During the downturn in March 2020, Bitcoin (BTC) fell by more than 50% over a two-day period. Traditional financial markets also declined significantly in March. Although Bitcoin has made a striking recovery, which will crush the price prices of all time, you may be wondering what, if any, could cause a similar future decline for Crypto’s biggest asset. Dermot O’Riordan, a partner at venture capital firm Eden Block, recently gave his thoughts on the matter.
“In the short term, the value of Bitcoin as a non-sovereign censorship hedge against the dollar is getting stronger by the day,” O’Riordan told Cointelegraph. “If I say that, the volatility of Bitcoin will not go away any time soon, and I expect to see a lot of volatility from those who take the money off the table for years to come,” he said, adding:
“However, something that is often overlooked is that each new price milestone unlocks a new larger class of institutional investor with the mandate to buy the asset, which will dampen the pressure on sales.”
Bitcoin has conquered a number of mainstream financial giants, including MicroStrategy, MassMutual, Paul Tudor Jones and others. Such players sank significant cash in the digital store of value in 2020, while the buying trend rose in the latter part of the year.
Although the price of BTC continues to rise and recently exceeded $ 40,000, the asset still has its liabilities. O’Riordan noted that Bitcoin’s top two are long-term risks. The first: ‘How the rough consensus management mechanism handles questions surrounding the protocol’s security budget if fees do not rise sufficiently to supplement the issue of Bitcoin,’ he explained. The second he described as “the risk of the institutionalization of Bitcoin impeding the confidential base layer.”
Bitcoin has overcome significant adversity over the past twelve years, but is finally recovering and leading to greater adoption.