The Sky Is Not Falling: Why The Bitcoin Price Doesn’t Matter

“Bear markets are the best time to be alive and in the sector. It’s depressing for those that don’t know what they’re doing, it’s awesome for those that have a longer-term view.” – Simon Dixon

The difference between Bitcoin and everything else is that the price of bitcoin doesn’t matter. Over the long term the price of bitcoin has gone up, yes, but the value proposition of bitcoin as hard, non-confiscatable and truly decentralized money is really what matters. Not the price hype and not the pump. This is why traders and speculators have lost interest in Bitcoin, and continue to flock to the newest pumping decentralized finance (DeFi) or non-fungible token (NFT) project at the drop of a hat. This loss of interest from the speculators is viewed by many as a negative development for Bitcoin, but it is actually a very positive one. What we are seeing now represented in the lower bitcoin price is the value of its actual functional utility and the absence of retail speculation capital that was there before. This article will describe why that’s a good thing.

misguided analysts have described Bitcoin as a Ponzi scheme dependent on continued artificial speculation pumping into the space. As anybody with experience can tell you, speculators are shiny-object chasers by nature and pull out of any position the minute something shinier comes along. Well, the bitcoin “bear market” has arrived and all the speculators are gone. They got bored and took their toys home with them. Even with them gone, bitcoin is still valued at far higher than its 2020 and 2021 lows and is increasing adoption on an institutional (and sovereign) level. This adoption represents real value.

Day Trader Army Loses All The Money It Made In Meme-Stock Era,” details how many of the new traders that entered the space have “never seen a market that wasn’t supported by the Fed.” Retail traders lost all the gains they made in the Dogecoin, AMC and GameStop rallies, and are exactly back at square one.

Source: Morgan Stanley, Bloomberg

The entire market is falling right now and we need to rethink what a “good investment” is. Like the above chart from Morgan Stanley shows, the overall movements of retail trading have canceled out to zero since January 2020 despite their temporarily outsized gains in 2021. If we compare today’s bitcoin price to the January 2020 price, we still see a gain of 331% for bitcoin, outdoing the S&P 500’s return by a large margin and beating the overall retail trading profit of absolutely nothing by a margin of infinity. Do we need any more proof that HODLing is a superior strategy?

The same can not be said for other cryptocurrencies. Ponzi schemes by definition cannot exist for decades and the honesty in current bitcoin price attests to the honesty of its fundamental value proposition. Yes, it goes down sometimes. This is an indicator of health and transparency. Something that just goes up and up and up forever? That’s a Ponzi scheme and the bottom will always fall out eventually.

singing “Pump It Up” anymore, and despite how fun and euphoric the 2021 rally was for a while, the space is really better off without the memers around. It’s time for a more grown-up culture of development and adoption around Bitcoin, and time for a more grown-up price conversation as well.

This is a guest post by Nico Cooper. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.