Given the decline of the bitcoin market over the past week, it may be a good time to ponder on bitcoin’s maturity. While the constant advice by bitcoin experts to look at the bigger picture is slightly assuring after such an unpleasant correction, it may be reassuring to note that the top crypto is staging impressive signs of maturity.
Of course, bitcoin’s path is riddled with many obstacles and occasional dips but these five signs suggest a bright future for the top cryptocurrency.
- Institutional Investors Are Showing Interest In Bitcoin
Indeed, bitcoin has been experiencing some of the largest levels of institutional growth as seen with Grayscale Bitcoin Trust (GSBTC) which has many institutional investors paying good money to be able to bet on bitcoin without having to hold the asset itself, as well as a number of established venture capitals and investment funds. This shows that institutional money is becoming increasingly interested in bitcoin as a good potential investment.
Also, there has been a notable growth of the bitcoin custodial industry. Custody services are important to institutional investors for two major reasons: risk mitigation and regulatory compliance. In terms of regulation, regulatory bodies like the SEC require institutional-grade platforms to use professional custodians for their customers’ assets. With such services, investors are guaranteed the safety of their bitcoin holdings, subsequently attracting new investors.
- Bitcoin’s Surging Hash Rate
While many in the crypto industry use bitcoin’s price as evidence of just how far bitcoin has come in its decade-long existence, the hash rate might give a more interesting look at how much the king coin has grown.
Despite bitcoin sliding to the four-figure zone, bitcoin’s hash rate has been rising significantly. Hash rate is a prime indicator that shows the fundamental strength of bitcoin and its steady rise this year indicates that bitcoin’s network is currently stronger than ever. The network’s hash rate is now slightly above 100 TH/s according to Blockchain.com.
A week or so ago, Nic Carter, co-founder of Coinmetrics.io and a renowned figure in the crypto community noted that compared to other processes, not a single one of these processes has exhibited a steady growth like bitcoin’s hash rate:
“Is there any process – bounded by physical constraints – that has grown at the pace of bitcoin’s hashrate in the last decade? We’re talking 0 to 100 quintillion. It’s preposterous, even on a log chart.”
Even though bitcoin is currently trading below $10,000, its growing hash rate is a bullish sign that will probably be reflected in bitcoin’s price in the medium and long terms.
- Bitcoin Has Earned A Coveted Spot On The Macro Landscape
As ZyCrypto reported, the top crypto has grown to become the 29th largest currency by market cap globally outpacing the Colombian peso and the New Zealand dollar.
On top of that, bitcoin is slowly making its way into nations’ central banks. A few days ago, Bloomberg reported that Venezuela’s central bank could soon be holding stashes of bitcoin and ethereum. According to the report, Venezuela’s state-owned oil company, Petroleos de Venezuela has a secret stash of bitcoin and Ethereum and is currently exploring the possibility of sending it to the nation’s central bank for storage in the international reserves.
The idea that a country’s central bank could very soon count bitcoin among its national reserves has widely been viewed as a bullish sign – the suggestion being that other countries may soon jump on the crypto bandwagon (if they haven’t discreetly done so already).
- Bitcoin Futures Volume Has Shown Exponential Growth
The continued growth of the volume of bitcoin’s futures market is another sign that it is maturing. Bitcoin futures offered by Chicago Mercantile Exchange (CME) have been on the rise. In August alone, the average daily trading volume of bitcoin futures on CME spiked to $370 million. Averaging 7,237 contracts on a daily basis, the increase represents a 132% increase from the same period last year.
While the tepid launch of Bakkt’s bitcoin futures threw cold water on the hopes of institutional investors, having a market for physically-settled futures is a huge step for bitcoin. In fact, no fewer than four other companies are preparing new derivatives offerings, all focused on physical settlement.
- Bitcoin has Surpassed the World’s Most Earth-Shattering Bubbles
Crypto skeptics are time and again predicting that bitcoin will go down as one of history’s most infamous bubbles, similar to other bubbles like the dot-com craze, Dutch Tulip mania, and the South Sea. However, unlike these manias, bitcoin has always somewhat managed to recover from previous pullbacks.
If we can take the period from Dec 2017 to January 2018 as the peak of bitcoin’s biggest bubble, it is nothing compared to the boom-bust cycles of the dot com bubble. What’s more, many of the technology stocks created by the dot com bubble are no longer in existence. Conversely, bitcoin has been growing gradually for a cool 10 years and its market capitalization currently stands at 145 billion.
Bitcoin Market Update
Sometime this week, bitcoin experienced a brutal decline below the $9,000 support level against the US dollar. At press time, the top crypto is trading $8,079.19 as per data provided by CoinMarketCap. On the weekly chart, bitcoin has declined by 19.8%, while its monthly losses amount to 16.1%.
Meanwhile, popular trader and analyst Josh Rager tells bitcoin investors to expect a continuation of the bull trend after the pullback. In simple terms, Rager believes we are still in an uptrend in the longer time frame. Rager observed that bitcoin retraced by 75% over 89 days in 2013’s bull market before skyrocketing by 1600% later in the same year.
Bitcoin’s tumble this week sure leaves a bad taste in many people’s mouths, but in the long-term view, the king crypto is showing splendid signs of maturity.