Why Bitcoin doesn't work well as a store of value.

[stadus]

You’re questioning the high volatility? You shouldn’t, because that’s just the nature of Bitcoin. With limited supply, that volatility will always be there. We’ve seen institutional investors putting money in, and some people thought that would reduce volatility, but it didn’t. It’s because there’s still no massive adoption. Bitcoin is still, in my opinion, treated as a speculative asset.

But as a store of value? Obviously yes. If you look at the big picture, despite the volatility, it’s still the fastest-growing asset out there, even beating some traditional stocks.

So yeah, it works well as a store of value.

[EL MOHA]

You’re questioning the high volatility? You shouldn’t, because that’s just the nature of Bitcoin. With limited supply, that volatility will always be there. We’ve seen institutional investors putting money in, and some people thought that would reduce volatility, but it didn’t. It’s because there’s still no massive adoption. Bitcoin is still, in my opinion, treated as a speculative asset.

But as a store of value? Obviously yes. If you look at the big picture, despite the volatility, it’s still the fastest-growing asset out there, even beating some traditional stocks.

So yeah, it works well as a store of value.

In the general sense yes we can say that the bitcoin market is actually volatile, but in reality check and compare others we can actually say that the bitcoin market is actually very less volatile compared to what it was in the early days, people usually stated that in the early days one can easily see the market dumping to less than 80% plus in a bearish sentiment and could do even 10x in bullish market trend but right now it is not realistic to see such numbers happening now in a short period of time. And as the adoption rate continues to expand and grow, it will be reducing too such that we wouldn’t be seeing even 60% fall as been realistic again

As for been store of value, every one has their own choice of how they view an asset but currently I cannot see more than two if not less than that, that is a better store of value than bitcoin, over a long period of time it hd proven how it can hedge against inflation

[headingnorth]

1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things.

While I agree a bit with this statement, there are two facts hinting that this "issue" doesn't affect Bitcoin that much:

- The long term trend was always bullish. That is very different from memecoins and shitcoins which only are bullish for one big pump and then lose value constantly (with likely intermittent small pumps which often never reach the original pump's price). And those that were "shaken out", had always the opportunity to re-buy for the same price they sold, and later they made profit if they held only a few weeks or months more
- Volatility is lowering since Bitcoin's incenption practically (see the charts I posted in your other "skeptical" thread).

I'm a bit wondering why you were so overwhelmingly positive about Bitcoin (even "maximalist" sometimes)

The "Liberation Day" market crash that happened back in April was caused by Trump's tariff war. Bitcoin took a big dump
but I noticed the price of gold went up big on the same day. That is when I realized the economy is screwed and how bitcoin is still very closely
tied to how the economy is doing. The economy was screwed long before Trump came into office due to non-stop money printing and monetary
debasement that has been going on for decades. But Trump just made things even worse with his Big Beautiful Bill and other nonsense.

That was a big signal for me to start rotating out of bitcoin and into precious metals. I sold my bitcoin in part to take profit but also as a
defensive measure to protect myself from whatever crazy thing Trump would do next. I didn't sell it all once but 10 to 15% per month
starting in April. I was hoping bitcoin would recover, and it did, but not by much.

For the most part bitcoin just stagnated all year long, despite the constant flow of bullish news all year long for bitcoin,
but bitcoin barely responded very positively to any of it. Even the stock market performed better than bitcoin.

It made me ask why that could be? That is when I realized bitcoin has no support beyond speculation. The stock market also has speculation
but the companies themselves are supported in large part by demand for their goods and services that has nothing to do with speculation.
Let's call it organic or non-speculative demand for the sake of argument.

But bitcoin does not enjoy that kind of support because it is almost purely speculative. Bitcoin relies almost purely on people's
speculative behaviors and emotions such as fear and greed, which can always turn on a dime. Bitcoin doesn't have a strong foundation of organic
demand which makes it feel like you are on a wild rollercoaster ride that never ends.

Sooner or later people get tired of the constant whiplash and want to get off. Of course, any kind of investment can feel like that
but with bitcoin and crypto it is much more pronounced. The other thing is most people still don't even understand what bitcoin is.
And people are usually afraid of what they don't understand. Many still think of bitcoin as some kind of scam or is only used by
criminals and scammers, etc. You have to admit the idea of bitcoin is a very abstract concept, that is not easily understood by the average
joe.

1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things.

I'm a bit wondering why you were so overwhelmingly positive about Bitcoin (even "maximalist" sometimes)
until the OP_RETURN debate and now are trying to question it. Has it to do something with that debate? It's looking a bit "strange", at least

That has a little bit to do with it, but the OP-RETURN debate is just one of the long list of things that for me makes bitcoin more bearish than bullish.
It may have been the one thing that broke the camel's back for me. I still love the fact that you can store and secure value on a flash drive,
but I think bitcoin has so many issues that need to be addressed. The OP-RETURN thing just makes me think that bitcoin is heading in the wrong direction with its development as if bitcoin doesn't already have enough problems to deal with.

I agree with Jack Dorsey that bitcoin cannot grow much further as a speculative instrument alone. Which is why he is advocating for bitcoin's adoption
as a form of currency that could one day be widely used for payments with his payments services company.

It's a long shot but I hope he is successful with that. If so, it might make me interested in bitcoin again.

[Smartvirus]

You’re questioning the high volatility? You shouldn’t, because that’s just the nature of Bitcoin. With limited supply, that volatility will always be there. We’ve seen institutional investors putting money in, and some people thought that would reduce volatility, but it didn’t. It’s because there’s still no massive adoption. Bitcoin is still, in my opinion, treated as a speculative asset.

Volatility is an aspect of Bitcoin that can’t be over emphasized. It is the very reason why many institutions, private individuals and governments around the world has sort Bitcoin out for investment and reserve currency purposes. So, it’s not Bitcoin that needs to change but, the definition of what store of value ought to be for it to accommodate our current reality which is, a volatile Bitcoin.

[Smack That Ace]

You’re questioning the high volatility? You shouldn’t, because that’s just the nature of Bitcoin. With limited supply, that volatility will always be there. We’ve seen institutional investors putting money in, and some people thought that would reduce volatility, but it didn’t. It’s because there’s still no massive adoption. Bitcoin is still, in my opinion, treated as a speculative asset.

But as a store of value? Obviously yes. If you look at the big picture, despite the volatility, it’s still the fastest-growing asset out there, even beating some traditional stocks.

So yeah, it works well as a store of value.

The truth is that bitcoin is a speculative asset, it is not a safe haven like gold. This is not going to change anytime soon as bitcoin volatility remains quite high.
However, the concept of a store of value is an asset that can retain or increase in value over time, helping us maintain purchasing power in the future. Therefore, an asset that is speculative but can increase in value over time can also be a store of value. Bitcoin is a store of value, bluechip stocks are also stores of value but they are not safe havens.

With its impressive growth, bitcoin is even the best store of value in the long term but again, it is not a safe haven.

[Mandoy]

You’re questioning the high volatility? You shouldn’t, because that’s just the nature of Bitcoin. With limited supply, that volatility will always be there. We’ve seen institutional investors putting money in, and some people thought that would reduce volatility, but it didn’t. It’s because there’s still no massive adoption. Bitcoin is still, in my opinion, treated as a speculative asset.

Volatility is an aspect of Bitcoin that can’t be over emphasized. It is the very reason why many institutions, private individuals and governments around the world has sort Bitcoin out for investment and reserve currency purposes. So, it’s not Bitcoin that needs to change but, the definition of what store of value ought to be for it to accommodate our current reality which is, a volatile Bitcoin.

The difference between Bitcoin and the traditional stores of value such as gold or fiat is its volatility. Rather than assuming that Bitcoin will act as a stable good, we ought to redefine the meaning of the term store of value in the current world in which growth opportunities and volatility are two indistinguishable variables.

[Oshio-man]

If bitcoin is not working well as you wish, doesn't mean is not working well for the purpose it was created by the founder of bitcoin, bitcoin is volatile and you have to take it because there is no how you will get involve in bitcoin you will not experience volatile from bitcoin before you will able to earn something huge or small gain from bitcoin, yes, bitcoin is good for holding for long term because it always increase when the bullish season is on ground, while the price always decrease when the bearish season is on ground, and when you begin to see this two season in the market you don't need to be panicking than to make use of the one that will favour you at the moment.

[minairia3]

Btc,  a great store of value to those who are patient.

BTC has fixed supply. Means no new money printing and no inflation. Even gold supply increases 1 to 2% yearly. This fixed supply and continuous demand will drive the price in new high. Thus btc value is protected. You can control your asset completely. Can move it anywhere you want easily. From last decades BTC remain most profitable trade. It outperforms gold, stock, real estate everything.

Anything will outperform the market in its early years. Even memecoins can often wildly outperform when the price
10x's or 100x's in the first few weeks or months of their existence.

But there reaches a point when the marketcap gets very big and begins to experience diminishing returns.
Just because something may have multiplied exponentially during its initial years doesn't mean it can keep doing that forever.

For bitcoin to go from zero to $100K is a lot easier than to go from $100K to ONE MILLION per coin in the same time period.
At one million dollars per coin Bitcoin's marketcap would be greater than all of the MAGNIFICENT 7 companies COMBINED.

That is just not realistic for something that has little to no demand beyond people speculating on it.

I agree with you that bitcoin can go from 0 to $100,000 much more easily than it can go to $1 million from now. The larger the market cap, the lower the returns, and that is exactly what bitcoin is experiencing. Bitcoin couldn't even double in this cycle from its previous ATH of $69,000.

But overall, bitcoin's growth rate still seems to be far superior to that of gold, stocks, or real estate. So it would be incorrect to say that bitcoin is not an effective store of value.

With a market cap under $2 trillion and adoption still ongoing, Bitcoin will still be the superior investment in the future, IMO.

[Rustam Meraj]

Your are right in that Bitcoin is not normal way to keep value since it is highly changeable scaring most people to sell and its demand is not yet based on real use, but other, mostly guesswork, which causes it to rise and fall as other risky things. But although I agree that it does not pass old test, its supporters believe that such volatility will go down as market gets bigger, and that real value of it is that it is set amount of 21 million and that it is not controlled by governments, and so they see it as Store of Value 2.0, long term safety against inflation.

[d5000]

For the most part bitcoin just stagnated all year long, despite the constant flow of bullish news all year long for bitcoin,
but bitcoin barely responded very positively to any of it. Even the stock market performed better than bitcoin.

It made me ask why that could be? That is when I realized bitcoin has no support beyond speculation.

Where I agree with you is that the speculation aspect on Bitcoin is an aspect I would love to go away, at least a little bit. Even if it is fun sometimes, but it is an obstacle to its acceptance as store of value and currency.

But I think your perception that speculative use is "stagnating", or is still the predominant use case with few or no reduction, imo is caused by the new "wave" of speculative capital who entered Bitcoin after the ETF approval. It's the capital that caused mostly the crash (if you want to call it that way) from the 110-120k area to the 80-100k area. That were probably mostly profit takers, of those who got BTC at 80k or less.

Speaking of "retailers", I see instead much more interest for DCA models now, which cause a tendency to stabilize the price. Intelligent treasury companies (not Saylor) also may be opting for that solution, although it's of course a bit of a problem that many new treasury companies already bought for a very high price. And in that "retailer" sector there's a constant "trickling in" of people interested really in Bitcoin, not only as a speculative tool.

The "Bitcoin funnel" basically is: Speculation "ride the waves" style -> Long term hodling/speculation -> "Real use" (as a currency and "eternal" store of value). It's a slow process, but I still believe it works.

And the volatility reduction heavily works against the speculative capital and in favour of the long term hodlers and, above all, currency users.

Sooner or later people get tired of the constant whiplash and want to get off.

That's how it went until now. 70-80% crashes, and then "magically" it recovered. Because many saw that the downs were also only overreactions caused by speculation.

The long term trend is unbroken. Never before late 2024 the price was as high as it is now.

The other thing is most people still don't even understand what bitcoin is.

People are able to learn. The problem imo is that the use cases outside of speculation are indeed a bit "abstract". Many people for example think they have nothing to hide, so they don't need censorship resistance.

But I ask them then: What if in your country happens something like in Venezuela, that a democracy slowly turns into a dictatorship? Do you still think you have "nothing to hide"?

And even in democracies there are authoritarian tendencies, above all regarding surveillance being stricter and stricter. The "KYC obligation for social media" in Australia is unprecedented in history.

The OP-RETURN thing just makes me think that bitcoin is heading in the wrong direction with its development as if bitcoin doesn't already have enough problems to deal with.

I think I made it clear in the threads about that topic that I also don't like the idea of Bitcoin as a random data storage. But I believe actually the decision Core took, while not enough to "stop" that, was the only chance to limit the harm of these NFT spam waves without crippling Bitcoin in a way that made its "use as a currency" very difficult. Because Bitcoin can't scale to more than its current user base only with on-chain transactions and even Lightning.

I have big problems with proposals like BIP 444 which could set a dangerous precedent in terms that "not-that-standard" Bitcoin "Layer 2" applications like sidechains and Ark, which I consider crucial for "adoption of BTC as a currency", could face the danger to be confiscated. At least limited "programmability" for Bitcoin is needed for these solutions to work flawless.

That's the reason why I think that Core's decision was correct, and was done obeying strictly technical reasons.

I agree with Jack Dorsey that bitcoin cannot grow much further as a speculative instrument alone. Which is why he is advocating for bitcoin's adoption
as a form of currency that could one day be widely used for payments with his payments services company.

I also agree with that, but I think we're heading in that direction already, very slowly.

[viljy]

Basically, all 4 points are correct. However, points 1,2,3 have always been obvious and, in general, are not fatal. In general, these first three points can be ignored. The most unpleasant point is the 4th point. The funds did not stabilize prices or reduce volatility, as we expected from the arrival of institutional investors. Instead, bitcoin remains highly correlated with the S&P500, meaning it is a high-risk asset rather than a reliable safe haven asset. However, this only shows that bitcoin adoption is still insufficient. Bitcoin needs even more involvement from institutional investors. Even the largest holders like MicroStrategy and BlackRock are not enough. Bitcoin needs more time. Another question is whether the global economy has the time... but this question goes beyond the scope of this thread.

[Betwrong]

~ A store of value has to be more or less stable in price. It cannot be both
highly volatile and a good store of value imo.

Actually it can, in the long run, I mean. For someone who invested in BTC 5 years ago when the price was around $20k does it really matter that the price went to $17k three years later, or how volatile Bitcoin was during all those years overall?

But the path from $100K to $200K will probably be much tougher and longer IMO, assuming it will get that high.

Why "from $100K to $200K"? What is so special about those numbers? If you'll read some materials from history of Bitcoin, you'll see that in the beginning people were extremely skeptical about BTC going over $1 per 1 Bitcoin, and when that happened many predicted a steep decline from that "bubble" because "We all know what dollar is, but what is Bitcoin, a bunch of letters and numbers on your screen?".

[Dogedegen]

4. Bitcoin is too correlated to risk assets and the economy.

I also addressed this in the thread about gold vs. Bitcoin - probably a temporary phenomenon until Wall Street traders understand Bitcoin's fundamentals better.

I believe there is a prevalent misunderstanding that the frequency of hearing about something and the commonness of a word implies understanding. I would bet anything that less than 1% of people who have heard of Bitcoin actually understand it even at its basic level. Just because it is being more talked about in the media or on TV that does not mean that the presenters even really know the implications of Bitcoin. We live in a world that is addicted to centralization, control and inflation. Bitcoin is contrary to the deepest belief of most people. So yeah only once it is considered for what it is then can we say that real understanding has arrived.

I'm a bit wondering why you were so overwhelmingly positive about Bitcoin (even "maximalist" sometimes) until the OP_RETURN debate and now are trying to question it. Has it to do something with that debate? It's looking a bit "strange", at least

There are a few individuals here that appear malicious on and off. Some are definitely paid agents, others are trolls and the 3rd group is of that extreme type of immature adult that tends to respond like a child when they don't get their way. They try to show us, whatever the means for them but in the end they just look like toxic fools and accomplish nothing.

The difference between Bitcoin and the traditional stores of value such as gold or fiat is its volatility. Rather than assuming that Bitcoin will act as a stable good, we ought to redefine the meaning of the term store of value in the current world in which growth opportunities and volatility are two indistinguishable variables.

Something can be volatile and a store of value, those are not mutually exclusive.

People are able to learn. The problem imo is that the use cases outside of speculation are indeed a bit "abstract". Many people for example think they have nothing to hide, so they don't need censorship resistance.

But I ask them then: What if in your country happens something like in Venezuela, that a democracy slowly turns into a dictatorship? Do you still think you have "nothing to hide"?

We are already halfway there, it does not need to be a dictatorship and obvious. Cash restrictions are to the largest extent censorship and authoritarian control. Look what is going on in EU. They want to scan all correspondence but with the exception of politicians, police and military.. the main trio of corruption. It's a proposal that a privacy war is being waged on. Further they want to introduce even more cash restrictions and KYC.

And even in democracies there are authoritarian tendencies, above all regarding surveillance being stricter and stricter. The "KYC obligation for social media" in Australia is unprecedented in history.

Are you talking about the law the bans social media for children or something else? If you are then that is a good law. Nobody under 21 should be allowed on social media, but there is no way to enforce this in an interconnected world other than through KYC. I'd be happy if there was a way. The internet and technology thing just got way out of control and now we have to deal with bad solutions to various problems..

[icebar]

It should not be said that Bitcoin cannot be considered a store of value because due to its volatility. We can see the same situation if we look at other assets. When gold was accepted as a store of value, it also had volatility. Moreover, it is not unusual for anything to have high volatility in the beginning. Bitcoin has a fixed supply, which is why it will continue to increase in the long term. And those who hold Bitcoin for the long term do not lose from it. As Bitcoin becomes more expensive in the future, its volatility will also decrease to a great extent.

[d5000]

Are you talking about the law the bans social media for children or something else? If you are then that is a good law. Nobody under 21 should be allowed on social media,

Yes, I'm talking about that law. And I strongly disagree with you on this point, even more with your arbitrary limit of 21 years (people are adults in almost the whole world with 18 already.).

What makes kids addict to social media are algorithms for the social feeds that benefit "engagement" and thus often highlight content with hate and other highly emotional topics. That is where I think the lawmakers should act. They should insist on the feed sorting algorithms of large platforms being open source, and algorithms "benefitting hate content" should be prohibited. And if these algorithms are open, then schools and parents can teach children from an early age how these algorithms work, and how they can be a danger for an addiction.

Also: what is "social media"? In Australia they publish a list of affected services, but for example they have added Reddit which is not that different from this forum here. Imagine Australians having to do KYC for Bitcointalk to prevent minors accessing it 

I think this is really leading into a dystopia if other countries adopt such highly authoritarian laws. Because in the social media ban case, it's some of the main ways humans communicate in the digital age where everybody could be identified by the authorities. It would also make every social media user susceptible of identity theft if his identity is in some form tied to his user name.

And that's where decentralized technologies like Bitcoin become highly important. Bitcoin is not Monero, but it has CoinJoins and P2P technologies like swaps. And future developments like CISA (cross input signature aggregation) could make CoinJoins more attractive and Bitcoin would become almost a "privacy coin". Together with apps like Nostr, Fediverse and Retroshare for communication, it's one of the few digital technologies left where you really can be anonymous in digital communication.

[boyptc]

Before, I've seen that Bitcoin wasn't really attached to the global economy and was even affected by news that's being dropped to the community.

But today, we don't see that often anymore even with so much good news about it.

I think whoever says that Bitcoin is a great store of value have been here for a long time and also understands how highly volatile it is. We ignore the volatile part and only looks more of the probable long term value of it.

[Findingnemo]

Bitcoin should not be considered as store of value, then it will deviate from its real purpose of it and will end up in the hands of the rich and elites who will not likely use their stash of bitcoin ever after they accumulate which will end up a waste of the technology.

Bitcoin should be seen as an alternative to the existing banking system, it gives us a choice to be our own bank and people can use the volatile nature of bitcoin to make some money but the primary reason should always be the decentralization not the returns.

[Hispo]

...

4. Bitcoin is too correlated to risk assets and the economy.

When the economy tanks so do risk assets such as bitcoin. Which shows that people do not generally view bitcoin as a flight to safety
or a good store of value when times are bad. To the contrary it is one of the first things that gets dumped. Again, this is tied
to the fact that bitcoin has no strong or stable source of demand outside of speculation. Without it bitcoin may be forever
destined and limited to the niche market.

I mean... It does not matter which asset you choose, there will be always some correlation to its price and what happens in the real world, even the demand for gold can go south if some specific things happened. Oil is considered to be a very solid commodity and investment, because of the huge demand it has around the world, however it's price correlates with geopolitics in the middle east and in other regions which are rich in oil and have much of the global production.

Bitcoin has some characteristics of store of value, but most of people see it as a tool to speculate in the short and long term, but the fact Bitcoin supply is limited and there is still a growing demand, it will be translated into an increase in value against FIAT.

[Renampun]

1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things. A store of value has to be more or less stable in price. It cannot be both
highly volatile and a good store of value imo.

If you look at it from a short-term perspective, you'll see that Bitcoin tends to be volatile, but if you look at it over the long term, you'll see a consistent upward trend, making Bitcoin's volatility less significant because the overall trend remains bullish.

and the assessment of "store of value" is not only based on volatility, but also other considerations are Bitcoin's limited supply, public trust, decentralized system, which are important factors that make Bitcoin legitimate as a store of value.

[CryptoBuds]

People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things. A store of value has to be more or less stable in price. It cannot be both
highly volatile and a good store of value imo.

Incorrect, a store of value does not have to be stable, but needs to ensure its value increases over time to withstand inflation and currency devaluation.

What you say makes me feel like you are confusing safe haven with store of value. They have quite a few similarities but are actually two different concepts.

You would be right in saying that bitcoin is not a safe haven, and it is not there yet, as it is still too volatile and often gets dumped in an unstable economy. But it has been a store of value as its value increases over time and can be used as a fairly effective hedge in the long term.