The crypto winter seems to be finally over. Bitcoin has been breaking its all-time high every week. It has nearly doubled its ceiling since 2017, crossing $40,000 before a slight contraction. For many, this unprecedented increase in value is another ballooning in progress. A bubble ready to burst or realization of the technology’s value, that’s the question on everybody’s mind.
However, today, we will look at Bitcoin from another angle: Does the increasing value make it less risky or is it the other way round?
Volatile, Not Risky
First of all, we have to understand two key difference that often people end up mixing. Bitcoin (and all cryptocurrencies) are volatile by nature. Unlike other traditional currencies or assets, they are effected on a much larger scale. Being digital, they are not also bound by physical borders or jurisdictions. A crypto friendly move in the Far East has the same impact around the world as one made in the Americas. This means that the ups and down of Bitcoin is greater than fiat.
Risk, by definition is the chances of losses in investment. Though volatility does mean that there can be losses, but the truth is, these are just little dips and troughs. The way Bitcoin is designed, with its deflationary model, the supply will continue to fall, with demand increasing. This creates a financial ecosystem that is designed to increase the value, negating any risks in the long term. Do you know that if you had invested $1 in gold and the same in Bitcoin back in 2019, you would have $1.79 worth of gold today, but more than $50 million in BTC!
Higher Value, Less Risky
In short, if we take away the volatility and crashes, Bitcoin holds less risk than any other asset class. Even Bill Miller, the investing genius, has said that investing in Bitcoin is the way to go. According to the expert, people don’t take into account the inflation of fiat. Investing in other assets, such as stocks, may generate profits, but the truth is that the money will be less in value as an average 2% inflation will come into effect. The economic upheaval of COVID-19 also means that inflation is on the rise, with lesser profitability in investments.
Miller also has made a prediction, saying believing that the king of crypto can reach the edges of $80,000,
“I think that bitcoin… should probably be up 50% to 100% from here in the next 12 to 18 months. And if you were to ask me the over or under, I would definitely say it would be much more likely to be higher than lower,” Miller explains.
Here’s Miller’s interview with CNBC talking about the price volatility:
As more and more people are on boarded, not only the value rises, but the value floor is also established, increasing as does the ceiling.