Bitcoin prices have seen remarkable growth over the weekend, with values peaking over $4000/BTC.
This jump in price point would usually yield far greater concern of a bubble in the marketplace, since explosive growth is often a harbinger of future price collapse.
However, Bitcoin is different. Growth in value is actually a good sign. Bitcoin and VC investor Spencer Bogart posts on Twitter:
1/ It’s not often I can say “I’m more bullish than ever” after an asset rallies >100% in a couple months, but that’s BTC right now…
— Spencer Bogart (@bitcom21) August 12, 2017
Investors are excited because the value proposition for BTC is built around increasing value and liquidity. Unlike any other investment vehicle, with BTC, increasing value results in increasing stability.
Stability = Liquidity = More Stability?
As values increase over time, investors and “hodlers” are able to use their Bitcoin profits in microtransactions. These microtransactions result in increasing price stability, since pricing is no longer dependent on large-block transactions but rather smaller, less critical transactions.
Increasing stability means increasing investor confidence, which leads to increased investment and increasing prices.
Bitcoin is the only investment vehicle with both currency and asset functionality, making it uniquely designed for price accretion. Brendan Bernstein, analyst at Brainchild Holdings, agrees:
unlike equities, BTC gets more valuable as the price rises. Hash rate increases, more liquidity, less volatile + higher confidence
— Brendan Bernstein (@BMBernstein) August 12, 2017