The recent stock market bull run has led many to believe that Bitcoin prices will also go the same way. The truth is that this may not happen as historically speaking Bitcoin prices have always been at odds with stock market averages.
This is because the stock market has always moved in a predictable direction. Bitcoin prices don’t have a specific correlation. People are known to seek out cryptocurrencies as a safe haven once the stock markets go berserk and no one knows which way to turn.
This has led many to believe that Cryptocurrencies are the future. Yes, cryptocurrencies are the future but not in the way that we think. Bitcoin being the first of the cryptocurrencies is going to have at some point more value than any other asset in the World, due to its trustless nature.
The core concept behind decentralized ledger technologies is a little-known concept known as triple-entry accounting. This concept is what drives trust in digital assets. Triple entry accounting changes the concept of having a central authority to have shared authority on the basis of consensus.
This, of course, indicates that even if two people don’t trust each other they can trust a common entity that isn’t under the control of a few. This is how Bitcoin prices will rise.
Stock Markets are Centrally Influenced
Stock markets and other financial markets have always had at their core one form of central control of the other. This has created a paradigm where the values of stock markets are dependent on government policies. Governments always actively seek to keep this kind of control over their citizens including the entrepreneurs who can change the world with easier sources of finance.
As such, the true value of any enterprise or asset can’t exactly be defined as they are all dependent on double-entry accounting. Triple entry accounting systems, on the other hand, allow for the transparency and integrity of financial systems. This is something that many centralized authorities don’t want as it robs them of their power to control people.
Bitcoin Prices are Yet to Reach Full Depth
A historical study of the price movements of the world’s first commercially viable cryptocurrency suggests that Bitcoin prices are yet to reach their full depth. This can be attributed to a number of factors. Firstly, Bitcoin prices are driven by very basic forces at the moment. Many people see Bitcoin as a safe haven. This is one factor that drives up the cryptocurrency at the moment. Most times, whenever the stock markets are down, Bitcoin prices surge and vice-versa. This presents a quandary for many investors that have put their stakes in the Bitcoin market.
Low Bitcoin adoption rates are the main reason why Bitcoin prices are yet to reach full depth. For Bitcoin prices to reach their depth and to new all-time-highs, there has to be more inclusion between the crypto space and traditional financial markets.
Stock Markets Have Been Sensitive to Recent Geopolitical Issues
Recent stock market movements have responded to global geopolitical issues that range from the recent Brexit issues between the European Union and the United Kingdom and the United States-China trade wars.
At any hint of instability, stock markets have been known to dip but at the reverse, they go up as well. In between, Bitcoin prices haven’t been as predictable. This is because the markets are maturing. Bitcoin prices have varied reasons for movement considering the fact that the cryptocurrency markets are different from 2017 when they could have been measured easily y a fixed number of factors.
This has made Bitcoin prices to go in peculiar directions that other assets haven’t gone in. Bitcoin prices and other digital assets have remained the fastest-growing asset class this year and yet they have also remained the most volatile as well.
Digital Decentralized Assets have Highest performing Assets in the Past Decade
A study of the price histories of decentralized digital assets indicates that they have been the highest performing asset class in the past decade. Bitcoin alone has had a return of just over 12 million percent to current prices today (less than $0.05 to over $7,000). This has made many pundits within the financial space to believe that Bitcoin ad other decentralized assets may indeed be the big asset class of the next decade.
Before that happens, though there must be a greater understanding of what decentralized ledger technologies are first. New forms of DLTs must also be introduced and the concept of decentralized applications must also take precedence as opposed to legacy systems that everyone is familiar with.
Decentralized Ledger Technologies (DLTs) are fast gaining ground within real-world use-case scenarios and this will further drive Bitcoin prices as the first of the cryptocurrencies.
In answer to the question if Bitcoin prices will follow the US and global stock market bull run the answer is that Bitcoin prices will outperform traditional markets by a long mile as the recent history has shown that Bitcoin prices are in the next phase of movement after coming out of crypto winter.
What do you think? Will Bitcoin prices follow the stock market bull run?
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