It could change dramatically for the better or the worse by the time you read this. But as I sit here now putting thoughts into words, the bitcoin price just shot up above $9,400. Recall that in the crazy year that was 2017, the king of cryptocurrencies hit a then-unfathomable $10,000. Today, we regard anything less as disappointing.
But with the recent surge in bitcoin and other virtual currencies, investors and the curious are asking the same question: can lightning strike twice? Bitcoin was on the verge of crossing over a simply astounding price of $20,000 before the bubble collapsed. This time around, I think $20,000 is a foregone conclusion.
Now, I’m not going to give price targets because doing so angers people, and angry people send angry emails to my chief editor. Frankly, I’d rather not deal with the drama. However, let’s just say that I wouldn’t be surprised if we see bitcoin hit six figures per token as the next plateau.
Sound crazy? When this original virtual currency hit $100, I’m sure the idea of $10,000 (or more) would have seemed ludicrous. However, that move – which of course happened – represented a 100-fold increase in the market price. Getting to $100,000 now is a little more than a ten-fold jump.
Again, I’m not saying that it will happen, but that I wouldn’t be surprised. In my last write-up about bitcoin, I mentioned that the long-term technical pattern augurs very well for the crypto space.
Plus, keep in mind that virtual currencies are not “ordinary” investments. At the time of the article (Dec. 19), bitcoin was around $7,200, or a 31% gain.
Are you interested now?
Superior Convenience Factor Bolsters Bitcoin
I’m a nerd. Like most nerds, I have a tendency of making things too complicated. Here, I’m making a concerted effort not to do that. Fortunately, the biggest bull case – in my opinion of course! – for cryptocurrencies comes down to one, simple factor: convenience.
And when it comes to any investment market, convenience matters. In a Lund University School of Economics and Management research paper by Wenbin Kong and Yuting Fan, the two researchers discovered that both internal factors (such as trust) and external challenges (such as availability) impacted a person’s decision on whether to invest.
I’ll spare the granularity and get to the point: when investing tools and platforms are readily available to clients, they’ll invest. If not, they won’t.
Investopedia contributor Tim Smith came to a similar observation when discussing the dynamics between West Coast and East Coast trading. As Smith noted, West Coast traders have an advantage in that the most relevant technology firms are located in Silicon Valley. But arguably, East Coasters have the biggest advantages.
First, the stock market operates on eastern time. Therefore, those in this time zone don’t have to wake up at unholy hours of the day. Second, and more important, physical proximity allows high-frequency traders to have an edge “downloading” information a tick faster than others.
Conveniently, of course, this automatically favors the Donald Trump-types that hail from old money. And with these elites making the rules and selling the tickets, non-New Yorkers are always playing away games.
This is a serious inconvenience imposed upon the citizens of a single country. Now imagine if the international community wants to invest here? It’d be a nightmare.
But with bitcoin, you can leave your passport at home. All you need is internet access.
Virtual Currencies Align with Millennial Values
In 2018, a Gallup poll indicated that less than half of young Americans are investing in the stock market. Experts believe that a pervasive lack of trust stemming from the 2008 financial crisis is the culprit. In my view, that’s only partially correct.
Millennials and the emerging Generation Z care about long-term planning just as much as anyone else. But these demographics essentially grew up in the digitalization era. And what is the one attribute that underlines digitalization? That’s right, convenience.
Today, we have smartphones from Apple (NASDAQ:AAPL) that function like portable computers. With streaming platforms like Roku (NASDAQ:ROKU), we have on-demand content consumption. And the big one, Amazon (NASDAQ:AMZN), allows us to sit on our rear and have our groceries delivered to us.
Yet when it comes to investing, we have to physically live in New York City to enjoy the full potential of the platform. Something is very wrong with this picture.
As older generations fade away, the future of investment will increasingly look like bitcoin and its underlying blockchain technology. With cryptocurrencies, you have everything that millennials would look for: investing when, where and how they want. Basically, we’re talking about on-demand investing and that’s why I’m so optimistic about this sector.
As of this writing, Josh Enomoto is long bitcoin.
