The +50% jump in Bitcoin's price translates to a $600 billion USD increase in its market cap. I'm sure the next administration will have friendly policies, but $600 billion is too optimistic in my view. It assumes mainstream buying of something most people ignore.
Market cap is a useless/pointless metric. It is just an arbitrary number that has nothing to do with price discovery or price justification. Especially considering that there is a large percentage of bitcoin that is lost and will never be in circulation ever along with the large amount of bitcoin that hasn't moved in years. Market cap is just the price of bitcoin multiplied by an arbitrary supply number. Does an increase in the price of bitcoin require an influx of new money coming into bitcoin? Yes, but arguing that a +50% price for bitcoin would somehow require justification for an additional $600 billion in market cap ignores how price discovery is actually determined within the markets. The actual amount of bitcoin brought to market where price discovery takes place is far far smaller than the total circulating supply. It doesn't take much money to move the price of bitcoin large percentage because of the restricted supply of bitcoin brought to market, which is why it has historically been so volatile.
I continue to have zero interest in owning bitcoin, but the folks who bet on it have certainly (assuming they sell at some appropriate time) won big time.
It will be interesting to see how (and whether) the Trump administration drives the price up. The whole goal seems to be to get more people onboard (in terms of owning Bitcoin, nobody uses it for anything still) and there are probably still more suckers to rope in.
-W
At some point the narrative of "nobody uses it for anything still" has to go away. Is there a large percentage of traded bitcoin that is mostly for speculative purposes? Absolutely. That is true for just about every asset or commodity in the world. People just love betting, let's face it. Gold, which has its uses as jewelry and electronics is still a largely speculative asset when you account for the size of both gold used for investment purposes along with the larger speculative derivatives market.
In fact, the entire productive economy is dwarfed by the larger derivatives market (which is estimated to be somewhere between 2-4 quadrillion! dollars), which is wildly speculative in nature. So arguing that because bitcoin is largely speculative in nature therefore means no one is using it for economic transactions is a false assumption to make.
I know first hand that there is growing use of bitcoin for purchases and other economic transactions taking place around the world. Furthermore, someone who is saving money in bitcoin for the purposes of protecting their wealth from debasement of any given local fiat currency is in fact using bitcoin. That is absolutely a legitimate use case that I wouldn't consider speculative for those faced with that unfortunately reality. And let's face it, about half of the world has experienced double digit inflation over the last few years. So it isn't like that isn't a real or growing concern.
I think even the Lightning Network isn't solving their problems.
"A poll by the Centro de Estudios Ciudadanos at Francisco Gavidia University in November 2021, found that 91% of Salvadorans preferred to use the US dollar over Bitcoin.[41] In January 2022, Fortune reported that the switch to bitcoin had made paying remittances more difficult for many Salvadorans, rather than easier as had been promised, because the fees associated with the bitcoin transactions were several times as expensive as traditional remittances"
https://en.wikipedia.org/wiki/Bitcoin_in_El_Salvador
No doubt El Salvador botched their introduction to bitcoin for their citizens. But that is largely due to the fact that the wallet app that they made was and is a rushed and poorly developed mess. This is a custodial app that largely operates off servers in a datacenter which is where most of its problems lie. Just take a look at the reviews of the app in the PlayStore:
https://play.google.com/store/apps/details?id=com.chivo.wallet&hl=es_SVThis has little to do with the functionality of bitcoin or the lightning network and more to do with a shoddy developed application infrastructure that they used for their citizens. A vast majority of the problems experience have little to do with the lightning network. In contrast, take a look at the reviews for actual open-source lightning wallets and you'll see a stark difference is quality, functionality, and user experience (Bluewallet, Electrum, Zeus, Alby, Muun, Speed, WoS, Breez, etc).
As LateStarter said, you could easily flip the narrative to read that, even with a poorly developed app rife with technical issues, there were still 10% of the entire population that
preferred to use bitcoin.
Regardless of opinions on bitcoin, I think the El Salvador experiment is pretty darn fascinating considering there really hasn't been anything like it before. It offers quite a bit of insight into what pitfalls and benefits there are to rolling out a new digital currency in an emerging market. No doubt there are many other similarly sized countries taking note to see how it plays out. User experience not withstanding, you can be sure that if El Salvador continues to succeed with its bitcoin reserves, there will be others that join along as well. The fact that an emerging country as small as El Salvador has been able to ditch external debt while also issuing their own bonds is pretty incredible. Their 10-20 year bonds are some of the highest performing bonds in emerging market debt.
At the end of the day, at some point people have to admit that bitcoin isn't going away and has legitimate use cases in our financial world. The market has clearly decided that regardless of what naysayers insist. This thread is going to continue to age and the calls of bitcoin's death throughout will die off far earlier than bitcoin. Every now and then I pop back in to read and gain slight amusement from the increasingly strained critiques.
