The Bitcoin Mining Opportunity
Growing Crypto Adoption
Ever since the publication of Bitcoin's Whitepaper by Satoshi Nakamoto in 2009, Bitcoin's adoption has grown at a spectacular pace. Over the last few years, Bitcoin has transformed from an internet curiosity into one of the most important financial assets of today. With every passing day, more and more people across the entire planet either use Bitcoin or simply hold it as part of their portfolio. The number of Bitcoin addresses has also continued to grow, even through phases of price depreciation. Up until 2020, it was mostly private individuals that were interested in Bitcoin and other cryptocurrencies, but during the last two years we have seen a large number of banks and other institutions entering the space.
Moreover, Crypto's adoption cycle has been remarkably fast, similar to that of other recent innovations such as the internet or the mobile phone. Experts estimate that in 2021 the global number of cryptocurrency users grew by 200%. However, adoption is far from complete, as it is estimated that only around 5% of the global population hold any cryptocurrency today. Meanwhile, the market capitalization of the entire Crypto market is estimated at around $1 trillion. This figure is still very low compared to that of other asset classes, even smaller than certain international companies. The small size of Crypto leaves a lot of room for it to grow and catch up to traditional asset classes.
The Crypto Market Cycle
Still, Crypto adoption is far from a linear process, as it seems to undergo successive phases of rapid expansion and contraction. Expert traders describe three different phases of the Crypto market cycle: Accumulation, Bull Market, and Bear Market. These phases have already repeated three times, restarting around the time of the Bitcoin halving events.
During late 2020 and 2021, Crypto prices experienced an explosion, with Bitcoin price surpassing $60,000 at one point. This was the bull market phase, and it brought great profits to early Crypto investors. Since November 2021, Crypto prices have gone through a very significant correction, constituting the bear market phase. Once the price correction finishes, and prices stabilize again, the accumulation phase will begin. This phase typically arrives after most short-term holders lose hope and abandon the market. It is characterized by low trading volume and volatility. This is a good description of what we are observing at the moment in the Crypto markets.
The accumulation phase is the one that provides the best investment opportunities, as most buyers have fled the markets and prices are at their cheapest. This is the time when experienced investors take positions in projects with good fundamentals, so that they can profit during the following bull market phase.
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