will cryptocurrency reach one million?

Bitcoin is in crisis and the most loyal to the digital currency are selling their stock. An expert doubts that Bitcoin will ever reach a million dollars.

Leon Bensch / t-online

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American monetary policy is pushing investors to turn away from cryptocurrencies. The price of bitcoin has fallen since March from around 73,000 US dollars to around 66,000 dollars (around 58,000 Swiss francs). According to experts, investors would tend to avoid risky investments as long as the central bank, the Fed, does not signal a further reduction in interest rates.

But that doesn’t seem to be the only reason why demand for cryptocurrencies is suffering massively. Despite Bitcoin Halving, which reduces the quantity of tradable bitcoins, and the introduction of a Bitcoin Spot ETF, the price of the most famous digital currency is in free fall.

Analyst Willy Woo raises an important question about the X platform, which could destroy all fantasies about the price of Bitcoin.

Will bitcoin ever reach the million dollars?

Born in Hong Kong and originally from New Zealand, Willy Woo is an on-chain cryptocurrency analyst. He is followed by more than a million people on Bitcoin one day hits the magic million US dollar mark.

You should know that Jack Dorsey, founder and former CEO of Ark Invest is also firmly convinced that bitcoin will cross the million dollar mark by the end of the decade.

Who are the hodlers?

The word “hodl” is a meme that originated from a typo of the word “hold.” It refers to the attitude of investors who hold a cryptocurrency like bitcoin for a long time. Bitcoin buyers who “hodle” are accordingly called “hodlers”.

The same.Image: GameKyuubi

The meme originated in a post from user “GameKyyubi.” On December 18, 2013, he wrote on the forum of BitcoinTalk.org a message titled “I AM HODLING”. He described the fact that his girlfriend was at a bar and that the price of Bitcoin had collapsed. Despite all the advice to sell, he decided to do the opposite and hold on to his bitcoins. He justified his decision by the fact that he was a bad trader. He excused his typo by explaining that he was drunk.

Long-term hodling has become a strategy used by people who, due to lack of knowledge or skills, do not engage in short-term trading.

Pressure sales increase

Long-term bitcoin holders hold on to their bitcoin holdings for long periods of time, even when prices are rising or falling sharply. Their sales activities are rare, but when they do sell, they follow a recognizable pattern, according to the site investing.comwhich refers to the measurement Coin Days Destroyed (CDD).

The CDD ratio gives particular weight to digital coins that have not moved for a long period of time. Analysts speculate that Bitcoin investors who have been in the market for a long time and have accumulated bitcoins likely have a better understanding of bitcoin price cycles than new entrants to the market.

Additionally, they believe that investors who hold large amounts of bitcoins in wallets over a long period of time tend to move their bitcoins from one wallet to another at key times, most likely to sell them.

According to investing.com, such movements are not new. Similar patterns have already been seen during the booms of 2017 and 2021. But this time, they raise a worrying question: If even the most convinced bitcoin investors are selling, do they really believe in the long-term success of the cryptocurrency?

Paper Bitcoins

Another factor highlighted by bitcoin expert Willy Woo on news platform X is so-called “paper bitcoins.” These are not real bitcoins, but financial products, called derivatives, options or IOUs, which allow buyers to speculate on the change in the value of bitcoin without owning the underlying bitcoins.

Centralized exchanges could theoretically issue a greater quantity of bitcoins than they hold in actual reserves – in the same way that banks can issue more currency than they hold in gold reserves.

Issuing “paper bitcoins” could artificially lower the price of the cryptocurrency, as supply appears to be greater than demand. Previously, the market reacted to sales from long-time bitcoin holders and newly mined coins, but today it is littered with “paper bitcoins,” according to Willy Woo.

It is precisely this pattern that is currently emerging. Every time the stock of “Bitcoin paper wallet” rises, the prices of Bitcoin & Co fall. According to the site investing.comthis could explain why the price of Bitcoin has stalled despite the positive impulses given to the market by spot ETFs and institutional investments.

Impossible predictions

Is Bitcoin on its way to reaching US$1 million or is its value just an illusion that even the most experienced bitcoin holders no longer believe?

The combination of selling activity and the growing dominance of paper Bitcoin casts doubt on the predicted price targets.

But there are other reasons why Bitcoin predictions are very uncertain and difficult. Cryptocurrencies are always exposed to strong price fluctuations and are not a stable investment.

Cryptocurrencies remain a speculative asset class, which is also not sustainable due to its high energy consumption. So far, Bitcoin acceptance is limited and not recognized as an official payment method. Regulatory restrictions are possible at any time. Competition within cryptocurrencies is high.

We therefore do not know how long the surge in cryptocurrencies will last. It remains to be seen whether faith in Bitcoin will be enough to propel it to new heights or whether it will fade into obscurity.

Translated and adapted by Tanja Maeder

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