As always I like to look at things in no smaller than six month time frames. The longer the better in general. I even remember 20 something odd years ago when an investment instructor told me that "if you're investing you shouldn't be looking at a time frame of less than 5 years." Let's apply this to our general way of thinking. When the housing market bubble burst people didn't run out and sell their homes. They either stopped paying because they lost their job or they held on and their diligence paid off when the market recovered.
Now let me introduce to you a simple story. A macro type of story, but it applies to almost anything. When we go to buy a product, whether it's produce from the supermarket or a car off the lot, we look for the best deal possible. Why people in general don't adopt this policy in investing we may never know. The story goes like this... A lady sees a dress for sale. The sticker price is usually $500 but today it's 50% off. No one in their right mind would say that it decreased in value so I'll wait till it goes back up. So she buys the dress when it's on sale and tells her husband how much money they made. I mean saved. Now, this should not be equated to short-selling. That's a different animal all together.
Now a third point. The GDP of Japan is almost 5 trillion dollars. That's not an insignificant number. Japan has recognized BTC as an official currency and form of payment and there are about 30 countries total where bitcoin is completely unrestricted and just waiting for greater adoption. People seem very wrapped around the idea of institutional money coming into the market recently and while there is nothing wrong with this I don't think it's going to be as big as people think. I also believe institutional money is already there in larger quantities than most people care to consider because:
1. Nothing stopped institutions from buying coins and holding them in reserve years ago.
2. There was no reason for them to inform the public of this if they wanted better positions.
3. This has happened before with Apple, Tesla, Google, and other investments where the public was completely unaware of the moves.
But let's get back to Japan. Five trillion USD, not Yen. Let's take 1 percent of that. That leaves us with 50,000,000,000. That's fifty billion that could be put into circulation in BTC and "IS" gradually happening. Now let's look at Korea's GDP. 1.4 trillion. Again 1% comes to 14,000,000,000. That's 14 billion. You can see how things add up really quickly. Now, let's take a look at the U.S. - 18.5 trillion, Germany - 3.5 trillion, and Canada 1.5 trillion. Add these five countries together and we get 29.9 trillion or 29.9x10^12. 1% of this is 2.99x10^11. What does that look like with zeros? $299,000,000,000.
Okay, so I admit I hit that number by luck because it is just about the number that coinmarketcap.com claims is the total market cap for all crypto-currencies. But I also hope that puts things in perspective. Because the price fluctuates by orders of magnitude, we can actually assume that there isn't this much money in the market yet. If there was we would probably be looking at double the current market cap. In 2016 the global GDP was around 75.4 trillion. You know the story now. If one percent of that was circulated in crypto-currencies, not even bitcoin alone, where would that put us?
So the actual end story should sound something like this... Bitcoin was created and the value went up, the amount of fiat in circulation went down, the rate of adoption went up, the fiat exponentially went down in use, BTC's value went exponentially up, and early adopters still got rich even when they bought and HODL'd at $19k in 2017.
Now this is very simplified and there will be massive dips because people will get too excited, but these are very real numbers. Hope this helps.
Now let me introduce to you a simple story. A macro type of story, but it applies to almost anything. When we go to buy a product, whether it's produce from the supermarket or a car off the lot, we look for the best deal possible. Why people in general don't adopt this policy in investing we may never know. The story goes like this... A lady sees a dress for sale. The sticker price is usually $500 but today it's 50% off. No one in their right mind would say that it decreased in value so I'll wait till it goes back up. So she buys the dress when it's on sale and tells her husband how much money they made. I mean saved. Now, this should not be equated to short-selling. That's a different animal all together.
Now a third point. The GDP of Japan is almost 5 trillion dollars. That's not an insignificant number. Japan has recognized BTC as an official currency and form of payment and there are about 30 countries total where bitcoin is completely unrestricted and just waiting for greater adoption. People seem very wrapped around the idea of institutional money coming into the market recently and while there is nothing wrong with this I don't think it's going to be as big as people think. I also believe institutional money is already there in larger quantities than most people care to consider because:
1. Nothing stopped institutions from buying coins and holding them in reserve years ago.
2. There was no reason for them to inform the public of this if they wanted better positions.
3. This has happened before with Apple, Tesla, Google, and other investments where the public was completely unaware of the moves.
But let's get back to Japan. Five trillion USD, not Yen. Let's take 1 percent of that. That leaves us with 50,000,000,000. That's fifty billion that could be put into circulation in BTC and "IS" gradually happening. Now let's look at Korea's GDP. 1.4 trillion. Again 1% comes to 14,000,000,000. That's 14 billion. You can see how things add up really quickly. Now, let's take a look at the U.S. - 18.5 trillion, Germany - 3.5 trillion, and Canada 1.5 trillion. Add these five countries together and we get 29.9 trillion or 29.9x10^12. 1% of this is 2.99x10^11. What does that look like with zeros? $299,000,000,000.
Okay, so I admit I hit that number by luck because it is just about the number that coinmarketcap.com claims is the total market cap for all crypto-currencies. But I also hope that puts things in perspective. Because the price fluctuates by orders of magnitude, we can actually assume that there isn't this much money in the market yet. If there was we would probably be looking at double the current market cap. In 2016 the global GDP was around 75.4 trillion. You know the story now. If one percent of that was circulated in crypto-currencies, not even bitcoin alone, where would that put us?
So the actual end story should sound something like this... Bitcoin was created and the value went up, the amount of fiat in circulation went down, the rate of adoption went up, the fiat exponentially went down in use, BTC's value went exponentially up, and early adopters still got rich even when they bought and HODL'd at $19k in 2017.
Now this is very simplified and there will be massive dips because people will get too excited, but these are very real numbers. Hope this helps.