Exactly one year ago, the price of bitcoin had reached its all-time high – at almost $20,000 – that paved the way for some enthusiastic bullish calls. Mike Novogratz, a former Goldman Sachs official, predicted that the digital currency would touch the $40,000-mark. Fundstrat CEO Thomas Lee said bitcoin would establish a new high at $25,000. Some analysts even predicted that it would overreach its upside targets by jumping anywhere between $50,000 to $1 million.
However, at press time, Bitcoin value is standing at a meager $3,500, still lurking toward its downside targets.
Not Bitcoin Fault
For a digital currency that had everything going right for itself, especially when it comes to regulation and institutional adoption, bitcoin was let down more by its surroundings than its own fundamental or technical faults. As it boomed, Bitcoin became a prime example of how a store of value asset should look like. Those who believed in its long-term prospects held it closer while others used it as money to purchase cheaper crypto assets, commonly known as ICO tokens.
The speculators thought that purchasing ICO tokens would give them an early mover advantage in projects that promised to be better than bitcoin. But as more than 50% of these projects failed to deliver onto their promises, or turned out to be vaporware/scams, all the long investors lost money as well as the opportunity they could have had with bitcoin.
The ICO projects, meanwhile, covered their operational as well as leisure expenses by selling bitcoins they had raised, adding a negative pressure on the digital currency against an unspecified demand. The year 2018 saw ICO tokens crashing because of lack of underlying revenue models, and bitcoin because the ICO projects took it for a deadly ride.
As usual, bulls had not thought of such a scenario to take place, for they were relying on the adoption while predicting majestic upside targets for the digital currency.
What’s Next for Bitcoin
ICO market is almost dead, said Novogratz during one of his recent interviews. His analogy was based on the legal actions taken by the US Securities and Exchange Commission (SEC) against projects that raised funds without obtaining approval from their office. And indeed, even in the absence of the SEC’s scrutiny, investors have visibly learned their lesson after losing millions to dim blockchain projects. Bitcoin is merely facing the heat of the overall crypto market, despite being the one that continues to stick to its long-term motives.
The year 2019, therefore, is an essential year for the digital currency, for it marks the beginning of an earnest market where investors are more professional and learned. They will enter the space after getting equipped with its fundamental factors, primary the launch of mainstream investment products like futures and ETFs. And most importantly, they won’t be giving their bitcoin holdings to any run-of-the-mill blockchain project, not unless it has a concrete business model for long-term.
Bitcoin will move to its proper direction, eventually to attain the status of digital gold. There are bumps expected anyway, because of the ongoing economic slowdown as US Dollar improves. But when the value will move from the FIAT reserves, it will likely move to markets like gold, stocks, and indeed, crypto.