What are the reasons behind Bitcoin being so strong?

[Bluedrem]

I don't know how this discussion will be received here After some thought, I present here what I found.For some time now I have been thinking about why Bitcoin will be long-lasting and strong. In that case, two things come to mind:
1. Bitcoin will strengthen due to price increases.
2. Bitcoin will strengthen due to Bitcoin's structure.

When discussing BTC, we often put one thing in front of us and that is how much will it cost?
$10K, $100K, $500K $1000K or more?
These discussions are normal. But I think the most important thing about BTC is not in its price list, but in its property design.

Why Bitcoin's price is not its real strength

🔸The price of Bitcoin is mainly determined by its demand since the supply is fixed. But out of 21 million, some Bitcoins will be in strong holdings, so there will be less Bitcoins to trade in the market. That is, if the purchase volume increases, the price will increase and fear and selling will cause the price of Bitcoin to decrease.

🔸Although the price of Bitcoin is variable, its fundamentals are predetermined. The price may decrease/increase by 10 to 20% in a day, but its protocol will remain the same.

On the other hand, Bitcoin is strong for several reasons, the main reasons are-

1. Fixed supply.
2. Demand is greater than supply.
3. Control over your own assets.
4. Institutional acceptance.

1. Why is Fixed Supply so important?

Bitcoin's maximum supply is limited to 21 million. That is, it is not possible to create new Bitcoin at will like conventional fiat currency.

There is an important difference here:
Fiat money → Supply can change according to monetary policy.
Bitcoin → Protocol's white paper rules determine the supply limit.

The most interesting aspect of BTC to me is that its supply limit is not a marketing policy but rather a part of the network rules.

2. Does Bitcoin shortage and demand alone create the price of BTC?

This is where the issue gets more interesting. We know that when the supply is limited, the price of anything increases, and the same should be true for Bitcoin, but just because the supply of something is limited, its value is not guaranteed. The value of something depends on the demand, utility, trust, and practical acceptance of that thing by people.

In the case of BTC, therefore, just saying 21 million does not end the whole argument, but the question should be:

• Why would people want to hold Bitcoin?

         The reason is that its supply is fixed, and it acts as a hedge to maintain the value of the asset.

• Will BTC be used as a means of value transfer in the long term?

         Yes, there may come a time in the future when Bitcoin will be valued in the digital economy in the same way that gold is    
         currently valued.

3. Self-Custody

In the case of a bank account or a centralized platform, a third party has a role in the asset, but in the case of BTC, the one who controls the private key essentially also controls Bitcoin. That is, when you want to withdraw your money saved in the bank, if the bank does not give permission, you will never be able to withdraw that money, but if you have Bitcoin, you can complete the transaction by investing Bitcoin directly with the second party, where no third party permission is required.

This is another reason why Bitcoin is strong.
In the case of Bitcoin, only the private key has to be stored and the one with whom it is stored is the owner of that Bitcoin.

It is said - "Not your keys, not your coins."

4. How strong is institutional acceptance of BTC?

This is another interesting question for me.
Currently, institutions like MicroStrategy, BlackRock, and the US government hold Bitcoin. Due to which ordinary investors find more interest in investing.

On the one hand, large institutions, ETFs and treasury companies are increasing the liquidity and adoption of Bitcoin, on the other hand, ordinary investors are able to have more confidence in Bitcoin, due to which institutional adoption of Bitcoin is making Bitcoin stronger.

Now Bitcoin adoption is not only Bitcoin price exposure but it is also a fuel to strengthen the foundation of Bitcoin.

Finally, I would like to say-

In my opinion, judging Bitcoin's success only by the price of BTC is not enough.

Some of the more important metrics that could strengthen Bitcoin in the future are as follows

• How many people are custodianizing Bitcoin themselves
• How many institutions are using Bitcoin
• How many countries are developing Bitcoin legal/financial infrastructure
• How much is the Lightning Network or other scaling solutions being used
• How is the network decentralization going
• How resilient is the mining network going

Last words

The price of Bitcoin is important, but Bitcoin's long-term story is not just the price chart.
Maybe the biggest question in the next few years will not be how much Bitcoin will go to, but rather -What will people actually use Bitcoin for?
And that answer will likely determine Bitcoin's long-term importance.

I want to know your opinion:
What are the reasons behind Bitcoin being so strong?




[Note: My intention here is not to cause confusion. If any moderator feels this is not appropriate for discussion, they can delete or remove it.][/list]

[Ambatman]

Bitcoin biggest strength in my opinion is the fact that it's the closest thing we have to a decentralised money.
Other thing have remained the same because of this
Whether it's it limited supply or the fact it's pseudonymous.

Yes, there may come a time in the future when Bitcoin will be valued in the digital economy in the same way that gold is   

FTFY.

On the one hand, large institutions, ETFs and treasury companies are increasing the liquidity and adoption of Bitcoin, on the other hand, ordinary investors are able to have more confidence in Bitcoin, due to which institutional adoption of Bitcoin is making Bitcoin stronger.

And despite their increase in adoption and supposed increase in price
They introduce the risk of paper Bitcoin
Which in a way contradicts on the bitcoin being an asset with limited supply.

[Rruchi man]

I want to know your opinion:
What are the reasons behind Bitcoin being so strong?

There is a strong community around Bitcoin that is attracted by the multiple uses and benefits that Bitcoin at the moment offers now and will offer later; in my opinion, this accounts for the strength Bitcoin has because of the value and benefit that people have placed on it.

It will be difficult for Bitcoin to have any real value on its own without people like us, the community members who see value in its use for investment currently and later for transactions, majorly.

Bitcoin is strong because of you and I.

[Charles-Tim]

On the one hand, large institutions, ETFs and treasury companies are increasing the liquidity and adoption of Bitcoin, on the other hand, ordinary investors are able to have more confidence in Bitcoin, due to which institutional adoption of Bitcoin is making Bitcoin stronger.

And despite their increase in adoption and supposed increase in price
They introduce the risk of paper Bitcoin
Which in a way contradicts on the bitcoin being an asset with limited supply.

I did not understand what you mean here very well. Did you mean that the ETF institutions are creating shares that they are selling to their customers more than the bitcoin that they bought and hold?

Although, I think bitcoin can still do great without institutions, but it will take a longer time to achieve where it has gotten to today, but it will eventually get there.

What I see more about it is that institutions are benefitting from bitcoin businesses because they know how valuable bitcoin is.

[Bluedrem]

Bitcoin biggest strength in my opinion is the fact that it's the closest thing we have to a decentralised money.
Other thing have remained the same because of this
Whether it's it limited supply or the fact it's pseudonymous.

Yes, there may come a time in the future when Bitcoin will be valued in the digital economy in the same way that gold is    

FTFY.

Oh this is my typing mistake , thanks for the correction.

Yes, the decentralization of the coin makes it stronger and that's what I was saying. Bitcoin is not controlled by any one person or group. The value of Bitcoin is not different in different regions and continents. So if a person holding Bitcoin wants to affect its value, it will also affect the Bitcoins they hold.

[Ambatman]

I did not understand what you mean here very well. Did you mean that the ETF institutions are creating shares that they are selling to their customers more than the bitcoin that they bought and hold?

I'm talking about rehypothecation and the likes.
It doesn't necessarily have to be ETF since they are usually backed 1:1.
We have futures or leverages and options intoduced by most exchanges and platforms.

Oh this is my typing mistake , thanks for the correction.

Yeah noticed. You welcome.

[Nothingtodo]

If you want to explain how important fixed supply is in the case of Bitcoin, then of course you have to focus on the unlimited supply of paper money. Especially if the government ever comes under economic pressure, then they try to solve that economic problem by increasing the unlimited supply, as a result of which inflation is widely seen in the country. But in the case of Bitcoin, you cannot do anything like that because it is electric money, so this electric currency, you cannot increase the supply in any way because there is no option to increase the supply. Due to which, Bitcoin is free from the terrible effects of inflation for now. Therefore, fixed supply carries an important feature in the case of Bitcoin, only because it is not affected by inflation, it is completely unique from other currencies.

[OgNasty]

Bitcoin is so strong (popular) because it is the key to unlocking financial freedom dressed up as a get rich quick scheme.  It appeals to people who don't know what they're doing and want to watch the number goes up and it also appeals to people who have been financially oppressed, or want to keep others from being financially depressed.

Without the get rich quick scheme aspect, developers would haven't the power of the network to try and bring financial freedom to the oppressed.

[hmbdofficial]

And despite their increase
They introduce the risk of paper Bitcoin
Which in a way contradicts on the bitcoin being an asset with limited supply.

The paper bitcoin is something that’s laughable, it will never worked because it basically counter one of the purpose of bitcoin. One of the aim of bitcoin was to curb the issue of printing more money that usually causes inflation. Which the paper bitcoin will create room for that. Even though I’m thinking of the possible way the paper bitcoin can work without conflicting bitcoin protocols. Just the way bitcoin ATM works.

[Nathrixxx]

Bitcoin has every capacity to make us rely on its network, this is why the more people are getting to know about it the better it becomes and the stronger we are seeing it from time to time, everything about bitcoin network has been made on a strong foundation with the blockchain technology, we don't have to continue with our search for a reliable digital currency as long as we have come across with Bitcoin, all we need is to learn to know about bitcoin network and understand more of the blockchain technology the same time.

[Smartprofit]

In my opinion, institutional adoption isn't a positive for Bitcoin. The problem is that institutional players want to neuter Bitcoin. A truly decentralized Bitcoin is a great danger to them. Satoshi Nakamoto originally conceived Bitcoin as an alternative to the modern financial system. 🙋

Bitcoin is a decentralized asset. Bitcoin requires multiple miners, multiple full node owners, multiple developers, and multiple owners... That's what makes it strong!

Institutional players strive for monopoly, not decentralization. They're willing to accept Bitcoin, but only after they destroy its underlying value. The good news is that institutional players actually have very little influence in our world. They don't rule our world.

If you imagine our world as a schooner, the power elite isn't at the helm. There's no one at the helm... The schooner is flying into the unknown.  The ruling elite has barricaded itself in the captain's cabin, devouring delicacies and sipping sweet wine. But they no longer control anything and exert virtually no influence. Therefore, in my opinion, Bitcoin will continue to thrive. 💁

[lionheart78]

What are the reasons behind Bitcoin being so strong?

Some of the reasons behind Bitcoin being strong are:

Government recognizing Bitcoin as an asset, mode of payment, and in one time as legal tender.  The involvement of the government and the positive reaction gained from this government gives the Bitcoin industry confidence, thus people who were once half-hearted are now fully convinced that Bitcoin is a legit industry.

The involvement of a huge number of traders because of price volatility.  Many see high volatility as a liability, but in Bitcoin, many found it to be a positive feature of the Bitcoin market because traders and speculators loves high volatility market to gain profit.

Another reason is the Bitcoin features themselves.  Bitcoin being decentralized and boundless makes it the best mode for transfer. People can send funds to different parts of the world without any intermediaries.  This gives them complete freedom and privacy (if the address is not linked to any centralized exchange)

[PrivacyG]

so this electric currency, you cannot increase the supply in any way because there is no option to increase the supply.

Bitcoin is Electronic, not electric and its Supply can be increased, but it would require a Fork.

[Maslate]

Bitcoin can be viewed as a strong asset and currency due to its scarcity, security and adoption. But even so, if its not made to become strong, then how will bitcoin remain standing and overcome the market attacks for over a decade? It seems that bitcoin has no choice, otherwise it will lose its position, and the idea that bitcoin is made to achieve individual's financial freedom will be hardly realized.

[Sammysmart001]

What are the reasons behind Bitcoin being so strong?

Some of the reasons behind Bitcoin being strong are:

Government recognizing Bitcoin as an asset, mode of payment, and in one time as legal tender. 

You do make a good point here,but also on government recognition i disagree that it what makes Bitcoin strong. ETFs and government adoption helps to drive the price up In fiat terms but from day one Bitcoin real strength was already there (decentralization. For Bitcoin to keep producing blocks, it doesn’t need government permission. The government acceptance is just to bost price and adoption but also a permissionless freedom is the true foundation.

[Dave1]

It's the first of it's kind, a prime mover. Even if there are predecessors of Bitcoin before, it didn't succeed. But Satoshi's invention is the one the bridge everything, from decentralization, without any party in between, trust less and other features never been seen before.

And it disrupts the financial industry, imagine those unbank individuals, now they can own Bitcoin and make it a sound money without any bank whatsoever. So that alone is a big polarizing thing, that is unprecedented.

[Catenaccio]

On the other hand, Bitcoin is strong for several reasons, the main reasons are-

1. Fixed supply.
2. Demand is greater than supply.
3. Control over your own assets.
4. Institutional acceptance.

Fixed supply only is not enough. There are other cryptocurrencies with fixed supplies, either bigger or smaller than Bitcoin's fixed total supply but they don't have very high price like Bitcoin has. It's because those cryptocurrencies don't have good value like Bitcoin has, and without value, no price, it's not matter having fixed supply or not.

Demand is bigger than supply, it means for long term, not for short term because even shitcoins can have bigger demand than supply during hypes and FOMO time.

Control over your own assets: Many people don't care about that, they only want to find something for profit, and they can invest money in Bitcoin as well as other cryptocurrencies. Surely Bitcoin is most secure blockchain and there is no smart contract for freezing your bitcoin in non custodial wallets.

Institutional acceptance: Before that, Bitcoin had very good individual acceptance, then community acceptance. Institutions only participated in Bitcoin market recent years and they have spent capital in this market more intensively since Bitcoin Spot ETF approvals in the USA in January 2024.

More reasons about Bitcoin strength
The bullish case for Bitcoin.
Bitcoin & the accounting revolution.
Bitcoin is an accounting revolution.

[Ruttoshi]

The decentralize nature of bitcoin and since, it's beyond censorship resistance makes bitcoin strong since, the beginning of creation till date. There are some shitcoins out there like Litecoin that has a fixed supply but that doesn't make it unique and strong like bitcoin.

As for adoption rate, bitcoin can still make it without the government but it might take time compared to as it's growing now that the government are involved.  If the network isn't secured through mining, it would have been the opposite.

[Luzin]

What are the reasons behind Bitcoin being so strong?

I believe the primary driver is the value that reinforces their confidence. The fact that it experiences fluctuations yet consistently rebounds to reach new, higher price levels is its greatest appeal. Consequently, I think that for most users, the goal right now is money, rather than the decentralized system and its mission of financial freedom; not everyone is focused on the system itself at this stage.

[sunsilk]

• Why would people want to hold Bitcoin?

         The reason is that its supply is fixed, and it acts as a hedge to maintain the value of the asset.

Not only about being an hedge but let's go straight why people want to hold it is because we all want to profit from having it.

• Will BTC be used as a means of value transfer in the long term?

         Yes, there may come a time in the future when Bitcoin will be valued in the digital economy in the same way that gold is    
         currently valued.

I think your answer is quite far from the actual question. Today, it's already been used as a means of transfer.

And the same goes with being valued as an important asset just as gold. But if it's about being used as a means of transfer, we're already doing it already.