It’s hard to imagine that before the present day coronavirus outbreak began taking the rest of the world by storm and expanding its reach beyond Asia, Bitcoin found itself trading at around $11,000 USD. At the time, both traders and investors alike would likely engaged in pricing in the upcoming halving event in May, which will decrease the number of Bitcoins mind per new block to 6.25 Bitcoins.
At the time of this writing, 50,000+ Americans have contracted COVID-19. As for the price of Bitcoin? It fell off a cliff. It’s since recovered significantly but it’s a far cry from the $10,000+ days.
Consider that in a 24 hour span between March 11 and March 12, 2020, the value of one bitcoin plummeted from just under $8,000 USD to just under $5,000 USD. That’s a difference of nearly 40%!
So with the oil and every major Index in the stock market also plummeting amid fears of the pandemic and the Bitcoin halving event approximately two months away, why isn’t it proving to be the store of value that libertarians have always been saying it will be?
In order to answer that question, we’ve got to dive deeper into the details.
Bitcoin as the Internet of Money
When the Bitcoin blockchain first launched in 2008, the vision was to give people a peer-to-peer payment system through which to transact without the oversight of a central authority or government. In the early days of the network, sending value between one another cost mere pennies. Thus the revolution began.
However, in 2017 Bitcoin’s price reached an all-time high of over $19,891 USD. Since the number of transactions confirming on the blockchain began to increase in the value of those transactions also went up, so did the fees. All of a sudden, users were paying out $20, $30, $50 etc. just to send a few hundred dollars across the network. Needless to say it became impractical to use Bitcoin as money.
Modern-day upgrades to the network have made it cheaper and faster to transact with Bitcoin, and now there are also other versions of Bitcoin (Bitcoin Cash, Bitcoin SV etc…) that also promise to offer cheap and fast transactions.
The thing is 2017’s fee issue provided enough fuel for many in the crypto community to dub digital currencies as stores of value or more akin to digital gold rather than money. It made sense of the time given a large number of users were hoarding it as a commodity and investment rather than using it to exchange value for goods. And yet, today in 2020 with every other market in the world experiencing a dramatic downturn and heading into a recession, why isn’t Bitcoin crushing it at the moment?
The Truth Hardcore Bitcoiners Won’t Admit
The reality is, hardcore Bitcoiners won’t admit that cryptocurrencies in general simply don’t make up enough of the broader financial market to be taken seriously in the eyes of most investors who are panicking about their other more traditional investments, their homes or their jobs etc.
The market capitalization of all the cryptocurrencies in the world typically fluctuates between $150 billion and $400 billion at any given time. Considering the United States government just doled out more than $1.5 trillion in financial relief to large corporations and small businesses in the wake of this current coronavirus outbreak, a $150 billion market for an entire industry of digital currencies aiming to replace the fiat world is nothing.
More Adoption is Crucial
The above market capitalizations are a reflection of the fact that the average person still doesn’t believe in or understand blockchain technology enough to take it as a serious investment when they are wondering whether they are going to lose their retirement fund or not. It’s also too early to tell what the final financial ramifications of this outbreak will be in the long run.
Bitcoin will still be around and it will continue to grow in value no doubt, but the reality is there are still millions of people on the sidelines all around the world that need to get involved and become hard-core about Bitcoin in order for it to really expand its horizons on a global scale.