About 5 months ago reddit user u/dtanner wrote a post entitled “Why I believe we're on the cusp of the 3rd great Bitcoin bubble”
It’s possible that u/dtanner was just lucky. Statistically speaking he probably was. Yet I keep going back to that post and that time of year when I consider what the next rapid price rise in the bitcoin currency will look like. Here is an update to some of his thoughts as well as some of my own. If I’m incorrect it is an unintentional mistake and I’m sure that the reddetectives will correct me on any mistakes.
Sentiment is in the dumps
This is no surprise. We’re still over 50% below the all time non-gox high of $1,163 on Bitstamp. When the price was rising it looked cheap at $900. When it’s falling it looks expensive at $450. That’s just markets. In fact, judging from the most recent comments surrounding the price action on r/bitcoin and r/bitcoinmarkets, a larger percent of people than ever believe that bitcoin is going much lower than today’s $470. People who were excited about bitcoin at over $800 are now thinking that it might go much lower than here. I think we are in the thick of despair.
Major payment processors are beginning to accept bitcoins
I know, I know. The new mantra extolled by despair-ridden r/bitcoin is “but merchants that convert to fiat increase selling pressure and drive the price down.” If you think that this isn’t made up for in terms of positive PR and free marketing of bitcoin you and I have different thoughts on the matter than myself.
Bitcoin ATMs are shipping all over the world right now
The distribution companies who are taking delivery of these ATMs have been working for months to get the proper licenses to set these ATMs up, develop marketing strategies and partnerships with storefronts to place these ATMs in desirable locations.
Institutional money is arriving in a really big way
Companies like Vaurum, Bitcoin Investment Trust, and the Winklevoss Index are bringing both the masses, banks, and investment firms the ability to purchase bitcoins in a regular. Fortress invested $20M of their $6B in bitcoin. If it starts rising expect other investment firms to pile in rapidly.
Clarifying regulation has arrived
The IRS ruling isn’t great on a micro level in terms of driving the price higher but it, combined with the near-advocacy of Benjamin Lawsky and treasury department in bitcoin have combined to create an environment where banks and investment funds are comfortable getting involved.
Mt Gox is closed
I’ll reserve judgement on this. If someone really stole 600,000 coins they could crash the price on every exchange to zero. Assuming that either the coins aren’t actually stolen (I think only one person knows for sure) or that if they are, the thief doesn’t plan to unload them on an exchange, the positive of a shady and untrustworthy company being removed from the bitcoin ecosystem is a net benefit.
Network is more powerful, Bitcoin more mature
Verbatim the same as u/dtanner’s post last time and this is really the whole point of this post and the way bitcoin grows. When bitcoin rose as a result of speculators in March/April and again in Oct/Nov 2013 three important things happened:
- Wealth was created in the hands of those who held bitcoin
- People with money who didn’t own bitcoin suddenly learned about it and invested in both the currency and companies surrounding it.
- Problems with either the protocol or the infrastructure were identified and opportunities to mend them were created
Now, 4 months after the last bubble “burst” the companies and entrepreneurs who identified problems and received funding 4 months ago are beginning to roll out their projects. I recently attended Coinsummit in SF and the number of new products entering or leaving beta testing is incredible. Multi-sig tech like Cryptocorp, colored coins,
Conclusion
Anyway, it’s a bit of a rant and I’m not purporting to know that “the bottom is in.” Any number of things can happen that nobody can predict. If tomorrow the US, EU, China, and Russia all banned bitcoin the protocol would still hold value for the people of X (Madagascar fishing villages, Senegalese pig farmers, etc) who are looking for a more efficient way to account for property. The market always wins and bitcoin will crush the competition in the long run.
Personal plug in case you read this far: If you’re a bitcoin startup looking for funding please don’t hesitate to reach out to the investment firm I started for the purpose of growing bitcoin startups. Right this moment, though, I can tell you I’m more inclined to hold btc than part with them at a $470 USD valuation.
submitted by itsjoeco
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