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2 Precious Charts Say ‘Buy’ This Cryptocurrency!


Cyclically, we find ourselves in the middle of a cryptocurrency winter again. And as in previous crypto winters, critics and opponents argue that Bitcoin (BTC) is dead, can’t rise again, is a zero-pozier chain, and will never recover. But meanwhile, analyst RJ Fulton shares two charts that led him to continue buying Bitcoin and buying the biggest cryptocurrency. Here are the details…

The finite supply argument in Bitcoin, the most valuable thing

All the negative news in Bitcoin has been happening since it was created in 2009, but all it has done since then is to go on a historic run and become the most underperforming asset in history. Bitcoin forces us to think about what money really is and how it should work. Bitcoin has been touted by some as a near-wonderful form of currency. Despite its volatility, which is seen as a feature of new assets that will eventually decline, there is reason to believe that Bitcoin will once again rise from the ashes and reward investors who are patient and long-held, according to the analyst.

One of the key features of Bitcoin as solid money is its inherent scarcity. There is an ingrained limit in its code: There will be a maximum of 21 million Bitcoins in circulation. The only way this can be changed is if 51 percent of the nodes running the Bitcoin network agree. “I don’t think that will ever happen. This is one of the most valuable elements that make Bitcoin Bitcoin,” he says. This finite supply argument has helped drive the price of Bitcoin over the past 14 years.

Since 2009, demand for Bitcoin has only increased and will likely continue as it remains resilient, has proven to be a viable store of price, and as people around the world seek more robust forms of currency. To better illustrate the dynamics behind Bitcoin’s supply and demand, the analyst shares the charts below.


Chart 1: Increasing demand for cryptocurrency

There are a handful of metrics that can be used to show the growth in demand for Bitcoin. You can see graphs for the number of active addresses (wallets that send or receive cryptocurrency over a period of time), transaction volume, or activity on the Bitcoin Blockchain. However, the analyst says, “While he believes that Bitcoin may eventually become a viable currency for day-to-day transactions, multiple investors who support it today are interested in it as a store of value.” Therefore, to capture the growing demand as a store of assets, a graph of all Bitcoin addresses currently holding at least 0.01 Bitcoins is shown below. The metric in question is currently sitting at an all-time high.

You will notice that the graph is displayed on a logarithmic scale. If drawn on a linear scale, the line would always show an upward trend from left to right. Unlike linear charts, which you may be more used to viewing, logarithmic charts are more suitable when you want to display wide ranges of assets or describe the growth rate of something. According to the chart, the number of addresses holding at least 0.01 Bitcoin increased in the earliest period of the token’s history, but has continued to rise since then, even in the midst of the current cryptocurrency winter. This metric, which stands at more than 11 million today, has increased 70 percent over the past five years and has risen 3,000 percent since 2013.

Chart 2: Outstanding supply

The chart below shared by the analyst shows Bitcoin’s declining supply-side growth. With just 21 million Bitcoins to be created, it could be enough to satisfy the appetite for increased demand – especially considering that around 91 percent of all Bitcoins have actually been mined. Again, this graph is plotted on a logarithmic scale because it is more accurate in showing the rate of change. More than being inflationary, Bitcoin is considered a deflationary asset – an outstanding quality for a priceless store to have. Deflationary assets increase the purchasing power of the individual over time rather than decrease it. This is the exact opposite of almost any currency issued by the state.

There are about 19.25 million Bitcoins in circulation today, and by the year 2140, when the last Bitcoin is mined, only 1.75 million more Bitcoins will enter the supply. Given the near-zero coin inflation, Bitcoin could benefit from increased demand and finite supply in the future. Thanks to increased demand, Bitcoin’s price has skyrocketed over the past decade and may rise again as it becomes more scarce. At least, the analyst states that he is currently a Bitcoin buyer because of this belief.

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