(1) Bitcoin was worth $1135 at the end of 2013. (2) Bitcoin value has been in free fall since Christmas. These two facts are often quoted, and although both are largely, technically, true, the majority of people quoting them fail to place the statements in…
(1) Bitcoin was worth $1135 at the end of 2013. It must be remembered that it was trading at $1135 in 2013, but it was also trading at $693, just three days later. Two things, first: during 2011, the value of a bitcoin climbed from 30 cents to $32 and then dropped back to $2. This was a drop of $30 or almost 94%, frightening, isn’t it. Problem for the naysayers is that the value of a bitcoin rose by 567% over the full year. Now, there is a headline! Good news does not sell as many newspapers though, does it? Here is the second thing: For a bitcoin to sell at $1135 on the market; someone, who has a bitcoin, must be willing to sell it at that price. There were people demanding bitcoins at lower prices, but there was also a shortage of sellers and hence the price was high. Why would someone holding bitcoins, as an investment, be willing to sell the best performing investment on the market since 2009, other than at a substantial premium? Therefore, there were people willing to enter the market at prices up to $1,135 but the sellers, convinced they were on a winner, were only willing to sell at prices of $1,135 or above. The market was also small, and this acted to present an inflexible interaction between the Market forces. As soon as sanity returned sellers began to reconsider their options and sold at lower prices. This was considered to be a fall in value, whereas to be accurate, it was an increase in trade volume that brought realism to the market. The sellers at $693 had probably made a killing on their holdings.
Bitcoin value has recently stabilized and is now showing strong signs of an increase. All the signs seem to be positive, yet the naysayers are having a field day. Why does the “common” or “red top” newspapers seem to hate Bitcoin? It’s because an estimated 76% of people don’t possess, or for that matter understand, cryptocurrencies; whenever a newspaper wants to develop or increase circulation it has two options: It can educate and lead, or it can hold to the lowest common denominator and act to build up and confirm prejudices. Remember, over three-quarters of the potential readership are already on board, also, bad news sells. We’ve read and listened to some bad press recently, but we must remember that Bitcoin has returned very well to investors since 2009 and a reasonable person would assume that it will continue to do so. Bitcoin is a long haul development, and as more retailers come on board, the fact remains that Bitcoin is going from strength to strength. We must continue to do just what we’ve always done; It has worked well so far.
Last modified: January 3, 2020 3:11 PM UTC