- Fidelity Digital’s Head of Research believes Bitcoin has huge upside potential as a store of value.
- Meanwhile, BTC prices fell below the $43,000 price level.
In the report, titled ‘Bitcoin First,’ Kuiper opines that no other cryptocurrency can best Bitcoin as a store of value, either now or in the future. The report addresses two major concerns that Fidelity’s investors felt when exploring Bitcoin as an investment option.
The first concern for investors is if Bitcoin is susceptible to “innovative destruction“- think AltaVista and Google. Another concern is if Bitcoin has enough upside potential as a store of value compared to other coins.
According to Kuiper, Bitcoin is a monetary good that acts as a digital store of value. Fidelity’s Research Head also noted that Bitcoin has the potential to become the primary monetary good, thanks to its decentralization, censorship resistance, and scarcity.
Don’t Reinvent The Wheel
Kuiper also highlighted the impact of the Monetary network effect on Bitcoin. In detail, the network effect states the value of a network increases exponentially as the number of users grows.
People joining a monetary network incentivize others to join, either due to FOMO or because users want to share the same network that their peers or businesses are using. As more users park their wealth in Bitcoin and demand increases, the price per coin grows in tandem.
Higher price leads to higher profit margins, meaning miners can increase their computing power, which helps enhance network security. Moreover, Kuiper goes on to state that developing another Bitcoin-esque monetary good would be akin to “reinventing the wheel.”
Regardless of future developments, Kuiper believes Bitcoin will likely come out on top. Even in a multichain ecosystem, where multiple blockchains coexist, BTC’s advantage as a store of value asset essentially makes it ‘future-proof.’
Moreover, developers would likely choose the strongest, most secure networks as a Layer 1 blockchain to build applications. A scenario in which a few, or even one, blockchain accumulates most of the crypto market value is plausible.
In such a case, Kuiper says Bitcoin is most likely to be the pick of the lot.
Given that Bitcoin is arguably the most decentralized and immutable blockchain in existence, it appears as a prime candidate to be one of, or perhaps even the sole winner if this situation [blockchains competing for superiority] were to play out.Excerpt from the Bitcoin First Report.
Bitcoin Price Charts
Bitcoin prices briefly broke above the $45,000 price level in the week beginning Feb 7. However, profit taking by bears resulted in a very short-lived uptrend. The prime crypto then saw a downside movement that resulted in BTC losing 8.8% between Feb 10’s high ($45,829) to Feb 12’s low ($41,779).
Bitcoin was paring prices going into the weekend, but Sunday saw some late action by the bulls, who struggle to maintain BTC price above the $42,000 price level. Immediate support for the token comes from its 26-day Exponential Moving Average (white wave) near the $41,500 price level.
However, if Bitcoin follows the stock market crash, it could result in BTC breaching below immediate support to test the $40,344 price level. In addition, several traders seem to think that the $41,000 support might not hold.
Also Read: Bitcoin (BTC) price drops as US Inflation jumps 7.5%, a 40-year high: Rebounds quickly as Bulls step in.
Another key support level would be near the $38,000 price level, from where BTC registered a massive 11.4% intraday jump on Feb 4. Conversely, if bulls successfully defend the $42,000 support, BTC could move to challenge immediate resistance near $43,260.
Once buyers move in, Bitcoin would then target resistance near $45,000. Reclaiming $45,000 would help fuel BTC’s upward rally.
Meanwhile, trend-based momentum oscillator MACD shows weakening bullish momentum for BTC. Bars on the MACD histogram, which records the difference between the MACD line (difference between 12-day and 26-day EMA) and its signal line (9-day EMA of MACD), are contracting.
In detail, contracting bars indicate the MACD line is moving downwards, hinting at weakening price action for BTC. Moreover, Bitcoin’s 100-day MA (yellow wave) and 200-day MA (red wave) lines formed a death cross on Feb 9, adding to the bearish sentiment around BTC’s price action.
At the time of writing, BTC was trading at $42,387, up 0.31% on the day.