Title: The Promise of a Bitcoin Supercycle and the Role of Global Grassroots Adoption
Introduction
In the world of cryptocurrency, there is a widely held belief that the blockchain and cryptocurrency industry operates in a boom-and-bust cycle, and the driving force behind this cycle is Bitcoin. As the most well-known cryptocurrency, Bitcoin, also known as BTC, has a halving cycle roughly every four years, which impacts the supply of new coins awarded to miners. This cycle leads to dramatic ups and downs in the industry, and the end of 2021 saw a significant downturn in the market.
The Predicted Bitcoin Supercycle
In 2020, Dan Held, a Bitcoin educator and marketing adviser for Trust Machines, predicted that there would be a “supercycle” for Bitcoin. This supercycle would see Bitcoin reaching new all-time highs and, according to Held, would be driven by factors such as increased network value, scarcity due to halving, and greater institutional adoption.
Institutional Adoption and the Role of ETFs
Although institutional support was growing during the last cycle, it was not enough to prevent Bitcoin from falling from its all-time high. In the final leg of the cycle, various exchange-traded funds (ETFs) were approved around the world. However, these products did not provide the institutional support that many believed would come from ETFs. The United States is considered to be a key market, and the potential approval of spot Bitcoin ETFs in the country would play a significant role in the future of Bitcoin.
Global Grassroots Adoption
Chainalysis’ recent “2023 Geography of Cryptocurrency Report” indicated that countries such as India, Nigeria, and Vietnam were top in terms of cryptocurrency adoption. This report highlighted the significance of grassroots adoption in driving the value of Bitcoin and other cryptocurrencies, as it ultimately comes down to the perceived value of market participants.
Emerging Trends in Adoption
According to the report, the United States ranked fourth overall in terms of cryptocurrency adoption, but the country’s adoption was driven by centralized services rather than peer-to-peer (P2P) Bitcoin transactions. The report suggests that investing in Bitcoin and cryptocurrencies is akin to emerging markets investing at this stage in the adoption cycle.
Historical Insights and the Lesson for Bitcoin
The history of other industries and technological innovations that have undergone boom-and-bust cycles provides valuable insights. The rise and fall of the whaling industry and the dot-com bubble serve as examples of industries that were ultimately driven by market participants’ perceived value. The need for Bitcoin to have perceived value is emphasized, as it is the market participants who ultimately bring value to Bitcoin.
The Future of Bitcoin and Its Global Impact
While the global grassroots adoption of cryptocurrency may have seen a decline, lower-middle-income (LMI) countries have experienced increased adoption, driven by high inflationary monetary issues within their countries. This suggests that Bitcoin could be seen as a better alternative than holding domestic currency in these regions. As global trends continue to change and the flight to safety increases, the role of Bitcoin could become more significant, especially in the face of potential hyperinflation in major economies, including the United States.
I have been writing about crypto for over two years. I have a vast amount of experience in the industry and my work has been featured on some of the biggest publications in the space.
