While institutional investors continue to buy bitcoin in the millions of dollars, retail investors seem to have created an “opinion dichotomy” as far as the industry is concerned. Some believe Bitcoin is here to stay and buy Bitcoin steadily in order to participate in the revolution.
Others, especially investors who have seen lots of investing success in traditional financial markets are in disbelief. How can a digital currency possibly be so valuable? It is erratic, to say the least. They continue bashing crypto investors without understanding the real reasons behind this massive wealth shift.
This is exactly why we wrote this article. In the next few chapters, we analyze the reasons behind this dichotomy. Through a series of points that we believe are worth mentioning, we help you understand what you can do to bridge the gap between the two parties. Ready to delve in? Let’s get started.
Table of Contents
The primary motivation of entering the markets
Unlike the previous bull markets that Bitcoin experienced, the market is now way more “mixed”. Investors are no longer only motivated by quick profits.
The economic uncertainty we experienced over the past few months, paired with the lockdowns, has motivated many high-net-worth individuals to place part of their portfolios in Bitcoin to protect their wealth from potential hyperinflation.
Aside from that, we have also investors who are more visionaries than profit-driven. These are the buyers who have what Twitter users refer to as “diamond hands”. They do not necessarily need to sell their coins for profit, and neither are they focused on short-term economic instabilities. Instead, they are working in the crypto industry and are trying to build a better financial system for the future.
Level of technological understanding
The diverse perspectives on the crypto markets are also very much affected by the level of technological expertise that investors have. Those that are not able to understand the drawbacks of our traditional financial systems and the technologies that empower them will most likely stick to the narrative of a “dangerous gamble” instead of a fundamentally strong opportunity.
Those that have a better understanding of blockchain technology are those who have a more positive outlook on Bitcoin’s future. The alternative form of money that has been introduced to the economy has already exposed the flaws of the US economy and is only gaining more traction as time goes on. When you manage to understand Satoshi Nakamoto’s whitepaper and the problems Bitcoin is trying to solve, you will most likely start to embrace the purpose and price of Bitcoin.
Comparing crypto with traditional investment markets
Experienced, or better yet, traditional, investors that come from other financial markets tend to compare their volatility with that observed in cryptocurrency. These people often fail to understand that Bitcoin is completely unlinked with other financial markets. The strongest proof of this statement can be seen in the recovery of Bitcoin and other cryptocurrencies compared to the stock market (or precious metal market) shortly after the Black Swan market crash of March 2020. While all traditional markets sluggishly continued their stagnation path, Bitcoin recovered swiftly. It was only after the governmental intervention that the stock markets managed to gain traction once again, heading back to their prior levels.
Those who understand that Bitcoin is an asymmetric risk-reward opportunity also understand that it should not be treated the same way as traditional investments. Therefore, these are the people who do not panic when sudden price movements change the public narrative.
The future is vague but the direction is clear
It is important to accept all different viewpoints towards cryptocurrency and use the negative ones as fuel to try and educate people. Most people are not aware of the way our financial system works; the dangers of inflation; the reason behind negative interest rates. These are the exact people that will usually adopt a negative attitude towards the survival of crypto in the long term.
That said, for those that have spent a little more time in the industry, the conviction as far as the general direction of crypto is very strong. We are headed into a fully digital future where bits are more valuable than atoms. Bitcoin has started a revolution against centralization, and the public agrees with its peaceful statement. Those that passionately refuse to believe this, sticking to their outdated narratives will eventually come to realize that our world is full of possibilities, and it is those that the public embraces that will eventually survive.
Most people are not incentivized enough to believe in Bitcoin and feel like they missed the train. It is therefore our responsibility to take it upon us and guide them to a better future, with knowledge and understanding of the direction the economy is headed at.