Reasons why Bitcoin ‘is not in a bear market’
Even with Bitcoin’s correction phase stretching to almost a couple of months now, analysts and optimists somehow continue to remain bullish. This rejection of a bear phase, albeit not unfounded, has been repeatedly expressed by several analysts and Bitcoin supporters, most likely, in a bid to keep investor sentiment high.
The recently published “Bitcoin price prediction 2021” report reflected this aspect. As per the report’s findings, 62% of the surveyed panelists believe that BTC is not in a bear market. According to these panelists, several factors such as sustained buying interest, Bitcoin’s price history, and the continued relevance of fundamentals were key indicators driving their stance.
As per the above chart, even with BTC prices moving sideways, new entities continued to join the network. Over 50,000 new entities were seen coming on-chain every day, and the weekly net growth on the Bitcoin network was higher than that observed at the beginning of the year when the prices had started to reach new highs.
However, other on-chain metrics that refute these claims cannot be ignored. The above chart shows how Bitcoin’s adjusted on-chain volume was falling steadily over the last few months. From a peak of over $16 billion in May, the daily transaction volume had dropped to nearly $6 billion, indicating that traders were receding from the network.
With reference to the abovementioned report, the panelists, including leaders from the crypto space worldwide, predicted that by December 2025, the price of BTC will go up to $318,417. This has been attributed to halving events and inflation taking place.
It has been estimated that 30% of the U.S. dollars in circulation at the moment were printed in 2020, which gives enough impetus to an upcoming inflation scare. Mass bitcoin adoption could be another reason for this predicted surge. Around 54% of the panelists thought that “hyperbitcoinization,” which is when bitcoin will take over global finance, will take place by 2050. However, 25% of the respondents believed that it will take place much earlier by 2035, and some 20% of the respondents said it’ll happen by 2040.
With DeFi providing lucrative and safer alternatives to virtually all traditional investment vehicles and institutional investors taking an interest in crypto funds and derivatives markets, billions of dollars are currently locked into DeFi and further billions are being managed by asset management firms. All these aspects, point to an inevitable “hyperbitcoinization” of global finance, although a date in the coming decades might be tough to single out.
It is not just big-time investors that will be reaping the benefits of their investments. 33% of the panelists further predicted that bitcoin will become the currency of choice in developing nations within 10 years. A further 21% said that level of adoption is more than 10 years away.
Even amidst news such as El Salvador’s Bitcoin adoption, and of the Venezuelans using it as a means to beat hyperinflation, such sentiments may not hold completely true. A recent report on crypto readiness found out how developing nations were far from achieving mass crypto adoption or being ready for it.
Reasons for this included a lack of regulatory interest, Bitcoin ATMs or lack thereof, lack of citizen interest and so on. Other reasons for this may include illiteracy, lack of internet or electricity, inadequate infrastructure, and government hesitance among other issues that developing countries typically face.