Bitcoin Needs Some Positive Movement
Vinny Lingham, CEO of Civic, a secure identity ecosystem, has a warning about Bitcoin’s price. In his opinion, the Bitcoin price will be range bound between $3K to $5K for the next three to six months.
But it could go lower, he specifies, unless there is some positive movement. “If we don’t get out of the crypto sort of bear market cycle in the next 3 to 6 months, that 3000 level could go.”
Anyone invested in the cryptocurrencies market would be alarmed at those words. But Lingham has a different point of view. For him, fundamentals are more important than speculation. And for better or worse, this market has been driven by speculation. That has been a boon for publicizing and raising awareness of Bitcoin and cryptocurrencies as a whole, but it has also led to volatility. This double-edged sword has scared away institutional investors. “[Y]ou can’t have this sort of volatility in an asset class when you want big money to become involved.” Many in the crypto-sphere argue that the next phase for a bull market will be on the backs of institutional investors actively and publicly investing in the space. With volatility such as this, financial institutions will most make the plunge, according to Lingham.
The Bitcoin Narrative
But the main problem, for Lingham, is Bitcoin’s narrative.“The Bitcoin narrative is that it is a store of value, and so people buying in at $15k, $20k believe that and that’s proven not to be true. The original narrative that I bought into was that this was a payment network that could compete with Visa and MasterCard at scale…Bitcoin can’t get there because the community has blocked an increase in capacity from 1MB upwards.” The Bitcoin community is holding back development at this point. By focusing on the narratives of store of value and not in a payment network limits wider engagement on the scale of credit cards.
The idealistic notion that crypto will help the un-banked must first pass through the utilization as a payment network before it becomes a store of value. The unbanked are the un-banked because most do not have surplus income to save. But they must transact. The argument for scalability then must be one where a successful payment network is brought to scale. When pushed on this issue, Lingham asserts that Bitcoin may not be the solution to this problem. “There are lots of other cryptos trying to tackle the payments problem. Bitcoin is being typecast as a store of value, government censorship resistant type of money.” Which has its place, but if adoption is the goal, the Bitcoin narrative, in Lingham’s eyes, is misdirected. Ethereum (ETH), Ripple (XRP), or another Altcoin may very well fulfill this need.
And while #thisisnotfinancialadvice, concerning investment, Lingham believes that the market is too risky right now. He’s quick to point out that higher risk means higher rewards, but those who are patient and willing to pay a little bit more may mitigate that risk substantially. “There will be better opportunities later on. You may have to pay a bit more, but … buying in at that level $5,700 or $6,000 in the future would be obviously higher price, but you will be more de-risked if Bitcoin can get back to that level and make a run back to its previous highs.”
But nothing is guaranteed.
A Focus on Bitcoin Fundamentals
The alarmist mass media will always exaggerate Bitcoin’s rise or fall. Adoption is low, and accurate understanding of the technology is even lower. Many to be willing to provide an opinion without having done the proper research. Similarly to A.O. Pompliano, Lingham is unmoved by these wild swings of the price. For both, a focus on fundamentals must be one’s a priori stance when understanding the development of the Bitcoin ecosystem and cryptocurrency as a whole “Fundamentals need to lead the market not speculation.”
Once fundamentals take center stage, the market will recover on a steadier foundation.
Image Source: “Flickr”
Carlos Acevedo is a writer and educator whose crypto-journey began not so much with Bitcoin but with Dogecoin in 2014. And while that involvement was not insanely profitable, the experience in fundamental best practices in using crypto became useful when the boom of 2017 occurred. Already in possession of a Coinbase account after hearing Andreas Antonopolous on the Joe Rogan Experience, he was primed to jump right in and has not looked back since. Studying cryptocurrency and exploring its potential, pitfalls, and possibilities has become a part of his daily life. You can find him on Twitter at @CLAcevedo222.