The guest commentary below was written by Sam Callahan of SwanBitcoin.com. This piece does not necessarily reflect the opinion of Hedgeye.
Today, less than 2% of the world owns Bitcoin & Bitcoin’s price is >$30,000.
Not convinced you’re early to Bitcoin? Keep reading...
Whenever someone discovers Bitcoin there are two phases that typically occur, the first is that they wish they could buy it cheaper, and the second is that in hindsight, they should have bought more.
Everyone feels like they’re late to the game when they find out about Bitcoin. They feel like Bitcoin is too expensive and that they missed the boat, but this is flawed thinking.
Take it from Greg in 2011:
Nowadays we laugh at the idea that somebody could think $8/bitcoin is expensive. However, back then it probably really did feel that way.
Similarly, although 1 bitcoin costing $37,500 might sound high today, that same price may look dizzyingly cheap years from now as Bitcoin adoption continues to grow across the globe.
It’s key to remember that over long periods of time, bitcoin has returned extraordinary gains for investors. That’s why it is more important to buy it and hold it for a long period of time, rather than try to time the market to get in at a lower price.
Zoom-Out
What I am referring to above is the concept of lengthening your time horizon.
When investing in Bitcoin, you should view it as a long-term investment rather than a short-term trade to get rich quickly. If you start thinking in years instead of weeks or months, it will change the way you view the price of Bitcoin.
Ask yourself this — if you plan to hold bitcoin for 5 years, 10 years, or 20 years, are you really going to care if you bought bitcoin at $30,000, $40,000, or $50,000? The answer is probably not. You expect it to be much, much higher by then.
When looking at the price of Bitcoin, it helps to “zoom-out” to get a general idea of how Bitcoin has continued to grow as an asset over time.
One can easily observe this trend by looking at the all-time chart of Bitcoin.
The main takeaway is that it’s not about what price an investor buys, but rather how soon they make the decision to buy Bitcoin at all.
As they held it, they were able to benefit from the price appreciating as Bitcoin’s adoption continued to grow over the years. When it comes to Bitcoin it is time in the market that matters, not timing the market.
Adoption
By buying Bitcoin today, what you are really betting on is that the usage of Bitcoin will continue to spread. It’s reasonable for investors to conclude that the price of bitcoin will be magnitudes higher years down the road if the positive trend of Bitcoin adoption continues.
As more and more people find value in Bitcoin, the demand for the asset increases, and this results in the price rising due to Bitcoin’s fixed supply. Since we already know Bitcoin’s supply is fixed, let’s see what Bitcoin’s demand has looked like over the last 12 months.
In the past year alone, we’ve witnessed public companies, hedge funds, insurance companies, and now countries all adopt Bitcoin.
On top of that, payment providers like Paypal, Visa, and Square began offering access to Bitcoin for their millions of clients and merchants.
Lastly, billionaire investors like Bill Miller, Stanley Drunkenmiller, Paul Tudor Jones, and Ray Dalio have all endorsed Bitcoin. The demand for Bitcoin appears to be healthy and growing, and thus we can expect the price to continue to increase with its adoption as the years tick on.
You’re Not Late, You’re Early
The truth is that despite Bitcoin being >$30,000, we are still extremely early in its adoption. Bitcoin is an ambitious technology that aims to one day allow for the free flow of trillions of dollars worth of value on its network.
It’s attempting to become a widely accepted store of value which is why it is often compared to gold.
The reason gold is compared frequently to Bitcoin is they share a lot of the same properties. Like gold, Bitcoin is scarce, divisible, durable, and portable. Yet Bitcoin actually improves on gold’s properties by being a natively digital technology.
Bitcoin is a scarcer gold that you can divide up into millions of pieces and send through the internet with a tap of a finger. Thus investors can reasonably expect that in the future Bitcoin may reach and perhaps even exceed the market cap of gold.
Perhaps sooner than any of us think.
EDITOR'S NOTE
Sam Callahan is a Bitcoin Analyst and educator at Swan Bitcoin. He graduated from Indiana University with degrees in Biology and Physics before turning his attention towards the markets. He writes the popular "Running the Numbers" section in the monthly Swan Private Insight Report. Sam's analysis is frequently shared across social media, and he's been a guest on popular podcasts such as The Investor's Podcast and the Stephan Livera Podcast.
