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

[Asuspawer09]

I mean for sure even if we see the history we can see the rise of Bitcoin's value and with its structure of having limited supply of 21 million as the Bitcoin become more popular around the world we could surely expect that its market price is just gonna continue to increase overtime and there are already a lot of speculation that is happening out there and even compared to other asset that store value or as a investment we can see Bitcoin probably have the highest return overall.

But still Bitcoin is not something that you can compared to gold or a real estate because it is just way different it doesnt have a tangible asset that is going to support it, its market price is just about supply and demand, so market price is just depending on the demands and how the supply of it, so in other perspective it might not be the best investment because it surely have a huge risk investing on something like it, and even though i believed on Bitcoin I surely still agree that it wasnt something that is going to be guarantee, that is why it is still better to have a diversify investment rather than sticking on Bitcoin.

[wiss19]

Of course I wouldn't blame anyone for selling Bitcoin when they simply need spendable cash because I sold a lot myself at very low prices. I lost only potential income because it wasn't like I bought BTC at a higher price earlier. I got my first BTC from gambling sites and faucets.

Same for me, I have sold so much bitcoin at lower prices, if I kept all of my bitcoins and didn't sell any, I would be able to live free without working ever again. But that is not how life works, you need money to survive, you can't just spend zero money a month, you need to cash out to live and that is what I did. I never made more money than I needed, I always made barely enough to survive so it never really mattered for me, never had ability to save too much so I agree that when people need to, they sell.

[Antona]

The fact that bitcoin is highly volatile doesn't change the fact that it has proven it's worth over the years as a good store of value. Those investors that has been holding bitcoin for like 5-10 years can testify to this. So you are wrong to think that bitcoin isn't a good store of value.
As long as you are doing DCA holding bitcoin whether the price is high or low won't be a problem since you are buying bitcoin at different prices. To hold bitcoin for a long time when the price is high won't be an issue if you understand the nature of bitcoin.

Bitcoin fluctuations are an art for profit, that's where people can get big profits, especially having a 4-year cycle will make it clear where bitcoin always gets the ATH price, which if you buy the highest price in the previous cycle will definitely benefit in this way.
Buying with DCA is the same as finding the average price of our purchases, a simple example if we buy 1 bitcoin at $100k, then the next time we buy 1 bitcoin at $50k, then our average purchase price will fall at $75k, the more DCA at the lower price, the lower the purchase price we buy at the upper price.

The "will definitely benefit" part is a big assumption. The 4-year cycle is based on the halving, but each cycle has different macro conditions. What if the next one is flat because of a global recession or regulatory crackdown? DCA works because it doesn't assume the cycle plays out perfectly. It just trusts the long-term trend.

[MusaMohamed]

This distinction is critical, especially for new people lured by the promise of quick gains. In spot, your max loss is if the asset goes to zero. In futures, your max loss can happen in minutes via liquidation, often exceeding your initial capital (with isolated margin) or wiping your whole account (cross margin). It’s not investing; it’s a sophisticated form of gambling where the house (the exchange) has a massive structural advantage through funding rates and liquidation cascades. Your savings belong in spot, or better yet, in a cold wallet.

Price goes to $0 is a biggest fear and most terrible scenario with anyone and their investment into something. This fear existed in early months, years of Bitcoin market but since 2009, there are almost 16 years of Bitcoin and it has been more matured, more stronger so I believe that at the present and in the future, Bitcoin price will never drop to $0.

If you look backward to Bitcoin history, this fear is one of reasons of existence of many "Bitcoin is dead" callings, fortunately year by year, especially cycle by cycle, there are less "Bitcoin is dead".
https://99bitcoins.com/bitcoin-obituaries/

[khiholangkang]

The fact that bitcoin is highly volatile doesn't change the fact that it has proven it's worth over the years as a good store of value. Those investors that has been holding bitcoin for like 5-10 years can testify to this. So you are wrong to think that bitcoin isn't a good store of value.
As long as you are doing DCA holding bitcoin whether the price is high or low won't be a problem since you are buying bitcoin at different prices. To hold bitcoin for a long time when the price is high won't be an issue if you understand the nature of bitcoin.

Bitcoin fluctuations are an art for profit, that's where people can get big profits, especially having a 4-year cycle will make it clear where bitcoin always gets the ATH price, which if you buy the highest price in the previous cycle will definitely benefit in this way.
Buying with DCA is the same as finding the average price of our purchases, a simple example if we buy 1 bitcoin at $100k, then the next time we buy 1 bitcoin at $50k, then our average purchase price will fall at $75k, the more DCA at the lower price, the lower the purchase price we buy at the upper price.

This is basically why many long-term holders outperform traders. They don’t chase pumps, they just keep buying through the cycle. I’ve done DCA myself and it definitely feels less stressful than lump-sum buys

Of course, because it will be like you are saving slowly with the relatively small amount of money you have available, a good condition for DCA is when you know that the market is in a bearish state or in the long winter season, that condition is very good for carrying out DCA as often as possible because it will be profitable if the bull market returns to bring fresh air to your nose.
In terms of value, your bitcoin will increase as the price rises and the number of bitcoins collected, people who think that bitcoin is not suitable as a place to store value are those who buy it at peak prices and making large purchases at once is not a wise decision for an asset that has fluctuations.

[john_egbert]

The "will definitely benefit" part is a big assumption. The 4-year cycle is based on the halving, but each cycle has different macro conditions. What if the next one is flat because of a global recession or regulatory crackdown? DCA works because it doesn't assume the cycle plays out perfectly. It just trusts the long-term trend.

If it doesn't work, we wait for longer till our target is reached, there is all to it.

And we may never know what happens during such a time span, everything may happen, I agree. And many things may affect how the cycles themselves change one another..

[headingnorth]

I mean for sure even if we see the history we can see the rise of Bitcoin's value and with its structure of having limited supply of 21 million as the Bitcoin become more popular around the world we could surely expect that its market price is just gonna continue to increase overtime and there are already a lot of speculation that is happening out there and even compared to other asset that store value or as a investment we can see Bitcoin probably have the highest return overall.

Anything you invest in will often give you huge returns in the early years.

Amazon, Facebook, Microsoft, Walmart, Dollar Tree, Apple, Tesla, etc. You name it.
You can basically get rich off of anything if you invested early enough.

But when an asset matures and the marketcap is well into the trillions then you can no longer expect
it to produce such huge exponential returns. Unless you were a bitcoin OG you're probably not going to be 10x'ing
or 100x'ing your money any time soon.

The mistake is to assume that a mature company like Apple is going to double or triple in value within one year
like it was doing in its early years. And bitcoin now also has a similar big marketcap to a mature tech stock. But many
were calling for Bitcoin to double or triple in price in 2025 which was pretty ridiculous IMO. These people don't seem to
understand the concept of diminishing returns that is taught in every high school economics class.

Every year bitcoin returns are becoming less and less just like any other asset as it matures.
So probably now the best way to make big money off of bitcoin is to trade the volatility short-term,
but that comes with more risk and you have to know what you're doing as a trader.

Today the only realistic way to 10x your money with bitcoin IMO is to be either super good at trading,
or if the price drops back down to $10K or so. Then you can buy it really cheap, wait for it to go back up to $100K and sell.

The 21 million limited supply of coins is overrated IMO. It only really becomes a factor after all 21 million coins
have been mined which won't happen until the year 2140. That is more than a hundred years from now.
But until that time hundreds of new bitcoins will continue to be mined each day that has to be absorbed by the market,
which places downward pressure on the price.

[Tinubu]

Anything you invest in will often give you huge returns in the early years.

Amazon, Facebook, Microsoft, Walmart, Dollar Tree, Apple, Tesla, etc. You name it.
You can basically get rich off of anything if you invested early enough.

But when an asset matures and the marketcap is well into the trillions then you can no longer expect
it to produce such huge exponential returns. Unless you were a bitcoin OG you're probably not going to be 10x'ing
or 100x'ing your money any time soon.

The mistake is to assume that a mature company like Apple is going to double or triple in value within one year
like it was doing in its early years. And bitcoin now also has a similar big marketcap to a mature tech stock. But many
were calling for Bitcoin to double or triple in price in 2025 which was pretty ridiculous IMO. These people don't seem to
understand the concept of diminishing returns that is taught in every high school economics class.

Every year bitcoin returns are becoming less and less just like any other asset as it matures.
So probably now the best way to make big money off of bitcoin is to trade the volatility short-term,
but that comes with more risk and you have to know what you're doing as a trader.

Today the only realistic way to 10x your money with bitcoin IMO is to be either super good at trading,
or if the price drops back down to $10K or so. Then you can buy it really cheap, wait for it to go back up to $100K and sell.

The 21 million limited supply of coins is overrated IMO. It only really becomes a factor after all 21 million coins
have been mined which won't happen until the year 2140. That is more than a hundred years from now.
But until that time hundreds of new bitcoins will continue to be mined each day that has to be absorbed by the market,
which places downward pressure on the price.

Regarding diminishing returns, you are entirely correct....many novice investors fail to recognize this important concept....The math is straightforward... $2T asset needs to absorb significantly more capital to reach $20T, but a $10B company can grow realistically 10x to $100B...but also some few things to consider...The supply argument requires subtlety... The *rate* of new supply (inflation) is more important than the total supply, even though you are correct that new coins are still being mined. This is arguably already priced in, as Bitcoin's issuance rate (~1.7% annually) is already lower than that of gold and is declining with each halving.

The dynamics are altered by institutional adoption: BlackRock, Fidelity, and sovereign wealth funds want 20–50% returns with less correlation to stocks, not 10x. This changes Bitcoin's focus from "get rich quick" to "portfolio diversification," 😁

[headingnorth]

Anything you invest in will often give you huge returns in the early years.

Amazon, Facebook, Microsoft, Walmart, Dollar Tree, Apple, Tesla, etc. You name it.
You can basically get rich off of anything if you invested early enough.

But when an asset matures and the marketcap is well into the trillions then you can no longer expect
it to produce such huge exponential returns. Unless you were a bitcoin OG you're probably not going to be 10x'ing
or 100x'ing your money any time soon.

The mistake is to assume that a mature company like Apple is going to double or triple in value within one year
like it was doing in its early years. And bitcoin now also has a similar big marketcap to a mature tech stock. But many
were calling for Bitcoin to double or triple in price in 2025 which was pretty ridiculous IMO. These people don't seem to
understand the concept of diminishing returns that is taught in every high school economics class.

Every year bitcoin returns are becoming less and less just like any other asset as it matures.
So probably now the best way to make big money off of bitcoin is to trade the volatility short-term,
but that comes with more risk and you have to know what you're doing as a trader.

Today the only realistic way to 10x your money with bitcoin IMO is to be either super good at trading,
or if the price drops back down to $10K or so. Then you can buy it really cheap, wait for it to go back up to $100K and sell.

The 21 million limited supply of coins is overrated IMO. It only really becomes a factor after all 21 million coins
have been mined which won't happen until the year 2140. That is more than a hundred years from now.
But until that time hundreds of new bitcoins will continue to be mined each day that has to be absorbed by the market,
which places downward pressure on the price.

Regarding diminishing returns, you are entirely correct....many novice investors fail to recognize this important concept....The math is straightforward... $2T asset needs to absorb significantly more capital to reach $20T, but a $10B company can grow realistically 10x to $100B...but also some few things to consider...The supply argument requires subtlety... The *rate* of new supply (inflation) is more important than the total supply, even though you are correct that new coins are still being mined. This is arguably already priced in, as Bitcoin's issuance rate (~1.7% annually) is already lower than that of gold and is declining with each halving.

The dynamics are altered by institutional adoption: BlackRock, Fidelity, and sovereign wealth funds want 20–50% returns with less correlation to stocks, not 10x. This changes Bitcoin's focus from "get rich quick" to "portfolio diversification," 😁

I think many novices just get blinded by the hype. It seems bitcoin has to depend on tons of hype to get people to buy in
because there is little to no demand for it outside of speculation. I'm not saying bitcoin doesn't have some good utility I believe it does,
but almost everyone is buying it to speculate or invest in and not much else.

Personally I would be happy if bitcoin just provided around 10% return a year. I will probably still keep some of my money in it because I like the fact
you can self-custody your funds while minimizing counter-party risk. To me that is bitcoin's greatest value. If there was somehow a viable way for it
to be backed by something like gold or silver in the future that would be even better.

[Cryptmuster]

Price goes to $0 is a biggest fear and most terrible scenario with anyone and their investment into something. This fear existed in early months, years of Bitcoin market but since 2009, there are almost 16 years of Bitcoin and it has been more matured, more stronger so I believe that at the present and in the future, Bitcoin price will never drop to $0.

If you look backward to Bitcoin history, this fear is one of reasons of existence of many "Bitcoin is dead" callings, fortunately year by year, especially cycle by cycle, there are less "Bitcoin is dead".
https://99bitcoins.com/bitcoin-obituaries/

Never say never. I think this can be said about gold its price will never fall to zero, but digital assets are something new for us, especially in the long term, because even a period of 10 or 20 years is not that much in world history. This is something new that we are trying to accept at all financial levels. I don't think Bitcoin will ever fall too low, but such a possibility still exists, and this can discourage many cautious investors.

[Tinubu]

I think one of the reasons why  "Bitcoin doesn't work well as a store of value" is VOLATILITY...

Bitcoin can be very hard to predict..and i feel if anyone should store money anywhere such a place should be stable and reliable..and Bitcoin ain't that.. although reliable..but "Stable" I'm not sure🙄

[Onyeeze]

There are some certain things that need more evidence to back it up because I know quite well that bitcoin is a store value based on the way it was created, like example when you purchase Bitcoin today and the allow it to stay in your custody for 3 years interval I believe that the price of Bitcoin you had today will not be the same bitcoin price you will get in 3 years time, so there is a possibility that the price will increase and immediately the price increase more than what you bought it that means bitcoin has turned to a store value for you at that moment, but this is not the reason why it was created it was created to be a global currency that can be used across the nations but we that invest in Bitcoin misunderstood the concept and also see it as a store value

[Dogedegen]

Of course I wouldn't blame anyone for selling Bitcoin when they simply need spendable cash because I sold a lot myself at very low prices. I lost only potential income because it wasn't like I bought BTC at a higher price earlier. I got my first BTC from gambling sites and faucets.

If people make financial mistakes because they were lazy or otherwise not educating themselves on finances what should we do then? Congratulate them on doing the wrong thing? I think many people wants others to be accepting of these mistakes, but a lot of these mistakes could have been easily avoided. It has been written in other threads that Bitcoin should not be used as an emergency fund, instead there must always be a large enough emergency fund that comes first. With this method there will never be a need to sell Bitcoin even if a person needs cash to spend, that is what the emergency fund is for.

I think there's a high probability of BTC going over $1 mil in 25 years.

25 years? No that is definitely wrong. If it is going to happen, it will happen much sooner.

Only 500 million people hold Bitcoin in some capacity and I think the number should be over 3 billion.

This is completely incorrect! Not even 10 million individuals actively hold Bitcoin. Being a passive ETF holder does not count, most of those don't even know what a Bitcoin wallet is. There are many estimates about the actual number of users, but if you look in the details most of them are misguided and want to paint a better picture than it is. Like counting someone who had Bitcoin for 2 months, sold and never came back. That is not a Bitcoin user.

I think many novices just get blinded by the hype. It seems bitcoin has to depend on tons of hype to get people to buy in
because there is little to no demand for it outside of speculation. I'm not saying bitcoin doesn't have some good utility I believe it does,
but almost everyone is buying it to speculate or invest in and not much else.

No it does not, don't write bad things about Bitcoin. Bitcoin does not rely on anything. The same way you criticize naive investors are very similar to the people that are hyping up Bitcoin or their other investments. Instead of blaming the underlying investment you should blame those who are responsible for the messages that they create. Bitcoin does not create any messages, Bitcoin exists on its own and is perfectly neutral. If someone creates a crazy Bitcoin cult, you can not blame Bitcoin for this. Only the people involved are to blame.

[X-ray]

I think one of the reasons why  "Bitcoin doesn't work well as a store of value" is VOLATILITY...

Bitcoin can be very hard to predict..and i feel if anyone should store money anywhere such a place should be stable and reliable..and Bitcoin ain't that.. although reliable..but "Stable" I'm not sure🙄

Volatility is everwhere. It's definitely not exclusive to bitcoin.

An S&P500 that is considered as a stable for long term retirement savings and pension fund also occasionally have volatility.



Even your favourite fiat's value goes up and down every second and there is reason why forex trading exist. There's no such thing as absolute stability. As long as an asset has proven to be having a good growth from the beginning to date why does it matter if it's volatile on the daily candlestick?.

Bitcoin's growth record has proven that it's actually a good store of value and surpass the threshold of just beating inflation.

[CageMabok]

I think one of the reasons why  "Bitcoin doesn't work well as a store of value" is VOLATILITY...

Bitcoin can be very hard to predict..and i feel if anyone should store money anywhere such a place should be stable and reliable..and Bitcoin ain't that.. although reliable..but "Stable" I'm not sure🙄

Although Bitcoin is not among the assets with stable prices, holding and storing Bitcoin for the long term is also not a bad option because when there is volatility, every Bitcoin holder can expect a price increase in Bitcoin, although the risk of a price decrease is never far from Bitcoin. So storing Bitcoin is clearly very different from someone who stores money by choosing a stable asset because stable assets tend to increase in price over time unless the owner continues to buy the asset to accumulate more. And I think it really depends on each person's taste whether to choose one or both.

[aysha9853]

Speculation is not unique to bitcoin, housing stocks and even bonds are heavily speculative today, Bitcoin demand looks speculative because it is transparent and trades 24/7, also using Apple as a comparison is tricky since bitcoin is money not a company.

[Mallampue]

Speculation is not unique to bitcoin, housing stocks and even bonds are heavily speculative today, Bitcoin demand looks speculative because it is transparent and trades 24/7, also using Apple as a comparison is tricky since bitcoin is money not a company.

Speculation is a common thing, even all assets that are influenced by speculation, if the speculative value is very large and affects the broad macroeconomy, all assets are also fluctuating, but Bitcoin is indeed much more volatile, but we have investment profit value because the fluctuation itself is not on a continuous increase without a price chart structure in the impact of supply and demand, it is not a problem to be compared to Apple too because Bitcoin is now in the fifth position of the highest asset capitalization, it is only a matter of time to be in second place and beat Apple.

[Betwrong]

~

Only 500 million people hold Bitcoin in some capacity and I think the number should be over 3 billion.

This is completely incorrect! Not even 10 million individuals actively hold Bitcoin. Being a passive ETF holder does not count, most of those don't even know what a Bitcoin wallet is. There are many estimates about the actual number of users, but if you look in the details most of them are misguided and want to paint a better picture than it is. Like counting someone who had Bitcoin for 2 months, sold and never came back. That is not a Bitcoin user.

I thought in their estimates they counted only active users as a "Bitcoin user". Well, it's even better then. I thought the number of current users is is around 500 mil. If it's 50 times smaller then you are probably right about $1 million per 1 Bitcoin, it will happen much sooner than in 25 years. I mean, if the number of users increases from 10 million to 3 billion — that’s 300 times — the price should rise at least 20 times, right?

[d5000]

Not even 10 million individuals actively hold Bitcoin. Being a passive ETF holder does not count, most of those don't even know what a Bitcoin wallet is.

You may be correct about the number of on-chain active users.

But for the market, an ETF holder or those holding "Bitcoin IOUs" at their CEX of choice matter about the same as on-chain Bitcoin users. If an ETF holder sells his ETF, then he creates selling pressure on the markets too, because the ETF company will increase their sales. The same of course the other way around. And CEX bitcoins directly are ready to be sold on some market.

IMO until Lightning, Ark and other 2nd layers catch up it is not that bad that small holders / users are holding their coins at exchanges, as otherwise the blockchain congestion would be extreme. Ideally we see a trickling from CEXes to on-chain wallets and then to Lightning.

You are probably correct is that the estimates of hundreds of millions of Bitcoin users (500 million seems a bit high, but I've seen credible estimations for 200-300 million) are taking into account users that should not be listed as "active". For example, the crypto.com estimations clarifies in their methodology that they count all users that at some point in history had Bitcoin, either on an exchange, or on-chain. Their estimations are based mainly on CEX data. Coinbase alone for example has around 100-120 million users, but only 10 million of them are "active every month".

[Tinubu]

You may be correct about the number of on-chain active users.

But for the market, an ETF holder or those holding "Bitcoin IOUs" at their CEX of choice matter about the same as on-chain Bitcoin users. If an ETF holder sells his ETF, then he creates selling pressure on the markets too, because the ETF company will increase their sales. The same of course the other way around. And CEX bitcoins directly are ready to be sold on some market.

IMO until Lightning, Ark and other 2nd layers catch up it is not that bad that small holders / users are holding their coins at exchanges, as otherwise the blockchain congestion would be extreme. Ideally we see a trickling from CEXes to on-chain wallets and then to Lightning.

You are probably correct is that the estimates of hundreds of millions of Bitcoin users (500 million seems a bit high, but I've seen credible estimations for 200-300 million) are taking into account users that should not be listed as "active". For example, the crypto.com estimations clarifies in their methodology that they count all users that at some point in history had Bitcoin, either on an exchange, or on-chain. Their estimations are based mainly on CEX data. Coin base alone for example has around 100-120 million users, but only 10 million of them are "active every month".

I think the main point here is "all Bitcoin affects the price.. wether it's actual Bitcoin or just on paper.....i think when someone actually sells Bitcoin on coin base or ETF..it also contributes in moving the market..it's just like selling actual BTC...and definitely the ETF company has to sell actual Bitcoins to match with...so I think it all counts (market wise)...and the reason why i think exchanges aren't all that bad now is ...if everyone should move their Bitcoins by themselves,it might probably lead to a very slow and expensive network... because currently all the load are on exchanges...(But research shows me that faster systems are being built...and who knows when they're gon be ready)🙄

So I think the exchange process should be moving your crypto to your personal wallet and probably use lightning...for more faster and cheaper payments...

Another thing I want to speak on is the story behind  the number of Bitcoin users...A headline some time back stated "500 million Bitcoin users"....but research shows me that only 200-300 million people have ever touched Bitcoin..most people tried it once...

So I think paper Bitcoin is very active in moving prices..and exchange are still very useful to us (while the technology improves)