmetric risk-reward opportunity also understand that it should not be treated the same way as traditional investments. Therefore, these are the people who do not panic when sudden price movements change the public narrative.
The future of cryptocurrency is vague but the direction is clear.
It is important to accept all different viewpoints towards cryptocurrency. The negative ones should be viewed as reason to try and educate people. Most people are not aware of the way our financial system works. Many don’t understand the dangers of inflation or the reason behind negative interest rates. These are the exact people who usually adopt a negative attitude towards the cryptocurrency market in the long term.
That being said, for those that have spent more time in the industry, the conviction as far as the general direction of crypto is very strong. We are headed into a fully digital future where bits are more valuable than atoms.
Bitcoin has started a revolution against centralization, and the public agrees with its peaceful statement. Those that passionately refuse to believe this, sticking to their outdated narratives, will eventually come to realize that our world is full of possibilities. It is those thoughts that the public embraces that will eventually survive.
Most people are not incentivized enough to believe in Bitcoin and feel like they missed the train. It is therefore our responsibility to guide them to a better future, with knowledge and understanding of the direction the economy is headed.