If there is to be another Bitcoin bull run, that mythical period where people are allegedly willing to pay higher and higher prices for the elder cryptocurrency, then it will have to be fueled by some things.
Bitcoin has frequently taken a pause and “dipped” — or dropped in price — over the years. The current mode is likely to pass. Yet, a number of important factors will come into play.
Remember, first of all, that there are many investors who are unmoved by price.
The “hodlers,” as they’re referred to, are a group of Bitcoin investors who simply don’t sell BTC. In some cases, when the price of Bitcoin has fluctuated enough, these investors have added to their stash.
There’s good science that suggests their waiting will be rewarded – by waiting until they can mainly spend the BTC directly, they avoid a lot of tax penalties and other areas of confusion that current Bitcoiners face.
Factor One – External Economics
A few running theories suggest that if the larger economy experiences difficulty or shows signs of collapse, then the price of Bitcoin and other cryptocurrencies will see a corresponding rise. At least one prominent investor sees things a little differently.
Whether or not you believe this depends on your view of government and the current economic system.
Clearly, in a more Utopian vision, Bitcoin becomes increasingly valuable as traditional economic infrastructure collapses.
Perhaps the uncomfortable truth around Bitcoin: it currently relies, in several ways, on the traditional economic infrastructure.
As such, a full-blown collapse might not only lead to a depressed BTC price, but a corresponding rise in the cost of ultimately cashing out of the cryptocurrency.
A lack of liquidity is a problem for any asset.
It would be detrimental to reintroduce it to Bitcoin.
Factor Two – Government View of Blockchain
Wherever you invest in cryptocurrency, the government will play a role.
In the United States, you may have to deal with multiple government agencies to establish a crypto business. In New York, for example, you would have to secure a very expensive so-called “BitLicense,” which can take years.
The purpose of crypto is to make money easier. But in some cases, government has done their part to make it harder to use cryptocurrency than traditional fiat.
Depending on your philosophical leanings, you may still want to try and use cryptocurrency in such places. In fact, there’s good logic to suggest that countries which made it a risky endeavor to transact in crypto would thereby create a black market, or premium, opportunity.
Factor Three – Demand
Whatever you believe, one of the main factors around crypto adoption will be how widely it is in demand and how much it is in use.
Some believe that acting merely as a way to transmit value is a less important function of cryptocurrencies, while others feel that it is the primary use case.
Arguably, cryptos can reduce the cost of transactions for both parties. The onset of stablecoins as a wider and wider used industry mainstay means that companies using cryptocurrency can easily get their money into a dollar format, even if they decide to keep it accessible to the blockchain.
A world where every shopowner wants to host a Crypto ATM is a matter of creating a strong demand among the people wandering through his store. To do that, cryptos need to be user-friendly, welcoming, and everywhere.