Bitcoin follows a path similar to the adoption curve of a new technology closely. New technologies typically take fifteen years to be adopted by mainstream users (to the 85th percentile). November 2020 is the beginning of year thirteen for Bitcoin (Bitcoin’s introduction in Oct. 2008). High estimates predict valuations for Bitcoin at $375,000, $400,000, and $500,000 per coin, which would put Bitcoin at $318,000/Bitcoin by the end of 2022, one year from now. That foretells explosive growth between now and then. Bitcoin goes from $28k to $318K in twelve months.
Bitcoin is currently going through what Geoffrey A. Moore calls “Crossing the Chasm,” a book he had published in 1991. The “chasm” he describes is the vast divide between what Bitcoin has experienced so far in its adoption curve and where it needs to go to get further. The Bitcoin owners up until now Moore would label early adopters or visionaries. The Bitcoin owners of the future represent ten times as large an audience as we have seen to date. Moore refers to these as Main-Streeters. Early adopters and Main-Streeters have very different wants and needs. Making the transition from one to the other is what has to happen before Bitcoin goes further.
An early adapter likes to fiddle with new things. To a visionary Bitcoin adopter, “you are the first” is music to their ears. If the idea works, they’re thinking they are going to be champions in their organizations. To Main-Streeters, “you’ll be the first” is cause to cut and run. Remember the commercial “Nobody ever got fired for buying IBM?” They were selling to Main-Street. You can hook an early adapter with a sales pitch like “we make it work the way you want it to work; our technical support staff is available 24/7.” A Main-Streeter wants none of that. He assumes it does what it does without fuss. Any mention of technical support is going to scare off a Main-Streeter. Nothing needs to be customized in his eyes. It just works the first time correctly, out of the box. This is the “chasm” Bitcoin has to cross. Any new Bitcoin enthusiasts are going to be Main-Streeters and have to be treated as such.
For Main-Streeters, the discussion is over. It’s not a question of whether or not Bitcoin. Bitcoin is a done deal. Bitcoin’s price chart may also look like the Heating Curve of Water. We’d still be considered in the liquid phase of water at the level marked ‘boiling.’ You’ve heard the expression “A watched pot never boils?” The author undoubtedly was experiencing the liquid phase of the Heating Curve. As heat is continuously being added, the liquid gets hotter, but there is a long pause before it boils. Likewise, Bitcoin has to gather much more energy without much price appreciation to show it as it changes states from liquid to gas. Another way to think about this period is to think about Main-Streeters, whose buy-in price will be considered their base price. Someone who owns Bitcoin purchased at $2,500 is a very different sort of investor from one who has recently purchased Bitcoin at $26,000 per coin. Two weeks ago, no one owning Bitcoin had a purchase price of over $16,000. Before we move higher, all new money will have purchased Bitcoin for $26k or more.
It is also no coincidence that this “chasm” in Bitcoin’s price comes at the transition period between the Trump and the Biden administrations. Nor is it coincidental that we are amid the coronavirus pandemic and that vaccines are just now being rolled out. We have just entered the holiday season and begun year-end tax processes. Bitcoin most likely moves sideways until after the New Year, Biden’s win of the Electoral College on January 6th, and Biden’s inauguration on January 20th. After that, the sky’s the limit. The stock market will have rebounded from pre-end of year sell-offs and places for managers to park low-risk money.
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