There is a great debate about whether or not Bitcoin has the ability to outperform all other assets in this new decade. At the time of publishing this article, Bitcoin is trading at $7391 and the coin has gained 5.39% in the past 24 hours. The cryptocurrency started 2020 fairly strong with an opening price hovering around $7297 in the first week of January.
Despite volatility in the current market, Bitcoin has gained 50% of its all-time high of nearly $20K, and in reality, based on its RoI, Bitcoin is the top performing asset of the previous decade. In 2009, Bitcoin launched as a solution to the global financial crisis. It’s anonymous creator, Satoshi Nakamoto, developed what would ultimately become the world’s best performing asset. To put this into perspective, let’s consider a $1 investment at the start of 2010 would have returned over $100,000. In early 2010, the cryptocurrency was at the $0.003 level and it’s recent high was $12,000.
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Here’s the thing. According to experts, Bitcoin has no intrinsic value because it isn’t backed by any other asset. Bitcoin is Bitcoin and relies solely on its network to continue operating, and the ebb and flow of supply and demand.
One notable was back in 2010 when Laszlo Hanyecz bought the now-famous Bitcoin pizzas for 10,000 BTC, proving to the world that Bitcoin is a reliable means of payment. Since 2010, the price has trended upwards and no one is questioning that Bitcoin is basically roller coaster; plunging and regaining value as crypto tokens often do.
According to Bank of America Securities, researchers rated it the best-performing asset of the decade. When the price hiked in February 2011, it was the first parabolic run in price. In 2013, 2017 and 2019, there were similar bull runs in Bitcoin’s price. To justify its position as the leading asset, it is compared to the Dow Jones, S&P 500 and other top-performing stocks.
While no stock, not even real-estate or precious metals, turned a better RoI, Bitcoin had an RoI of over 100$ in a single year. Bitcoin’s RoI since 2013, is 5333.4%. Watching these returns, investors are relying on price predictions for 2020. Crypto influencers like Peter Schiff and Anthony Pompliano have predicted $100,000 before the end of 2020. According to John McAfee the price will cross $1 million in the next year. While predictions may or may not be true, many Bitcoin proponents are positive about its future. The Fear and Greed Index is suggesting a strong buying sentiment, or greed.
What about Ethereum?
After Bitcoin, Ethereum is the next top performing asset and despite the negative stigma surrounding it, the hard forks, differences between developers and zero transparency in the funds required, it has outperformed other cryptocurrencies. Its ICO price was less than $1 and it is now trading at $133. The ATH was $1,400. RoI stands at 4615% and it brought investors gains of over 17,900% in December 2017.
Despite these statistics, Bitcoin investors gained 3 times as much as Ethereum’s early investors. One of the factors responsible for this is the halving. After every four years, it brings a measurable success to all HODLers as the price rallies right before a halving.
The concept is that restricted supply of the cryptocurrency drives demand, which helps the price rally. Analysts have claimed that the halving of 2024 may send the price up to $1 million. While all this is possible, demand and market sentiment are major drivers. In the span of the next decade, an increase in adoption, institutional investment and regulation from authorities will aid the price hike.
The current geo-political scenario indicates fear in the stock market, and alternatively harbors a growing interest in alternative investment and hedge against crisis, like Bitcoin and other digital assets. Some economists have dubbed Bitcoin as digital gold, owing to the role that its playing in the economy. Capital controls and hyper inflation may drive the price up for now, adoption will be key in the next decade.
Despite its outstanding performance, Bitcoin and other cryptocurrencies are frowned upon by Warren Buffet and other traditional stock honchos. One reason could be the bubble-like performance of the crypto market and similarities between the dot-com crash and the crash after the historic bull-run of 2017. It remains a gamble in the regulatory grey area in countries that have little, or no regulation on use, exchange and taxation of cryptocurrencies.
Bitcoin and Regulations
Technology is moving faster than law enforcement and they have been playing catch-up with cryptocurrencies for the past decade. Libra’s launch announcement in June 2019, started a dialogue between social media giant, Facebook, drawing congressional attention to Libra and cryptocurrency. This encouraged several institutions to participate in the digital asset economy, without asking too many questions on regulations and legal clarity, but solely based on the assets’ value proposition.
The Bitcoin Difference
Bitcoin has become popular to the end that central governments of France, Russia, China and India are considering the development and issuance of a centrally issued digital asset. China has already started the development and it hasn’t caused Bitcoin to lose any investor interest or appeal. Instead, it is making cryptocurrencies a household name.
In the future, when fiat economies are rife with rate cuts, deficits and inflation, most global citizens will turn to Bitcoin and it may be the beginning of a parallel inclusive economy, more decentralization and less taxation. To answer the question: Will Bitcoin outperform all assets in the 2020’s? I feel very strongly that it will. What are your thoughts?
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