If you’re new to this space, Bitcoin’s recent retraction could supply you with some new-found hesitation in the digital currency that everyone’s raving about— however, if you’ve been here before, chances are, you’re not too fazed by it all. Probably because anyone who has been trading in crypto for five years or more has already seen this type of intense volatility in Bitcoin price. In fact, these legacy investors are probably already doing what it is that Bitcoin traders do: buying this newfound dip.
As these market retractions, finally open up some room to get on board for a number of investors that have wanted their chance to get hold of some of that digital gold. Others worry that these retractions could be a sign of a bubble bursting, and a market shift towards the chilly futures of a bear run. However, when considering a number of influences, it turns out these recent resistances just might signal future resilience.
Widespread Retraction
Bitcoin wasn’t the only legacy crypto to feel the pinch of the fall seen at the end of May, but other popular digital currencies, such as Ethereum, Litecoin and Dogecoin also saw a massive price drop. Which isn’t necessarily shocking, as most cryptocurrencies seem to be coupled in value, it is something worth paying attention to— as some detractors seem to believe that Bitcoin mining practices, or China’s legislature, have much to do with the latest dampening.
Instead, this recent retraction was seen to hit a number of different coins, even ones that don’t have the same verification processes that bitcoin does. So while the dip could indeed be linked to environmental concerns expressed by a certain Bitcoin bull, it’s most likely that this isn’t the entire reason the market fell out. But searching for one specific cause may be more to an investors’ detriment than actually believing they have found it. This is because cryptocurrencies have always displayed wild volatility, and while there may have been some prolonged periods of plateau within the last year— the volatility that has become the signature of digital currency still remains. Which is where an across-the-board drop could instead signal something very different. Something that might actually be a great sign for the crypto to come.
Maturity in the Making
Another reason that many are speculating could have caused the latest dip in crypto is that governments around the world are now starting to take a keen interest in the digital currencies. Adjusting policy and forming legislation in order to ensure that the system can coexist with this new financial paradigm. Which is arguably something that can set teeth on edge, but also signals that cryptos are growing up. This new-found maturity, with many of the world’s most influential investors and figures coming forward to claim their crypto holdings, shows unequivocally that digital currencies are taking hold and could soon be seen as mainstream.
In fact, even the technology and antitrust advisor to the White House has admitted to holding crypto— a lot of it. Which could be one reason why the US government is currently pushing to include more strict reporting practices for those that use digital currencies regularly. South Korea looks to have halted some ultra-high-risk trading during this time as the larger community pushes for better regulation. China has also been seen to tighten its grip on crypto rules, despite a long-standing disapproval of the tokens. Which could show that crypto ownership is still making waves in a country where it’s illegal to hold.
While this new wave of regulation means that crypto investors worldwide may be second guessing their cache and what they plan on doing with it, it also means that Bitcoin is expected to be around for the long haul. Functioning as a “digital gold”, Bitcoin has long been seen as an asset or store of value, functioning as an analogy to gold in traditional markets. So while Bitcoin prices were always expected to soar, seeing it level off in a much-needed retraction without a full-on crash is something to find comfort in.
Still a Bullish Future
Despite the retraction, cryptos across the board are also beginning to bounce back from the drop. While it may be too soon to begin championing a solid rally, this correction seems to be holding fairly stable. Which is a behavior the coin has often exhibited in the past. Also, something that leaves most popular bitcoin backers still bullish about the future.
Largely because of the retraction. Many of Bitcoin’s biggest investors believe that what will really drive-up Bitcoin’s market cap in the future will be use case scenarios. While currently, the coin mostly functions as a speculative asset, with greater regulatory attention and more retail investors dipping into the pot, some mega investors believe that the coin’s use case will shift— creating a digital currency that is more widely accepted and used by all. In order for the coin to be picked up by hesitant investors, it will most likely need to shed some volatility and some values. With current prices, it’s unlikely that many people would use the coin for day-to-day purchases— however this is exactly the trading paradigm that would drive Bitcoin’s price up to the +$100,000 mark.
So, while we may be seeing a retraction now, it’s still incredibly unlikely the bottom will drop out, instead as more investors, fund management companies, and governments get on board with Bitcoin, this normalization and widespread adoption isn’t just a bullish sentiment, but a real prediction for the future of global currency.
