Macro strategist Lyn Alden believes that its only a matter of time before the volatility of Bitcoin (BTC) falls thereby enabling it to be a practical medium of exchange.
Alden says in a What Bitcoin Did podcast that currently, however, the flagship crypto asset fails as an ideal medium of exchange.”
In the really early phases, unless you specifically need censorship resistance or unless you’re in an unbanked environment, for a lot of people in developed countries Bitcoin is not the ideal medium of exchange. Unless they are de-platformed or they just really want to use it right um they’re they are super into it.”
According to the macro strategist, Bitcoins volatility will decline as the adoption level rises.
If you go through five more of these cycles, and we’re 20 years in the future, and Bitcoin is more steady state, and it’s held by 30% of the world population, whatever number it is, you’d expect it to be a lot less volatile in that environment than it is now.
Besides the low adoption rate, the macro strategist says that the speculation and leverage in the crypto market contribute to Bitcoins high volatility levels.
“[Bitcoin is right now] held by actually a pretty small percentage population, there’s hidden pockets of leverage in the system, like we’ve seen with some of these lenders. For example, it’s often used as collateral to make bets on altcoins and things like that. And so there are multiple things that can add or decrease volatility.
So when it goes up in price a lot, a lot of new people discover it for the first time. Or at this point, they’ve heard of it but they might not have really looked into it and they start to look into it again.
So there’s new buyers flooding in that add upward volatility and then when you get that leverage and that speculation, you get sharp downward volatility.
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/SergZSV.ZP/Fer Gregory