Poet James Thompson of Scotland wrote in 1728, “Come, gentle Spring! Ethereal mildness, come.” One could use the kilt-friendly, Scottish writer’s words to describe the recent price action in bitcoin as well. There has been some pep in bitcoin’s step as of late, although the year did not start out that way.
A challenge of $4,000 in early January had given way to lows by the end of that month, and it felt as though the crypto winter murmurs were growing louder by the day. Many believed the cryptocurrency sector was trapped in a long-running bear market, as adoption was potentially stalling and banks put closely watched plans to wade into bitcoin on hold.
Cboe™ Bitcoin (USD) (XBT) futures began February at $3,395 in the midst of a six-month losing streak and deep in a 13-month bear market, i.e., crypto winter. However, beneath the surface of the ice-covered cryptocurrency waters, there was plenty of positive news trying to melt the frost and evoke Mr. Thompson’s words by welcoming a “crypto spring”’ filled with potential upward momentum.
At first, it seemed February was not going to cooperate, but breakouts on February 8 and over the President’s Day weekend eventually led to the first positive month for XBT futures since July 2018, as they increased 12% during the shortest month of the year. Bitcoin’s profile was buoyed by the comments of two large figures in the tech world during this time frame: Twitter CEO Jack Dorsey and Tesla’s Elon Musk. Both made public comments about how bitcoin and other cryptocurrencies will affect the future of money.
Dorsey, who is also the CEO of payments processor Square, has been smitten with bitcoin for some time and has also shown particular interest in its Lightning Network. On February 1, in an interview with podcaster Joe Roganhe said, “I believe the internet will have a native currency, and I don’t know if it’s bitcoin. I think it will be [bitcoin] given all the tests it has been through and the principles behind it, how it was created,” Dorsey told Rogan. Dorsey’s San Francisco-based Square has supported bitcoin since 2014, which is when the company began allowing merchants to accept bitcoin, and then added bitcoin trading to its popular Cash App in early 2018, allowing users to send bitcoin to one another.
Musk made his comments during an interview on advisory services firm ARK Invest’s podcast on February 19. He called bitcoin’s structure “quite brilliant” and added, “It bypasses currency controls … paper money is going away. And crypto is a far better way to transfer values than a piece of paper, that’s for sure.”
These tech titans are zeroing in on an essential issue of bitcoin and cryptocurrencies: the threat they pose to traditional payment systems such as Visa, MasterCard and PayPal. It is not unreasonable to suggest that soon people may potentially buy items such as coffee with bitcoin. It may sound ludicrous, but it could happen.
In countries like Venezuela, there is already evidence of bitcoin and other cryptocurrencies being used where traditional payment networks have failed. Confidence is slowly being restored after the epic 2018 downward spiral, which led to the loss of some $400 billion in value of cryptocurrencies. Currently, the total market capitalization of all cryptocurrencies is around $132 billion, with the largest coins listed in the chart below.
So what does the future hold? No one knows for certain, but if the current college student population is any indication, it’s possible we may see widespread acceptance of cryptocurrency. University campuses are the second-largest cryptocurrency miners across industry verticals, according to research by tech conglomerate Cisco published in PCMag on March 5.
Cisco’s research was carried out by security product Umbrella, which monitors clients’ network connections to screen for large usage and/or potential malicious activity. According to the report, university campuses are the second-biggest miners of digital currency across industry verticals at 22%, second only to the energy sector and utilities sector which clocks in at 34%.
A Cisco researcher reportedly explained the trend to PCMag, saying, “You can leave [the mining rig] running in your dorm room for four years, [and] you walk out of college with a big chunk of change. By running their mining rigs in dorm rooms or the school library, students can essentially avoid the high electricity costs associated with cryptocurrency mining and possibly increase profitability.”
Bitcoin is still a nascent market, and there are still many hurdles to climb. February was a positive month, and One to Grow On, deriving from the custom of putting an extra candle on a birthday cake. Each month brings more potential, with the holy grail of institutional investment still within arm’s length and potentially right around the corner.