5) “Bitcoin is Too Volatile”
Bitcoin is promoted as a store of value and medium of exchange, but it has a very volatile price history. This leads, again somewhat understandably, for investors to say it’s not a good store of value or medium of exchange, and thus fails at the one thing that it’s designed to do.
And they’re kind of right. Bitcoin isn’t the asset that you put money into for an emergency fund, or for a down payment on a house that you’re saving up for 6 months from now. When you definitely need a certain amount of currency in a near-term time horizon, Bitcoin is not the asset of choice.
This is because it’s an emerging store of value, roughly 12 years old now, and thus carries with it a significant degree of growth and speculation. Its market capitalization is growing over time, taking some market share from other stores of value, and growing into a meaningful asset class. We’ll see if it continues to do so, or if it levels off somewhere and starts to stagnate.For Bitcoin’s market cap to grow from a $25 million to $250 million to $2.5 billion to $25 billion to today’s value of over $250 billion, it requires volatility, especially upward volatility (which, of course, comes with associated downside volatility).
As it grows larger, its volatility reduces over time. If Bitcoin becomes a $2.5 trillion asset class one day, with more widespread holding, its volatility would likely be lower than it is now.
Therefore, having a nonzero exposure to Bitcoin is basically a bet that Bitcoin’s network effect and use case will continue to grow until it reaches some equilibrium where it has lower volatility and is more stable. For now, it has plenty of volatility, and it needs that volatility if it is to keep growing. Bitcoin’s technological foundation as a decentralized store of value is well-designed and maintained; it has all of the parts it needs. It just needs to grow into what it can be, and we’ll see if it does.
It’s like if someone identifies a new element, and people begin discovering uses for that element, and it experiences a period of rapid growth and high price volatility, until it has been around for sufficient time that it eventually settles in to a normal volatility band.
While Bitcoin remains as volatile as it is, investors can mitigate the risk by having an appropriate position size.
A common misconception of Bitcoin is that it is just one of thousands of cryptoassets in the world today. One may be forgiven for this misunderstanding, as our world today is home to many national currencies. But all these currencies began as warehouse receipts for the same type of thing—namely, monetary metal (usually gold). Today, national currencies are not redeemable for gold, and are instead liquid equity units in a pyramid scheme called fiat currency: a hierarchy of thievery built on top of the freely selected money of the world (gold) which their issuers (central banks) hoard to manipulate its price, insulate their inferior fiat currencies from competitive threats, and perpetually extract wealth from those lower down the pyramid.coinmarketcap bitcoin bitcoin список bitcoin форекс ethereum логотип bitcoin бизнес js bitcoin bitcoin future краны monero credit bitcoin ethereum decred
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