The Bullish Case for Bitcoin, reloaded.

[d5000]

Bitcoin's price seems to be caught in a limbo between bull and bear market. Even if we're still 60% above the November 2022 heights, there is again some fear lurking around. I think thus, it's time to remember why Bitcoin could be a much bigger success than it currently is.

Some will know the blog article The Bullish Case for Bitcoin by Vijay Boyapati, which has been transformed into a general introductory book about Bitcoin.

I agree with many of the ideas displayed in the article, but I get the impression that the linear "adoption timeline" the author pleads for, needs an update.

Basically the author argues that Bitcoin adoption will have four stages:

1. Collectible: A thing some people like to collect, even if its value is still undetermined.
2. Store of value: An asset used to store an abstract "value", for example to invest money in it and get the same or more value/money in the future.
3. Medium of exchange: A currency used to purchase goods and services.
4. Unit of account: A currency which can be used as a base to calculate prices.

We've successfully moved away somewhat from Phase 1. But I've got the impression that Bitcoin is currently caught in an intermediate "limbo" with characteristics of the first three stages, but without progress to evolve into the fourth (unit of account) stage. Even more: it seems that people's hopes currently are linked to the store of value concept, and usage as a medium of exchange was already more popular a few years ago. And as a store of value, it's only useful considering very long timespans (>2-3 years) due to harsh volatility.

My theory is that the order for Bitcoin's "bullish case" has to be updated. For me the stages are:

1. Collectible
2. Medium of exchange
3. Store of value
4. Unit of account

Why? There are basically two reasons.

1) The first one is liquidity and demand. Bitcoin's liquidity is better than 10 years ago, but hasn't made significant progress in the last 2-3 years. This makes its market still vulnerable to panic, FOMO, manipulation and other plagues which lead to its erratic price behavior.

If Bitcoin was used more as a medium of exchange, it would have significantly higher liquidity. Because each time you buy and sell something for Bitcoin it's a market operation where you're establishing its value. Even more important: Each time somebody agrees to sell something for Bitcoin, this can be considered a buy offer in the order book.

Thus, with more usage as medium of exchange and "boosted" liquidity, Bitcoin's volatility would probably lower, and it would become a safer store of value. Imagine you wouldn't have to fear an 70-85% depreciation in a bear market cycle but only 30% in the worst case. Would you invest more in it than now?

People also seem to misunderstand the concept of "scarcity". Scarcity is not equal to "limited supply". Scarcity exists when there is more demand than supply. A limited supply helps, but it does not mean something is really scarce. Many altcoins have a more limited supply than Bitcoin but have dramatically failed. Demand is crucial. If demand is erratic and only depends on FOMO cycles, then no reliable store of value can be achieved.

While if there is an explosion of merchants and everyday people accepting Bitcoin, then this means that there's also an explosion of demand. Again: Each of these offers is an offer in an imaginary orderbook where Bitcoin is traded against "real value".

Of course if volatility lowers then the bull runs will become less steep too. But that isn't a problem because Bitcoin has anyway the potential for values largely above $100,000. And that leads us to the second issue:

2) Many people forgot why Bitcoin is such a big innovation. It is the first digital value exchange medium which lacks central intermediaries completely and thus has its known advantages like censorship resistance. All previous attempts needed some kind of "bank" controlling the system.

This is Bitcoin's USP. Bitcoin can be used by anyone, anywhere (where there is Internet access) and anytime, without the need that someone "allows" you to do so. And this characteristic is most useful for a currency, not so much for a store of value. The internet (and this forum) is full of complaints about banks having closed accounts of people and made your life a pain. Bitcoin fixes this (And no, Ethereum and other centralized coins do not really fix it, as their censorship resistances is much lower).

In my opinion, Bitcoin's big advantages all really shine when it's used as a currency. And thus long term success in the future depends if it's used as a medium of exchange or not.

Once a path to currency usage becomes clear, Bitcoin will thus become a reliable store of value. Not before - before it will be subject to the same wild swings we've seen in the past years.

I would even say: There'll be no $200,000+ ("digital gold") Bitcoin without usage as a currency.

(And if you are worried about scalability: There's LN, there's even progress with sidechains, like projects like Stacks or Nomic and rollups show. It's nothing unsolvable.)

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[darkangel11]

Bitcoin's price seems to be caught in a limbo between bull and bear market. Even if we're still 60% above the November 2022 heights, there is again some fear lurking around. I think thus, it's time to remember why Bitcoin could be a much bigger success than it currently is.

Is bitcoin ever in a bear market? If it goes to 10k, falls to 5k, goes to 20k, falls to 10k, goes to 60k, falls to 30k, and so on, Is there even a bear market? Someone could argue that these are simple corrections in one big bull market, since it keeps going higher, making higher highs and higher lows.
IMO there's a clear growth pattern that we're witnessing here.

I have to agree that at this moment I only see it as a store of value. There's not enough acceptance for me to be able to spend it on the things I need and I don't want to sell it on exchange, especially now when it's so undervalued.

[hatshepsut93]

The internet (and this forum) is full of complaints about banks having closed accounts of people and made your life a pain. Bitcoin fixes this (And no, Ethereum and other centralized coins do not really fix it, as their censorship resistances is much lower).

This is just survivorship bias. People who encounter problem write a negative review or share their story on social media, while those who don't have any problems have no reason to voice their opinion. I've been using online banking and credit cards for years and haven't encountered any restrictions not even once. All the people that I know in real life also never encountered anything like that. If bank account freezes were a major problem, I would have likely encountered it by now.

If most people don't run into problems with banks, they have no reasons to look at Bitcoin, especially if you consider just how many trade-offs Bitcoin has.

[d5000]

IMO there's a clear growth pattern that we're witnessing here.

Of course, as I wrote in the long term (>2-3 years) Bitcoin already works as a store of value. However, not all people have that much time. But much more important: There is no guarantee that this long term bull market will continue. S2F and similar theories assume an "automatic growth", but I have severe doubts if demand can be sustained that high ... without the "usage as a currency".

People who encounter problem write a negative review or share their story on social media, while those who don't have any problems have no reason to voice their opinion. I've been using online banking and credit cards for years and haven't encountered any restrictions not even once. All the people that I know in real life also never encountered anything like that.

That is highly dependant on where you live. In my country for example it's mandatory for people to show an address proof to get a bank account. For example, many students which do not live in an own appartment (most do not) often fail to meet this requirement and stay unbanked or depend on their parents opening an account for them. (Situation has however improved a bit with online wallet providers which do not require address proof, but may be unreliable). I have also heard personally from people getting their account closed, although it isn't very frequent.

And: Even if the risk to get your account closed is small, it is not non-existant and if it happens it can be an extremely big hassle for your personal finances, and in the case of Bitcoin it "is 100% solved". The censorship problem, above all if you're any kind of "dissident", is even bigger.

If most people don't run into problems with banks, they have no reasons to look at Bitcoin, especially if you consider just how many trade-offs Bitcoin has.

It's a bit of a chicken and egg problem. Bitcoin will have less tradeoffs if its use is already more established, i.e. if solutions like Lightning are reliable and widely accepted by merchants. As a solution to the problem, what I'm advocating for is that current Bitcoin users should try to use Bitcoin more to pay for goods and services if possible. For example, if one wants to take profits in a bull market or cut losses in a bear market, this can be done buying some goods instead of selling the coins at an exchange.

[BIT-BENDER]

Let's say Bitcoin beats the all time high and reaches 100k and due to the volatility it goes down to 70k I think people would still consider it as a bear market season. Spreading your time worrying about which market Bitcoin is either bull or bear can be extremely frustrating.

I am interested in how I can make Bitcoin work more for me and that has to do with the adoption level, this is the best value for Bitcoin (the utility) we haven't yet started to experience that at its peak, and I hope we do

[348Judah]

Bitcoin's price seems to be caught in a limbo between bull and bear market. Even if we're still 60% above the November 2022 heights, there is again some fear lurking around. I think thus, it's time to remember why Bitcoin could be a much bigger success than it currently is.

Bitcoin should be seen far fetch from what it's current market price is today because it a digital currency we can trust it delivery future plan for the economy sustainability on it investors, this same assurance is what we have that bitcoin will not fail us no matter the downside of it market, it is known for that, being a volatile cryptocurrency, it fall and rises and we also trust it's process, the hope is sure that all aimed objectives on bitcoin investment  surely come to pass with time, not even now that we are getting closer to halving, which will soon mark the beginning of a new era or season for the market to pump, well this new week is not left out, anything new can come up at anytime from now in seing the market rising.

[panganib999]

Not really scared of what bitcoin is at currently. It could be worse that's one thing I'll give ya. Last bull season it literally took us 10 months before bitcoin was even able to recover and that was even past the halving period mind you. So for bitcoin to be in this state of limbo at a very healthy price point, I don't think there's a massive cause for concern here. Sure it could be better, we could be getting 40k now considering we're almost at the end of the year and the halving is just around the corner, but bitcoin doesn't have a general timeline that it follows to a T. So I say we keep at it with the information campaigns and all that awesome stuff to clear out all the confusions and negative connotations that bitcoin received in the past, but not so much as to do it because we're worried that bitcoin is going to fall in value real soon.

[hatshepsut93]

For example, if one wants to take profits in a bull market or cut losses in a bear market, this can be done buying some goods instead of selling the coins at an exchange.

This isn't very realistic, the amount that you plan to sell must coincide with the amount you plan to spend, at the timing must coincide too. For most investors this will not be the case and they will just sell BTC for a liquid asset - fiat.

It's a bit of a chicken and egg problem. Bitcoin will have less tradeoffs if its use is already more established, i.e. if solutions like Lightning are reliable and widely accepted by merchants. As a solution to the problem, what I'm advocating for is that current Bitcoin users should try to use Bitcoin more to pay for goods and services if possible.

The difficulties of being your own bank - key management and irreversibility of transactions are not correlated with the levels of adoption. Maybe in the future someone will release a more idiot-proof wallet software for mass use, but for some reason no one made such wallet in all these years.

Volatility also won't be gone completely with mainstream adoption. The biggest factor of Bitcoin volatility is that there's no mathematical formula for estimating Bitcon's "objective" value, so it's all just based on pure guess of traders.

[Accardo]

Bitcoin's price seems to be caught in a limbo between bull and bear market. Even if we're still 60% above the November 2022 heights, there is again some fear lurking around. I think thus, it's time to remember why Bitcoin could be a much bigger success than it currently is.

Bitcoin should be seen far fetch from what it's current market price is today because it a digital currency we can trust it delivery future plan for the economy sustainability on it investors, this same assurance is what we have that bitcoin will not fail us no matter the downside of it market, it is known for that, being a volatile cryptocurrency, it fall and rises and we also trust it's process, the hope is sure that all aimed objectives on bitcoin investment  surely come to pass with time, not even now that we are getting closer to halving, which will soon mark the beginning of a new era or season for the market to pump, well this new week is not left out, anything new can come up at anytime from now in seing the market rising.

The demand and limited supply of bitcoin work together to affect the price of bitcoin. The halving event has proven to be a good catalyst in the growth of bitcoin price.  But, after the halving, or bullish run that follows it, the price also falls back to a low amount. Because the bear market scare many users away and makes them feel like they're not good investors. like Op said, without the demand, bitcoin price won't make any much positive changes. Hence, when more people stop investing or trading bitcoin, because of its price volatility the price begin to drop, causing more users to pull off their money into fiat. It's realistic that bitcoin will not fail us, if a good number of countries, facing inflation adopts bitcoin as a means of exchange or payment. And the high expectation that bitcoin price will hit fresh ATH, may get the attention of the media. If they begin to publish such trend, more people, who wish to profit money through bitcoin will throw in some money into it.

[Sayeds56]

The demand and limited supply of bitcoin work together to affect the price of bitcoin. The halving event has proven to be a good catalyst in the growth of bitcoin price.  But, after the halving, or bullish run that follows it, the price also falls back to a low amount. Because the bear market scare many users away and makes them feel like they're not good investors. like Op said, without the demand, bitcoin price won't make any much positive changes. Hence, when more people stop investing or trading bitcoin, because of its price volatility the price begin to drop, causing more users to pull off their money into fiat. It's realistic that bitcoin will not fail us, if a good number of countries, facing inflation adopts bitcoin as a means of exchange or payment. And the high expectation that bitcoin price will hit fresh ATH, may get the attention of the media. If they begin to publish such trend, more people, who wish to profit money through bitcoin will throw in some money into it.

Your thoughtful insight about factors those can potentially influence the future of Bitcoin's price is indeed valuable. In particular, when assessing the Bitcoin price trajectory within the historical context of halving event and its consequent impact on Bitcoin market. It is important to acknowledge the prevailing economic conditions worldwide. Factors such as, high inflation and interest rates, declining GDP across major economies, tensions among USA, Russia and China, are creating unfavorable environment for investment in risky assets. Therefor despite the historical role of halving event to act as catalyst for price surge, it is possible that substantial increase in Bitcoin price in 2024 may not materialize, what most of Bitcoin enthusiasts are expecting.

[Strongkored]

This is Bitcoin's USP. Bitcoin can be used by anyone, anywhere (where there is Internet access) and anytime, without the need that someone "allows" you to do so. And this characteristic is most useful for a currency, not so much for a store of value.

This was the initial goal of creating Bitcoin but it has not been achieved until now, after more than a decade, those who have Bitcoin are still very limited in using it as a means of payment that can be used every day. The step that is always used is to first exchange it for fiat and shop while the merchant accepts it. Bitcoin is not one that provides products for daily needs, such as Namecheap which accepts Bitcoin, only certain groups benefit from it.

The internet (and this forum) is full of complaints about banks having closed accounts of people and made your life a pain. Bitcoin fixes this (And no, Ethereum and other centralized coins do not really fix it, as their censorship resistances is much lower).

I've read news about people experiencing problems with their banking accounts, and that happens in countries with weak banking systems, there are more countries where the banking system is stronger so banks won't be able to just freeze user accounts if there's no reason which is strong for that unlike what CEX can do which can't even answer complaints other than saying to comply with the law where the CEX is registered, and as long as I use the bank I have never experienced problems like that, everything goes well. So when there is bad news about banks, it doesn't reflect the valid truth and it's only case by case and not many compared to those who continue to use banks smoothly.

[streamliner]

I would say Bitcoin doesn't even need to meet the definition of money in terms of medium of exchange or unit of account to have value and to hold value.

My opinion is that Bitcoin would be valuable even solely as a store of value definition of money.

However, I do think that Bitcoin will become a medium of exchange once the price stabilises after the price discovery phase when that occurs.

If Blackrock and other ETFs are approved and we see inflow of capital into BTC ETFs, assuming 1-to-1 holding requirement for 1 BTC ETF with 1 BTC actual coin, I think BTC could get to $200k ceteris paribus.

[DrBeer]

.....
I would even say: There'll be no $200,000+ ("digital gold") Bitcoin without usage as a currency.

(And if you are worried about scalability: There's LN, there's even progress with sidechains, like projects like Stacks or Nomic and rollups show. It's nothing unsolvable.)

Interesting analysis, and glad to see the presence of arguments !
The last sentence is a KEY phrase.
As long as Bitcoin does not acquire the status of a real asset for mutual settlements, all dreams about its future are a meaningless pastime, as only a speculative manipulative asset remains.
As soon as bitcoin enters the real market, and gets the status of currency - the speculative component will begin to come to naught. And with it volatility and other disadvantages.
The only remaining issue is technological - the speed and cost of transactions

[stadus]

There's not enough acceptance for me to be able to spend it on the things I need and I don't want to sell it on exchange, especially now when it's so undervalued.

This statement could be debatable, though, in my opinion. How can you say that it's undervalued when there's currently not enough acceptance for bitcoin? Remember that bitcoin has pumped many times, causing FOMO where some people make a lot of money while others experience the opposite. If we believed the price wasn't overvalued at that time, then I think it should not have dumped due to the so-called correction. Isn't it wiser to also consider that at some point, the price is manipulated?

The thing is, if we talk about the basics, only demand would result in an increase in the price of bitcoin. But how is the status of that now? Is the demand really growing? If the answer is yes, then the price could be undervalued currently.

[franky1]

value is found outside the speculative market
value is NOT the market price

value sits beneath the market price

imagine value as the wholesale manufacturing cost of a product
imagine price as the retail sales cost of a product

the easiest way to find the value. is find the most efficient acquisition cost of btc on the planet.. and if smart enough you will learn that is mining in an efficient region..

this efficient mining cost sets the limit of anyone on the planets ability to sell and make a profit. because its the lowest.. no one is left to sell for less and break even. so it sets a support wall no one is willing to sell below. this support wall is the value line

you will notice because bitcoin mining is (currently) over $20k efficient. it gives good reason why the market this quarter is $25k+ instead of being just $100

you notice this support more when you look at things like crap coins with low PoW costs. their market speculates at a lower rate too

there are some PoS that have no real world mining cost. so their market is 99% speculative and <1% store of value. those PoS coins with high price can burst their bubble if their speculation reasons stop

[davis196]

Once a path to currency usage becomes clear, Bitcoin will thus become a reliable store of value. Not before - before it will be subject to the same wild swings we've seen in the past years.

We are waiting for this to happen in the last several years and it isn't happening.
You have the assumption that once BTC becomes an actual currency, everything will be fine and there won't be any problems with BTC.
The problem is that most of the Bitcoiners don't want BTC to become an actual currency. They simply want to buy BTC at 20K and sell it at 100K USD. As long as they have this kind of mentality, Bitcoin will never become a true currency and it will always stay in the category of speculative financial assets.
I will never stop repeating the same question over and over again. If Bitcoin was so awesome and so much better than the fiat payment systems, then why didn't everyone in the world just dump fiat and use BTC?
The answer seems obvious. The fiat payment systems aren't that bad and Bitcoin isn't perfect.

[EarnOnVictor]

Bitcoin's price seems to be caught in a limbo between bull and bear market. Even if we're still 60% above the November 2022 heights, there is again some fear lurking around. I think thus, it's time to remember why Bitcoin could be a much bigger success than it currently is.

Is bitcoin ever in a bear market? If it goes to 10k, falls to 5k, goes to 20k, falls to 10k, goes to 60k, falls to 30k, and so on, Is there even a bear market? Someone could argue that these are simple corrections in one big bull market, since it keeps going higher, making higher highs and higher lows.
IMO there's a clear growth pattern that we're witnessing here.

The next 2 years will say a lot more about Bitcoin and will be a litmus test for how people will continue to view the coin. For now, it's a bullish-bullish aspiration, this is my disposition as well, but I still have some reservations and will ever let my chart guide me. I believe that the true nature of the coin will be better unveiled this time that people are more aware of it and truly ready for it so that we would know its true behaviours.

The market is extremely bearish at the moment but even if there is no tradition like halving, there is no reason why a market like Bitcoin will be bearish forever, we are only in the bearish season yet. This is also a time of opportunity for those who value it and are smart enough to take advantage of it. Regardless of what's happening now, Bitcoin should be getting prepared to start another bullish phase a few months from now, and this might be relentless in giving profits to the Bulls.

[franky1]

when large institution are doing collateral deals extending upto and beyond 2028 you soon realise that things are not going to slow down any time soon

[MFahad]

Let's say Bitcoin beats the all time high and reaches 100k and due to the volatility it goes down to 70k I think people would still consider it as a bear market season. Spreading your time worrying about which market Bitcoin is either bull or bear can be extremely frustrating. 

I am agree with your status that lots of people are unaware of bear and bull market because when the price reduces 5 percent then they consider that time as a bear market but they don't remember the time when bitcoin price was 12k$ or 15k$.

It will be good if investors don't think about bull and bear market because they cannot understand it. Without considering ups and downs just focus on your profit that if investors can manage investment at a specific price then they should do and wait until it increases in value.

[Poker Player]

I don't see it. In other words, I am bullish on Bitcoin in the long term, but not for the reasons mentioned above, and I don't see this transition between currency and store of value, in whatever order, to end up as a unit of account. Today it has a certain use as a currency but I think it will lose meaning over time.

I think it will remain a store of value like gold, but as a digital asset.

This is just survivorship bias. People who encounter problem write a negative review or share their story on social media, while those who don't have any problems have no reason to voice their opinion. I've been using online banking and credit cards for years and haven't encountered any restrictions not even once. All the people that I know in real life also never encountered anything like that. If bank account freezes were a major problem, I would have likely encountered it by now.

If most people don't run into problems with banks, they have no reasons to look at Bitcoin, especially if you consider just how many trade-offs Bitcoin has.

It's just like that. I've never had any problem either.

The difficulties of being your own bank - key management and irreversibility of transactions are not correlated with the levels of adoption. Maybe in the future someone will release a more idiot-proof wallet software for mass use, but for some reason no one made such wallet in all these years.

Volatility also won't be gone completely with mainstream adoption. The biggest factor of Bitcoin volatility is that there's no mathematical formula for estimating Bitcon's "objective" value, so it's all just based on pure guess of traders.

I totally agree with your view which I understand to be more pragmatic, and in my opinion realistic.