Despite the legions of critics declaring that the crypto winter has arrived, there are more than enough reasons for bulls to remain optimistic.<\/h2>\n\n\n\n<\/p>\n![\"Patrick](\"https:\/\/miro.medium.com\/fit\/c\/96\/96\/1*CHmajIxeqU0MhGYZ4ViZAA.jpeg\")
<\/div>\n<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n![\"\"](\"https:\/\/miro.medium.com\/max\/1400\/1*owgLLbU-094BaLS_Kns76g.jpeg\")
<\/div>\n<\/div>Not just your average farm. (Photo by Peter Hammer<\/a> on Unsplash<\/a>)<\/figcaption><\/figure>\nAs<\/span> Kai Nguyen stepped out of the house his family had occupied for generations farming the northern plains of Vietnam, he remarked how it was unseasonably warm for this time of year.<\/p>\nWinters in Vietnam\u2019s fertile north were not known to be particularly harsh, but even this winter was exceptionally mild by the country\u2019s standards.<\/p>\n
And over the past several decades, Nguyen had noticed that the growing seasons seemed to be getting longer and the winters, milder.<\/p>\n
In some years, Nguyen could even get away with three harvests, instead of the two that was typical for that latitude.<\/p>\n
While climate change may be wreaking havoc for weather patterns globally, there have also been unexpected winners and Nguyen has been one of them.<\/p>\n
Everyone\u2019s a Winner (Sort of)<\/h2>\n
Not dissimilarly, years of negative real interest rates has proved a boon for all manner of risk assets, even as bondholders have seen the value of their investments eroded.<\/p>\n
But with the world\u2019s major central banks tightening monetary policy and either starting to raise interest rates or raising them already, risk assets have gotten off to a poor start in 2022.<\/p>\n
Highly-prized tech stocks have stumbled at the start of the year and cryptocurrencies have not been spared either.<\/p>\n
Bitcoin is now over 40% off its all-time-high at the time of writing and there has been no shortage of critics waiting to dance on a cryptocurrency grave or two.<\/p>\n
But how much lower can Bitcoin go?<\/p>\n
Much depends on the timeline that investors see themselves in.<\/p>\n
In 2017, the launch of cash-settled CME and Cboe Bitcoin futures saw the bellwether cryptocurrency surge to an at the time all-time-high of near US$20,000, swept up by expectations that institutional investors would rush to embrace the nascent asset class.<\/p>\n
But 2017 also dovetailed with the initial coin offering craze, with many projects either outright scams or the product of opportunistic individuals looking to sell the \u201cnext big thing\u201d and admittedly, the difference between the two was more imagined than real.<\/p>\n
These ICOs raised billions of dollars worth of cryptocurrencies, mainly Bitcoin and Ether, and since few of the individuals who raised these amounts were ever interested to do anything about the projects they raised them for, became net sellers of the very cryptocurrencies they soaked up from investors.<\/p>\n
Because there were only sellers and few (if any) buyers, cryptocurrencies inevitably crashed, sparking off the long \u201cCrypto Winter\u201d until the pandemic changed all that.<\/p>\n
But it\u2019s also worth recalling that 2017 was hardly the first major Bitcoin crash.<\/p>\n
In November 2013, Bitcoin rallied to a high of around US$1,150, before dropping by around 84% to US$180 just over a year later in mid-January of 2015.<\/p>\n
Four years later, Bitcoin, which peaked around US$19,000 in December 2017, bottomed out about a year later at US$3,200, a cumulative drop of around 83%, not far off from its previous capitulation in 2013.<\/p>\n
Were this historical pattern to repeat itself, Bitcoin should fall to a low of around US$11,500 this November, around 83% off its 2021 November peak.<\/p>\n
Yet despite economist Nouriel Roubini and other critics chomping at the bit to declare the demise of Bitcoin and its brethren, there are reasons to believe that this time really is different.<\/p>\n
Is this time different?<\/h2>\n
Cryptocurrencies today are a much larger asset class than they were in the 2010s.<\/p>\n
Whereas the entire cryptocurrency market was barely worth a billion at the start of that decade, Bitcoin alone pushed around US$1 trillion in market cap last year.<\/p>\n
The process of adoption by individuals and institutions continues apace, with even ride-hailing giant Uber conceding that at some point it may have to accept cryptocurrencies as a form of payment.<\/p>\n
Almost every other week, some of the world\u2019s biggest asset managers are creating new cryptocurrency products and finding ways to get more investors onboard.<\/p>\n
Last week Fidelity, one of the world\u2019s largest asset managers, launched a Bitcoin ETF product underpinned by actual Bitcoin and Singapore\u2019s largest bank DBS Bank, announced that it would be making cryptocurrencies available to retail investors by the end of this year.<\/p>\n
Some of Wall Street\u2019s biggest names have embraced cryptocurrencies, whether on their balance sheets or for their clients, while some of the world\u2019s biggest payment companies are working to process and accept them as payment methods.<\/p>\n
And while hedge funds formed the sharp tip of the spear when it came to trading and investing in cryptocurrencies, some of the financial universe\u2019s most conservative participants have also started lining up.<\/p>\n
Sovereign wealth funds, pension funds and massive endowments have all started sniffing around cryptocurrencies, with varying levels of commitment, from \u201cexploring\u201d to \u201cinvested.\u201d<\/p>\n
And given the relentless money printing by the world\u2019s major central banks in the period after the 2008 Financial Crisis, it\u2019s only a matter of time before a respectable central bank admits that it has some Bitcoin in its reserves, just in case.<\/p>\n
Digital Gold<\/strong><\/h2>\nDespite three being no shortage of competing narratives as to the nature of Bitcoin, it can be argued as serving the role of \u201cdigital gold.\u201d<\/p>\n
Indeed, a study of flows<\/a> has shown that when demand for gold has gone up, flows into listed Bitcoin products has fallen and vice versa.<\/p>\n
<\/div>\n<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n As<\/span> Kai Nguyen stepped out of the house his family had occupied for generations farming the northern plains of Vietnam, he remarked how it was unseasonably warm for this time of year.<\/p>\n Winters in Vietnam\u2019s fertile north were not known to be particularly harsh, but even this winter was exceptionally mild by the country\u2019s standards.<\/p>\n And over the past several decades, Nguyen had noticed that the growing seasons seemed to be getting longer and the winters, milder.<\/p>\n In some years, Nguyen could even get away with three harvests, instead of the two that was typical for that latitude.<\/p>\n While climate change may be wreaking havoc for weather patterns globally, there have also been unexpected winners and Nguyen has been one of them.<\/p>\n Not dissimilarly, years of negative real interest rates has proved a boon for all manner of risk assets, even as bondholders have seen the value of their investments eroded.<\/p>\n But with the world\u2019s major central banks tightening monetary policy and either starting to raise interest rates or raising them already, risk assets have gotten off to a poor start in 2022.<\/p>\n Highly-prized tech stocks have stumbled at the start of the year and cryptocurrencies have not been spared either.<\/p>\n Bitcoin is now over 40% off its all-time-high at the time of writing and there has been no shortage of critics waiting to dance on a cryptocurrency grave or two.<\/p>\n But how much lower can Bitcoin go?<\/p>\n Much depends on the timeline that investors see themselves in.<\/p>\n In 2017, the launch of cash-settled CME and Cboe Bitcoin futures saw the bellwether cryptocurrency surge to an at the time all-time-high of near US$20,000, swept up by expectations that institutional investors would rush to embrace the nascent asset class.<\/p>\n But 2017 also dovetailed with the initial coin offering craze, with many projects either outright scams or the product of opportunistic individuals looking to sell the \u201cnext big thing\u201d and admittedly, the difference between the two was more imagined than real.<\/p>\n These ICOs raised billions of dollars worth of cryptocurrencies, mainly Bitcoin and Ether, and since few of the individuals who raised these amounts were ever interested to do anything about the projects they raised them for, became net sellers of the very cryptocurrencies they soaked up from investors.<\/p>\n Because there were only sellers and few (if any) buyers, cryptocurrencies inevitably crashed, sparking off the long \u201cCrypto Winter\u201d until the pandemic changed all that.<\/p>\n But it\u2019s also worth recalling that 2017 was hardly the first major Bitcoin crash.<\/p>\n In November 2013, Bitcoin rallied to a high of around US$1,150, before dropping by around 84% to US$180 just over a year later in mid-January of 2015.<\/p>\n Four years later, Bitcoin, which peaked around US$19,000 in December 2017, bottomed out about a year later at US$3,200, a cumulative drop of around 83%, not far off from its previous capitulation in 2013.<\/p>\n Were this historical pattern to repeat itself, Bitcoin should fall to a low of around US$11,500 this November, around 83% off its 2021 November peak.<\/p>\n Yet despite economist Nouriel Roubini and other critics chomping at the bit to declare the demise of Bitcoin and its brethren, there are reasons to believe that this time really is different.<\/p>\n Cryptocurrencies today are a much larger asset class than they were in the 2010s.<\/p>\n Whereas the entire cryptocurrency market was barely worth a billion at the start of that decade, Bitcoin alone pushed around US$1 trillion in market cap last year.<\/p>\n The process of adoption by individuals and institutions continues apace, with even ride-hailing giant Uber conceding that at some point it may have to accept cryptocurrencies as a form of payment.<\/p>\n Almost every other week, some of the world\u2019s biggest asset managers are creating new cryptocurrency products and finding ways to get more investors onboard.<\/p>\n Last week Fidelity, one of the world\u2019s largest asset managers, launched a Bitcoin ETF product underpinned by actual Bitcoin and Singapore\u2019s largest bank DBS Bank, announced that it would be making cryptocurrencies available to retail investors by the end of this year.<\/p>\n Some of Wall Street\u2019s biggest names have embraced cryptocurrencies, whether on their balance sheets or for their clients, while some of the world\u2019s biggest payment companies are working to process and accept them as payment methods.<\/p>\n And while hedge funds formed the sharp tip of the spear when it came to trading and investing in cryptocurrencies, some of the financial universe\u2019s most conservative participants have also started lining up.<\/p>\n Sovereign wealth funds, pension funds and massive endowments have all started sniffing around cryptocurrencies, with varying levels of commitment, from \u201cexploring\u201d to \u201cinvested.\u201d<\/p>\n And given the relentless money printing by the world\u2019s major central banks in the period after the 2008 Financial Crisis, it\u2019s only a matter of time before a respectable central bank admits that it has some Bitcoin in its reserves, just in case.<\/p>\n Despite three being no shortage of competing narratives as to the nature of Bitcoin, it can be argued as serving the role of \u201cdigital gold.\u201d<\/p>\n Indeed, a study of flows<\/a> has shown that when demand for gold has gone up, flows into listed Bitcoin products has fallen and vice versa.<\/p>\n<\/div>\n<\/div>Everyone\u2019s a Winner (Sort of)<\/h2>\n
Is this time different?<\/h2>\n
Digital Gold<\/strong><\/h2>\n