After going to $9,200 before the weekend, today bitcoin price crashed down to $8,170. Industry commentators say the market is looking bad as the “global economy is having a bigger impact at this point than the halving.”
“Main effect will normally occur after the halving,” said trader Crypto Michael.
Bitcoin is acting like a risk-on asset along with the stock market as investors fear about the impact of the coronavirus on the economy and run for safe-haven assets like gold and Treasuries.
This has people questioning the leading digital asset’s value as more than a speculative asset.
“Here are my top reasons why Bitcoin will never work as money: Can't be adjusted for inflation, enormous energy consumption, not technologically capable (slow TX speeds), very user unfriendly (in current state), and governments aren't likely to allow it,” said crypto trader Magic.
However, popular analyst PlanB who determines bitcoin value by using the stock-to-flow model that puts bitcoin at above $100,000 before Dec. 2021, shoots down all these reasons.
Doesn’t Matter, Not True
For the starters, money is a unit of account, means of exchange, and store of wealth. The flagship cryptocurrency has Sat as a unit of account which unlike US dollar can make micropayments a reality.
With solutions like Lightning Network, it is increasingly working towards becoming a means of exchange along with adoption while it can’t be reversed like a credit card payment. As for a store of value, bitcoin is only a decade old and is already seeing immense participation, development and growth.
Analyst Plan also says it doesn’t matter that bitcoin can’t be adjusted for inflation because traditional safe-haven asset gold has the same quality.
Bitcoin might be a speculative asset but most store of value assets are and this crypto asset has been the best performing asset of the past decade by recording 9 million percent of gains. The crypto asset has also constantly improved with privacy soon to be added to the network.
Companies like Square Crypto are further working on improving the UX and the second layer, Lightning Network, that already enables fast and low cost transactions.
Interestingly, the last week also marked victories for bitcoin in the regulatory space. “Many govts have given legal clarity, are taxing btc, and regulated derivatives markets,” said PlanB.
Indian Supreme Court quashed the ban imposed by the Reserve Bank of India on banks and financial institutions that prevented them from providing their services to individuals and businesses involved in crypto.
Besides India, lawmakers in Germany, South Korea, also enacted positive legislation for the crypto industry. Also, France recognized Bitcoin as a legal financial instrument, in a court case, the digital asset was determined as a legal form of money.
In the past 11 years, Bitcoin’s market cap has now grown to $150 billion, seeing the interest from institutional investors and mainstream companies while fast approaching its third block reward halving.