Research has shown that most bitcoiners are so obsessed with the cryptocurrency that they would not give up even if bitcoin value dropped to just below $3,000. Lately, bitcoin has lost more than half of its value, but why are many people willing to lose so much and still not give up?
Bitcoin was the first cryptocurrency to be introduced on Earth, but right now there are over 4,000 others. The first decade of Bitcoin's existence was marked by extreme market volatility. Bitcoin's current value has come a long way: in 2010, the cryptocurrency's price was only around $10; in 2018, it was around $18,000; and in 2021, it was over $65,000. The volatility is not over yet and bitcoin will continue to go in all directions. Analysts say bitcoin could reach $100,000 in 2021, but that is yet to come true.
Bitcoin is the top cryptocurrency by both trading volume and market cap. According to CoinMarketCap, a cryptocurrency market data platform, the bitcoin market cap on July 27 was $704 billion and about $49 billion in trading volume in the last 24 hours.
Although it is difficult to track how many people own bitcoins, the total number of bitcoin users is growing at an unprecedented rate. According to a Nasdaq Stock Market estimate from May, 46 million adult Americans, or 17% of the country's total population, are now active bitcoin users.
Bitcoin is overly popular to the extent that Bitcoiners are still willing to hold on to the cryptocurrency even as its value declines. A recent Twitter poll by Gabor Gurbacs, a renowned tech personality, on whether bitcoin investors would still be willing to keep investing even if bitcoin's price dropped to $3,000, found that 67% would keep investing.
Micheal Saylor's MicroStrategy, on June 21, even after losing 45% of its total bitcoin holdings on the May market crash acquired a fresh 13,005 bitcoins for around $489 million and the company promises to buy more. J.P Morgan's Morgan Stanley has now opened up investment in crypto assets to its wealthy clients. Clients can now trade in the five asset categories: Grayscale's Bitcoin Trust, Bitcoin Cash Trust, Ethereum Trust, Ethereum Classic products and Osprey Funds' Bitcoin Trust with ease. Also, Elon Musk, after suspending bitcoin transactions in May, announced Tesla would have bitcoin back any time soon, as reported by CoinIdol, a world blockchain news outlet.
There are several reasons why bitcoin remains addictive for many investors.
There is no doubt that in 2009, a cryptocurrency was called bitcoin and vice versa. This was because there were no other cryptocurrencies. However, today there are more than 4,000 cryptocurrencies in the market and the list is growing every other day. Although bitcoin is in tough competition with other digital assets such as Ethereum, Tether, Binance Coin and others, the gap between the leading and the second best crypto asset (Ethereum) in terms of market capitalization is still almost half a trillion dollars. On July 27, when Bitcoin's market cap was at $704 billion, Ethereum trailed at just $263 billion.
Although there are thousands of cryptocurrencies, the average crypto person can not name more than 10 of them without looking them up on the web. Bitcoin will always top the list of cryptocurrencies. It also has the backing of the world's biggest billionaires, including Elon Musk, Micheal Saylor and other institutional investors. And the adoption of cryptocurrencies is mainly driven by their influence. From a joke, Dogecoin, thanks to the support of Elon Musk, is now one of the best performing assets with an ever increasing market cap. This example is the brightest, but not the only one.
While the other crypto assets are growing at a snail's pace, Bitcoin's volatility is a "win" for many. It led to the rise of many billionaires like Changpeng Zhao, Micheal Saylor, Tim Draper, Sam Bankman-Fried and others who have all made fortunes from bitcoin investments. Imagine in 2009, a pizza could be sold for 10,000 Bitcoins. Today, that would be $1.3 million. In December 2020, bitcoin was trading for just under $24,000 and four months later it was worth over $60,000. Any potential investor looks at these curves over and over and will not stop wishing they had invested sooner, just as Michael Saylor keeps saying that "any time is a good time to buy."
Bitcoin remains the dominant cryptocurrency and most cryptocurrency users prefer it regardless of its extremely volatile nature. Its age, name recognition, and ever-rising and falling nature suit traders who believe in making a quick buck. However, volatility also brings with it the risk of losing everything. Traders need to research thoroughly before making investment decisions.