Bitcoin’s Widespread Adoption
Bitcoin is everywhere. At least it seems that way. Anyone who’s paid any attention to financial markets during the past year has probably felt bombarded by bitcoin. There’s been a constant flood of articles explaining what it is, predicting how high (or how low) its price will go, or offering other commentaries about its future. Of course, bitcoin’s been around for over a decade. Why the sudden public fascination?
The simple fact is, people are paying more attention to bitcoin now because its price has forced people to pay attention to it. The recent price action is making bitcoin supporters look more and more prescient. When the coronavirus pandemic hit the US in March 2020, bitcoin took a nosedive, falling to its lowest value in years. But it quickly recovered and gained strength throughout the rest of the year. Then in December, it burst past its previous all-time high. Within a matter of weeks, it had more than doubled the previous record and got almost to $42,000 (USD) before falling back.
What’s Causing This Huge Price Move?
Bitcoin has experienced dramatic price moves before, but many pundits believe this rally is different. Unlike previous rallies, this one is being driven by major institutional investments. Firms like Microstrategy and MassMutual are investing their assets in bitcoin. And online payment giant PayPal is now allowing users to purchase bitcoin directly. Bitcoin may have originated as a niche asset that only a small handful of people even knew about, but now it’s a major global force in the financial world, and it seems like everyone who doesn’t have any bitcoin is worried about being left behind.
The Fourth Phase
Bitcoin is now in what Marshall Hayner of Metal Pay has called “the fourth wave” of adoption. The first three waves were characterized by exuberance, speculation, and utility. This fourth wave is characterized by widespread acceptance.
Predictions about what’s going to happen next vary widely? Some detractors still insist bitcoin’s value is purely illusory and the price will fall to zero. On the other hand, some proponents expect its value to increase tenfold in a matter of years. In the short term, the price is likely to stay a bit below the all-time high it set in January 2021. But if the recent trend of institutional acceptance and investment keeps up, the price could jump again soon.