The bitcoin market has evolved dramatically since its launch in 2009.
What was once an intimately small group of tech enthusiasts has grown into a global community of investors. Some 40 million crypto wallet addresses now reportedly hold bitcoin in varying amounts; a percentage of which belong to major institutional investors that were once too wary to dip their feet in the industry.
For example, BlackRock — the world’s largest asset manager — is now a holder of bitcoin. However, back in 2017, the firm’s CEO Larry Fink labeled the leading cryptocurrency as an “index of money laundering.”
U.S investment bank JPMorgan Chase also famously changed its tune on bitcoin. Four years after CEO Jamie Dimon called bitcoin a “fraud,” the firm now offers its wealth management clients access to several regulated bitcoin products.
This increase in adoption has certainly contributed to bitcoin’s rising prices over the years and is one of the main reasons why so many people feel like they’ve already missed the boat when it comes to investing in it.
But fear not. There are several reasons to suggest that bitcoin remains in its earliest stages of development.
Bitcoin is still relatively new
While it may seem like everyone but you has invested in bitcoin, there are far fewer investors in the industry than you might think.
In the United States, a survey conducted in 2022 by the Pew Research Center found that only 16% of American adults have engaged in buying and trading cryptocurrencies like bitcoin. According to the findings, the figure remained effectively the same between 2021 and 2022, showing adoption had likely stalled.
In another study, Triple A, a blockchain-based company out of Singapore, estimated that, on average, crypto ownership globally was only around 4.2%. This includes all cryptocurrencies, not exclusively bitcoin.
Taking these estimated figures into consideration, it shows that the bitcoin market is still in an early phase of growth as only a relatively small percentage of people worldwide are actually invested in it.
With bitcoin prices currently in the tens of thousands, it’s understandable why some think the market’s already experienced a peak and there’s little opportunity left to grow wealth.
While it’s impossible to predict any asset’s future market movements, there are certain events pre-programmed e within bitcoin’s protocol that have historically correlated with a rise in prices.
Known as bitcoin halvings or halvenings, these events are automatically triggered approximately every four years, or after 210,000 new blocks have been added to the bitcoin blockchain since the previous halving.
During these events, the amount of newly minted bitcoin given to successful miners — known as a block reward — is cut in half. Over time, the block reward is halved and halved again, until eventually the number of bitcoin that enters into circulation hits the protocol’s predetermined maximum supply of 21 million.
Once this supply cap is reached, no more new bitcoin will enter into circulation. Halvings have the effect of systematically reducing the amount of new bitcoin entering the market.
So far, three halvings have taken place since the launch of bitcoin protocol: one in 2012, another in 2016 and the last in 2020. These have all had a positive impact on bitcoin’s price, which have been typically experienced one full year after the event has passed.
It’s estimated that the last remaining bitcoin block reward will be earned in the year 2,140. This means that between now and 2,140 there will be at least twenty nine more halving events — each with equal potential to push prices higher. Certainly this is something for prospective bitcoin buyers to think about.
Regulations and security
For those new to the industry, there is a far greater range of regulated and secure platforms for buying bitcoin than there were in even recent years past.
Buying bitcoin used to be a precarious affair for investors. Many centralized exchanges operated without licenses and could not be held accountable in the event of losses. In some cases, founders even disappeared with users’ funds.
Now, exchanges like Kraken represent the modern era of crypto platforms which are highly secure, reliable and regulated. Users benefit from consumer protections, frictionless bitcoin investing and the ability to purchase crypto using a range of supported payment options.
For institutions, the approval of regulated bitcoin products like Exchange-Traded Funds (ETFs) allows access to the industry without having to hold bitcoin itself. And for those that do, there are now highly secure third-party custody providers capable of protecting their crypto funds.
In summary, while it can often feel like it’s too late to invest, there’s actually never been a better time to invest in the bitcoin market. Overall adoption is still relatively low in comparison to other well-established assets, the technology itself is still developing and the market is only now becoming more mature.