Let us get the terminology straight first, what is a bull run?
A bull-run is an increase in the value of a cryptocurrency over a long period of time. And since the price is rising, direct demand is increasing too. The longer a bull run is, the more people enter the market and join the rally. Good examples of bull-runs are the Bitcoin bull-run in 2018 and 2020 (writing this during the bull-run).
So, is a bull-run a self-fulfilling prophecy?
No, even though this could be considered as a logical assumption, but it is nonetheless incorrect. Since many people enter bull-run thinking exactly that, most of them will be surprised when the price comes down again and sell-off. Let me evaluate this further by listing you 3 reasons why Bitcoin is bull running now at the end of 2020. Make sure to stick around for a reason number 3 since it is the one we all can relate to the best probably.
- Retail Investors are entering the markets – Huge international corporations are turning their heads towards cryptocurrencies. Bitcoin and some of the Alt’s have outperformed every other market on the planet in 2020 and soared to new all-time highs. The financial world finally starts to understand that Bitcoin is here to stay, if they want it or not. Companies like Microsoft and Visa are the top companies on the list. Retail Investors start to understand that diversifying into cryptocurrencies might dabble in some nice and good profits to top of a strong year in all regards. Moreover, financial institutions like Square Inc. or Visa have added some Bitcoin to their portfolio in 2020. The news that Square Inc. would invest in Bitcoin was widely recognized as the reason why retail investors started to turn up with some money.
- Limited supply – Since there are only 21 million Bitcoin out there and demand for Bitcoin is picking up, the value of Bitcoin is increasing too. This effectively means that the more money there is in the Bitcoin market, the likelier the price is to rise. This makes it the perfect store of value. And since the US government has been inflating the Dollar at rates never seen before in the history of fiat currencies, many investors realize that Bitcoin is, economically speaking, the only real store of value next to Gold right now. This year alone, did the US print 50% of all the existing Dollar supply. I understand that this money is needed desperately, but, in my opinion, the US requires discipline and not more inflation to solve its problems.
In the year 2020, many unfortunate events brought it down to this. The world now uses inflation as a tool to “fix” all the problems that we have. This is the reason why 2020 was the year for me where I started to understand what Bitcoin really means to the individual. It is crazy to think that the only alternative monetary system to the one we use to run our world is a magical internet bean with subjective value. But it is the reality, and to have the ability to use Bitcoin as an alternative system makes me more than happy. Luckily, we all live in a time where having Bitcoin is made possible.
This brings me to point 3, so without further holdback:
3. You and I are entering the markets – Since the general awareness about cryptocurrencies increased during the 2017/18 bull-run, the public only starts to understand and grasp the complexity of Bitcoin. We were not ready to understand this new technology in 2018, but more and more people nowadays. The younger generations realize that Bitcoin is the internet solution to a 2020 problem. The financial crisis and now the crisis caused by the pandemic have increased awareness among every age group that value preservation has changed in the past years. This time it feels different than in 2018, where the Fear of missing out was consuming the public. Many in cryptocurrencies have learned from 2018 and are now better prepared for the markets’ complexity and volatility.
So, as I said before, the Bitcoin Bull-run does not work like a self-fulfilling prophecy because its value is based on the individual’s subjectiveness (how much some see value in Bitcoin). And since the public and retail investors do not act out of Fear of missing out anymore, they are likely to keep their Bitcoin for a longer time. Investors and you and I are all behaving more appropriately to the volatile market situation, which is excellent for a consolidating Bitcoin and hopefully a continuous run. This mentality change is crucial because it shows a maturing market situation that will eventually bring long-term price stability into the Bitcoin and cryptocurrency markets.
So, is it too late to enter the market?
NO, NO, and NO. It is never too late to enter the market, but please, never enter the market just for the sake of joining, do your due diligence and only invest if you have a strategy in place that might reduce the probabilities of losing your value. Starting out in cryptocurrencies is hard, but it is doable with a structured strategy and the willingness to sacrifice some time.
To conclude, there are many reasons why the ever-growing interest in cryptocurrencies is not flattening out anytime soon. With Bitcoin set to crack new all-time highs and the growing interest of professional investors and ordinary people bring additional momentum, Bitcoin has a bright future in front of itself. Join this significant venture that combines the opportunity for independence and financial freedom. Bitcoin has outperformed this year, and it will happen in the coming too.
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