The Role Retail Plays in Bitcoin’s Price By DailyCoin
- Learning about and understanding will lead to more adoption among retail investors.
- Bitcoin’s acceptance by countries will create a convenient locale for spending and transacting bitcoins.
- Cryptocurrencies are attractive to retail investors as investments.
Many individuals are often unaware of how the lack of financial education impacts them: information overload and sensationalism decay one’s understanding of an asset’s intrinsic value versus market positioning. Digital assets such as Bitcoin offer investors affordable, financially rewarding and attractive financial options. But, retail understanding and acceptance of Bitcoin may lead to faster adoption.
Bitcoin: The Gateway Asset
The rise of Bitcoin and cryptocurrencies created a generational financial shift. A Bankrate survey found that 5% of millennials believe Bitcoin is an excellent store of value, as it will continue to hold its value in ten years. In previous years, young people had the same affinity and perception towards cryptocurrency. This was because Bitcoin became more mainstream and commonplace in our perceptions.
In 2019, 98.9% were aware of Bitcoin. However, the risk factor associated with Bitcoin has radically declined in 2021. More importantly, unlike the general consensus of cryptocurrencies, Bitcoin is perceived more frequently as a “safe” investment as institutional interests have increased Bitcoin’s liquidity.
Although they share the same fundamental technology, cryptocurrencies have different utility networks. Investor behavior toward cryptocurrencies is the same. However, their volatility still plays an important role in the way institutional and retail investors can command this new asset. Reuters reported that retail investors are embracing “wild price swings” as they yield better financial results.
Acceptance Builds Rapport
The push and pull between Bitcoin’s acceptance and regulatory pushback is proving positive for Bitcoin HODLers as El Salvador or Ukraine affirm crypto assets as a strand. Although this follows a PR standard, Bitcoin’s societal normalization will help to invalidate unfounded assumptions.
Like other cryptocurrency philanthropic efforts, the B Word conference is meant to normalize public perceptions and offer well-argued insights into Bitcoin’s world. Although their intentions may be good, framing positive discussions is dangerous because it leads to false assumptions.
Casey Carrillo claims that Bitcoin holders, and those who understand it, have “the responsibility to share, promote and defend it” to help propagate it across the network. What’s worrying is that this can create a “positive feedback loop” which can dismiss counterarguments that effectively help to best develop Bitcoin for the future.
Bitcoin is not a new technology and has been around for many epochs. It does not need endorsements to be understood. The process of creating digital habits takes time. If users don’t have access to the latest payment option, 13 years will be insignificant. Although it might be tempting to help retail investors and to make them feel more confident, they will soon form their own habits when enterprises start adopting and integrating cryptocurrencies.
On The Flipside
- Regardless of whether businesses offer ways to spend Bitcoin, people are still HODLing.
- The cult-like crypto following damages the reputation of a stable currency
- Bitcoin has shown that it could not perform existing currency functions because of its volatility.
A Network Effect
Bitcoin is a novel currency because we are currently dependent on the established financial systems. Jurrien Timmer, director of Fidelity Investments, told CNBC that Bitcoin is seeing “coming of age” momentum in the adoption process, as previously only institutional investments were gaining knowledge and exposure with higher capital on Bitcoin.
Still, creating a global Bitcoin consensus in a timely manner involves several retail cycles, as Income Sharks highlights:
“The downside of mass adoption is getting a whole wave of completely inexperienced crypto traders who bring volatility.”
Retail investors can have an impact on the Bitcoin price as they get used to the volatility index. Bitcoin could gain widespread adoption status if more people begin to spend bitcoins rather than hold them. Bitcoin is a speculative instrument for retail and institutional investors until then.
What is the reason you should care?
Bitcoin doesn’t need to be preached or promoted like a Ponzi scheme. This will only cause it to lose its market reputation. Although Bitcoin’s price behaves identically to the penny stock, retail will influence the price of BTC and its acceptance only if there are incentives to spend it.
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