https://medium.com/@bitcoinoptimist/bitcoin-etf-would-an-approval-be-healthy-for-the-market-34edf44ada0#.ov03z1nb8Bitcoin has diverged away from the norm, and broken from its trend. Since the end of 2015, the slow-and-steady rise has been the name of Bitcoin’s game. As demonstrated by the recent price volatility, the rules of the game have since been changed. If they hadn’t, we would likely see Bitcoin hovering in the $1,000-ish price range and we would not have witnessed it hitting $1,275.
However, it is pretty easy to see why the price has been rising. Traders are speculating on the ETF approval, and other traders are speculating on the speculator’s speculation. This ultimately causes an elevated level of buying over selling, and this resulted in a deviation from the norm.
With that said, we could easily go back to the norm. If the SEC rules against the Bitcoin ETFs, the price will correct (and likely over-correct) and then once it finds a bottom, it will likely continue the predictable, slow-and-steady upwards ascent. It’ll go back to playing the game it knows.
On the opposite end of the spectrum, if the SEC approves the ETFs, the current volatility will continue to exist and we will likely see this “exuberance” drive Bitcoin’s price upwards into a parabola. Parabola meaning exponential.
An exponential rise might sound like a leap at first thought, but if you analyze other exponential charts, compare it with Bitcoin, and realize that exponential is in Bitcoin’s nature, it really is not as much of a leap as you might think. This is the internet of money after all.
Now this begs the question, “Is it healthy for Bitcoin to rise in an exponential fashion?” The answer to that question depends on the perspective you choose to take. If you have a short-term perspective and find boom-to-bust-to-recovery cycles bad for the market, maybe it’s not so desirable. If you have a long-term perspective where the goal is to increase Bitcoin adoption and awareness, the ETFs and a potential exponential price rise would be an absolute blessing (assuming they are configured and secured properly).
An extremely quick and large price rise would bring Bitcoin into the financial world’s spotlight. You would hear about it on financial news programs, and read about it in financial news publications. The news would spread over the internet like wildfire. Worldwide interest would be piqued, and the gap between the tech-based world and the world of finance would be filled. The financial industry would finally have access to the easily-passable bridge that has prevented them from investing in Bitcoin thus far.
Prior to an ETF, Bitcoin has flown underneath the financial world’s radar. As an investment, it hasn’t been taken seriously. It’s perceived as a crazy experiment suitable only for drug-users and money-launderers. It is not considered a reliable store-of-value. The launching of an ETF coinciding with a significant price rise would put that thought to rest. With easy, non-technical investment access, it could no longer be considered a currency only for criminals. It would be legitimized as an investment for the everyday person; and the psychology of it being a store-of-value would change. When the price is under $1,000, nobody really took notice. After $1,000, people started to take notice. If and when it hits $2,000+, people will really start to take notice. And the higher it goes, the more people will equate it as a store-of-value. They’ll equate it with a digital gold, and they’ll want to own some themselves.
As more fuel is added and the fire continues to rage, additional users and investors will be drawn into the Bitcoin ecosphere. The hype will feed upon itself, and from the Bitcoin adoption and awareness perspective, this will be a great thing. Not only will it be great, it will also be a necessity: A necessity for mainstream Bitcoin adoption and usage throughout the world. Before Bitcoin can go mainstream, it must first be desired as a form of money. People must want it. For people to want it, it must demonstrate that it is valuable. For it to be psychologically valuable, the price needs to be “high.” Once the price is perceived as high, it will be thought of as valuable; and then, everyday people will want it.
After Bitcoin is desired and in the hands and minds of many, the odds of mainstream success will be overwhelmingly in its favor. When it becomes inarguable that Bitcoin is valuable as money, this door to mainstream success will be opened. It probably won’t happen overnight, but with this prerequisite met, the Bitcoin network would be ripe for widespread adoption and could eventually realize its potential in revolutionizing the financial industry and becoming the backbone for everyday commerce.
So, from a long-term, “increasing Bitcoin awareness and adoption” perspective, an exponential price rise would be welcomed. The only way it wouldn’t be is if the Bitcoin network could no longer function because of it. Luckily for the world, Bitcoin doesn’t give a damn if the price is $.10 or $10,000. The code will still work, and the miners will still mine. And besides, it is almost inevitable that Bitcoin will rise on an exponential scale at some point. It has a relatively small market value, it’s global, and it’s on the scale of the internet. It has ample room for growth, and if we learned anything from the internet, growth does not come linearly — it comes exponentially. Why wouldn’t Bitcoin do the same? Therefore, the question is whether that type of rise will come sooner rather than later — but we should find that out soon enough.
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