In 2017, the price of bitcoin exploded to unprecedented levels. Today, it rests at a measly $ 8,338.03, far from its all time high of almost 20,000.
It’s unlikely that we’ll ever see bitcoin (or any other cryptocurrency) reach the same heights as bitcoin did.
There are a few reasons why.
First of all, the market’s psychology is different.
Back when bitcoin had its major rally upwards there was no yard stick to measure the coin against. We were used to bitcoin trading for a couple of hundred dollars or less, let alone tens of thousands. Back in those disillusioned years we thought we had struck digital gold; a new revolutionary currency that will quickly alter out day to day lives.
The reality, however, was that bitcoin experienced an unsustainable valuable climb that was fueled by nothing but greed and fear.
When the coin’s price finally went parabolic, fear, uncertainty, and a sobering reality quickly set in.
Millions of people were whipsawed from bitcoin’s dramatic drop from almost 20,000 to 8,000 to the meager amounts it trades today.
And If bitcoin’s catastrophic dip into the 3000’s we saw early this year isn’t enough there’s another reason.
Bitcoin has shied away many investors from investing into crypto (and for good reason). It’s therefore unlikely that we’ll see the huge overbought levels of 2017 again anytime soon.
Bitcoin is not ready
A large part of why bitcoin failed to hold its gains in 2017 is that the blockchain simply isn’t ready for mainstream use. Despite the headlines praising the blockchain as a “revolutionary new technology” the truth is that the blockchain is slow, expensive, and cumbersome.”
In fact, most companies don’t need to use a blockchain at all.
The world simply isn’t ready yet to use the blockchain on a systems or a day-to-date payment level. Although a study by Coindesk revealed that over 80% of Americans have heard of bitcoin, the adoption rate remains slow, the technology expensive, and the interest in realizing a decentralized economy is waning.
We’re simply too comfortable paying the easy way with cash or debit cards than to go through the hassle of buying and managing virtual currencies.
On and off ramps create friction
Crypto still isn’t accessible to everybody. To buy bitcoin in New Zealand for instance, you need to link your NZ bank account, provide photo ID, and then wait a few weeks just for your account to be approved. These steps create friction for people who want to buy crypto right now.
On the other hand, less technical people also have a harder time when it comes to buying and selling cryptocurency. For most people, exchanges are daunting and complicated platforms that don’t make it easy for newcomers to sign up and start spending their virtual currencies.
It’s for all these reasons and more that adoption of crypto in 2019 could be a very long road ahead.