- Innovations like Lightning and RSK are catalysts for Bitcoin, the company said.
- The analysis says that apathy is a good sign for buying the digital currency.
The Tulip Crisis and the Bitcoin (BTC) boom are two events that are often compared. To mark the occasion, a study by financial analytics firm Stony Chambers uses the excitement generated by these plants in the 17th century to argue for its digital currency investment thesis.
Before we delve deeper into the company’s statements, it is important to remember that tulip fever originated in the Netherlands. These investments made their way onto the stock exchange and the first futures markets emerged. However, this was diluted, leading to the companies going bankrupt The economy went bankrupt.
At times it was claimed that Bitcoin was the tulip of today, i.e. a financial product that is offered at an exorbitantly high price and a “bubble” that will burst at the end. But as Stony Chambers describes, “tulip or bubble plants neither have a 14-year lifespan, nor do they continue to exceed their predetermined historical maximum, nor are they plants with clear use cases.”
If Bitcoin is tulips, “then they are very special tulips simply because of their age.” That’s why the company says it “obsessively buys 14-year-old tulips.”
The company bases its Bitcoin purchase on taking advantage of “market sentiment” and the use cases that Bitcoin has “unlocked,” rather than supply and demand price trends.
Market apathy is a call to buy BTC
When it comes to “sentiment,” Stony Chambers refers to how “negative and apathetic” the Bitcoin market appears in the current scenario.
One example uncovered in the study is still BTC is 60% below its all-time high achieved in November 2021.
“BTC trading volume is at its lowest level in five years, indicating an apathetic market.” If this situation reverses, “the actual direction of the market should be clearer,” the company says.
Other companies like Glassnode have noted a decline in volatility, reaching historic lows in August, as CriptoNoticias reported.
Another aspect that reflects market sentiment is that BTC has struggled to break through the $30,000 resistance over the past five months, the company points out.
This frame of apathy is seen as a signal to begin “accumulating Bitcoin” under the Dollar Cost Averaging (DCA) method, as the currency’s hedging lies in its fundamental intrinsic value and leading to “new use cases throughout Bitcoin.” led to a bear market.”
According to the study, people use Bitcoin for payments, BTC fundamentals will become stronger.
Innovations in Bitcoin are a bullish catalyst
The analysis also assumes that the Bitcoin innovation is a bullish catalyst for the digital currency, although this optimization is not “strictly standardized” as the simplicity of the network leaves plenty of room for “various innovation methods”.
According to Stony Chambers, an example of innovation is the Lightning Network. According to Criptopedia, the educational division of CriptoNoticias, it is a decentralized network for instant micropayments and high transaction volumes that eliminates the risk of delegating money custody to trusted third parties.
In addition, the RSK sidechain as well as the Fedimint, Ark and ZeroSync protocols are added to the list. According to the company, these have unique approaches to Bitcoin scaling and are focused solely on expanding the use case of the BTC token,” the study highlights.
“These types of technologies will increase Bitcoin adoption and are invisible to the casual observer or junior analyst looking for on-chain activity,” he adds.
More bullish catalysts for Bitcoin This must be considered According to Stony Chambers, it is the next halving, an event that will take place between April and May 2024, and the possible launch of a spot Bitcoin ETF in the United States. All of this represents a scenario of “accumulating BTC”.
“Now is a good time to accumulate BTC. “There are many upcoming bullish catalysts for the digital currency that will reward investors over the next year,” the study highlights.
Lack of education puts Bitcoin at risk
One of the risks Bitcoin faces is “public relations,” says Stony Chambers. This is because the Bitcoin community “needs to educate more people” as it is the only path to adoption.
“If Bitcoin cannot garner enough public support, governments could gain some control over it and reassert their monetary monopoly.”
Report by Stony Chambers, Financial Market Analysis Service.
According to the analysis house, there is uncertainty for the coming times about what the public perception of Bitcoin will be and this is where the regulatory field intervenes. “At least in the United States, they seem to be becoming more and more friendly towards Bitcoin and cryptocurrencies,” as the regulator pointed out that BTC is certainly not a security.
“Those who believe that governments will take action to ban it without considering people’s preferences implicitly deny the power of the rule of law and constitutional freedoms.” They also risk denying the power of the free market, which is a very dangerous bet,” he concludes.