The mainstream financial media doesn’t always get bitcoin, Bloomberg included. But given the resilience of the leading cryptocurrency, it’s clear that bitcoin isn’t going anywhere, and media coverage of the crypto market has in some cases experienced a shift.
Most recently, Bloomberg has published a report indicating that bitcoin is poised for greater adoption in 2020, which is the one fundamental issue that the crypto community is waiting on, too. The stars are expected to align for BTC thanks to the simple dynamic of supply and demand, the Bloomberg report suggests, pointing to bitcoin’s fixed supply of 21 million and greater mainstream adoption. According to the report,
“Our takeaway is straightforward: Bitcoin is winning the adoption race, notably as a store-of-value in an environment that favors independent quasi-currencies.”
Evidence that mainstream adoption of bitcoin is afoot is clear in the crypto derivatives market. According to Bloomberg, BTC futures trading is a barometer of mainstream adoption, and volumes are strengthening:
“The stair-step pattern of advancing Bitcoin futures volume and open interest is sustainable, supporting a price foundation and pressuring volatility, in our view.”
Meanwhile, the coupling of rising futures volume and open interest points toward a rising BTC price, one that is supported by greater “institutional involvement.”
“Futures represent migration toward the mainstream, and Bitcoin supply will only advance about another 16% to its total of 21 million coins,” Bloomberg points out.
With more than 18 million BTC having already been mined, bitcoin has never been so close to peak supply. Meanwhile, bitcoin’s case as digital gold has only been strengthened of late as investors moved into the largest cryptocurrency during times of geopolitical unrest. The escalation in U.S./Iran tensions sent the BTC price soaring to nearly USD 8,400 once again as investors flocked to safe-haven assets including bitcoin and gold. Volumes were similarly robust, which gave legs to the rally. But it didn’t last.
Mati Greenspan, Founder of Quantum Economics, explained in today’s note:
“The top 10 exchanges traded about $1.5 billion worth of bitcoin that day, a number that is now around $500 million. Along with that, sentiment has cooled off as well. Two days ago, social media was about as bullish as it gets, today it’s not exactly negative but most indicators would say we’re back in neutral.”
With the fear of war abated, for now, investors have withdrawn from both bitcoin and gold, which demonstrates the correlation between the two store-of-value assets. Despite today’s pullback, the BTC price remains higher for the week, and traders will take what they can get given the roller coaster ride that the leading cryptocurrency has taken them on of late.
Broader Crypto Market Adoption
On the flip side, with bitcoin’s dominance hovering at nearly 69%, the dynamics don’t bode well for broader cryptocurrency adoption. The Bloomberg report points to fierce competition among altcoins for adoption, which will continue to pressure broader crypto market prices downward. Until the supply of altcoins is “curtailed,” there’s little hope for alt season to return. Last year, a whopping 3,000 coins were added to CoinMarketCap, the most in the crypto market data site’s history. The number of “tradable coins” is nearing 5,000 vs. 600 in early 2017, the year when bitcoin reached its peak of nearly USD 20,000.