Is Bitcoin still an Evil Bad-Boy? (April 2023)

Merely five months ago, during the winter of November 2022, Bitcoin (BTC) dropped 22% to $16,500. Market Pundits wondered if it was the end of the road for cryptos or just another painful Crypto-Winter. Well, this week, Bitcoin was trading at $28,900. That’s a 75% upside or a 200% annualised return.

The surprisingly fast exit from its “Crypto-Winter” has placed it atop the leaderboard in best-performing assets by a wide margin. In contrast, the Fed raising lending rates to 5% has worried economists across the globe. Further, government-backed digital currencies have seen a tepid market response. Can we expect this sunny spring to translate into green shoots of recovery?

The Ides of March

March 2023 has been brutal for the global banking sector. The collapse of Silvergate, Silicon Valley Bank, Signature Bank and most recently #creditsuisse Suisse, has been a catalyst to the world’s relook at digital assets. This remarkable surge in popularity, particularly as the recent financial crisis led to diminishing trust in conventional banking institutions. Bitcoin (BTC), the most well-known digital asset, has seen considerable value appreciation within the past month. Of course, governments will fund these bailouts using taxpayers’ dollars and print more paper currency. In the past, overprinting of fiat currency has fuelled soaring inflation.

The Genesis - Will History repeat itself?

The cryptocurrency revolution was born from three ideas coming together at the right time. These three drivers are Bitcoin, Blockchain technology, and Economic uncertainty. Bitcoin was born out of the pain arising from the 2008 recession. The banking collapse has brought the long-term impact of cryptocurrencies, NFTs and Web 3.0, back to the discussion table. This present crisis is being closely watched, as the previous 2008 financial crisis led to the birth of Bitcoin.

Bitcoin is a network that is not dependent on anyone. If you own Bitcoin and if you own your private keys, you own a piece of that network. But cryptocurrencies, often termed “digital gold”, are still highly volatile, and are reminiscent of the Wild Wild West.

What are the futurists doing?

“#Bitcoin is more than a new technology. Bitcoin is a cultural phenomenon. An idea and a movement that represents a more connected and freer world.” @jackmallers

Crypto evangelists like Michael Saylor, co-founder of MicroStrategy, have doubled down on their Bitcoin bets, with holdings reaching an astonishing $4.14bn.

An interesting phenomenon has been the sharp recovery in Bitcoin prices. However, this recovery has not translated across the board with other Altcoins. Several smaller cryptos have only seen a marginal recovery of market capitalization. Bitcoin’s dominance in market share in Crypto assets grew from 38% (Nov 2022) to 46% (March 2023). We need to see if this divergent trend with Bitcoin will continue to dominate the crypto market. Or this is a classic K-type market recovery, where the big guns recover well, and the small cryptos fade away.

Advocacy & Ease Needed

For the average guy on the street, Bitcoin and the purpose behind cryptocurrencies is still an enigma. Surprisingly, many millennials still believe that cryptocurrencies are banned by the government.

A critical factor in improving retail participation is the creation of the necessary off-ramp and on-ramp mechanisms. The on-ramp is the method to convert fiat currency to digital assets. The key to building a direct fiat onramp is integrating bank accounts with multiple apps, instead of the circuitous P2P mechanisms. The easiest method for new retail users to on-ramp is via a centralized exchange (CEX), such as #binance, #theunitnetwork, or #kraken. The off-ramp is the method to convert digital coins and tokens like Bitcoin to fiat currencies like the U.S. dollar or Euros. During off-ramping, crypto investors convert virtual currencies into fiat. On-ramps and off-ramps need to be globally seamlessly to make cryptos more accessible. Using only centralised exchanges defeats a key goal of encouraging decentralised finance (#defi ).