Swanepoel is confirming what many of us already knew: Bitcoin is mainly a speculative vehicle for trading, and that’s what the majority of people are using it for currently. The CEO told CNBC that ‘90%’ of people using Bitcoin are using it for investment or speculation. Only 10% of them are using Bitcoin currently for transactions.

Bitcoin as an Alternative Investment

However, Bitcoin as an investment might make sense given the economic conditions. The leading cryptocurrency has proven itself to be very responsive to macro indicators, making it a useful tool for institutional traders trying to gauge markets. The CNBC panelists agreed that Bitcoin’s 2019 price spike seems to be “correlated with the nervousness of risk assets.”

What Swanepoel seems to miss, however, is that a large portion of Bitcoin is not being traded. This number is only growing. In May 2019, it was reported that some 10.5M Bitcoin had not moved in at least a year. That’s at least 58% of the circulating supply being frozen for a year, locked up by serious holders.

Ultimately, Swanepoel is looking at the 10 or 20-year cycles—the current cryptocurrency market is following a broader trend which goes beyond Bitcoin being a speculative short-term hedge. The Luno CEO would also argue that a minority are currently using Bitcoin as a ‘safe haven‘ when compared to gold. The asset’s main attractiveness is as an ‘alternative investment,’ since it makes sense to invest a tiny amount into cryptocurrencies regardless of what kind of portfolio you have.

Luno CEO Isn’t Wholly Convinced

Overall, the main takeaway is that Bitcoin is still a young asset which must ultimately prove itself. It is slowly developing the right fundamentals to function as a hedge like gold, but it is still too early to speak of macro trends directly in relation to Bitcoin’s price.

Swanepoel also spoke highly of Facebook’s planned cryptocurrency, telling CNBC that the “developing world needs Libra.” During periods of high inflation, smaller economies will ultimately find that Bitcoin or a stablecoin like the Libra could end up salvaging a runaway, inflationary economy. This could be a more attractive alternative to pegging one’s economy to the dollar, which comes with all kinds of political allegiances and strings attached.

Do you Swanepoel’s claims seem reasonable? Let us know your thoughts below in the comments. 

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