Bitcoin’s Growth and Adoption

According to Jurrien Timmer, director of global macro at Fidelity Investments, Bitcoin has shown minimal growth in wallet count over the past year.

Timmer attributes this stagnation to the approval of US-based spot exchange-traded funds and MicroStrategy’s aggressive acquisition of Bitcoin. He noted that large buyers typically do not require more than a few wallets.

Timmer believes Bitcoin’s adoption follows the S-curve cycles seen in other exponential technologies. Additionally, Bitcoin’s value is influenced by network effects; it grows as more users join the network.

However, tracking Bitcoin’s adoption curve has become increasingly challenging.

A Disappointing Cycle?

Earlier today, Chris Kuiper, director of research at Fidelity’s digital assets unit, mentioned that Bitcoin has only slightly outperformed the S&P 500 index over the past four years.

The leading cryptocurrency has increased by 17% on a compound annual basis, while the S&P 500 has grown by 13% during the same period. Furthermore, Bitcoin’s risk-adjusted returns are lower, as investors experienced four times the volatility for unimpressive returns. “This four-year period has underperformed previous cycles. If we peaked earlier this year, it will be a disappointing cycle,” Kuiper stated. Nevertheless, he does not discount the possibility of the current cycle being prolonged.