In the 16 years since its inception, Bitcoin (BTC) has turned from a niche concern exciting a small group of cryptography fans to one of the world’s most valuable assets, with a market cap exceeding $1.6 trillion.
Over the years the “Death of Bitcoin” has been pronounced many times, yet it has always bounced back stronger than before. Meanwhile, with financial institutions offering BTC ETFs and the US government announcing a Strategic Bitcoin Reserve, the asset nicknamed “digital gold” has come a long way from its underground days to become the mainstream item it is today.
But not everyone buys the narrative. There are still plenty of skeptics who find the whole idea of Bitcoin and its fellow crypto brethren ridiculous. Investor Daniel Jones certainly falls into that group and is not shy about it.
“My own professional opinion is that most cryptocurrencies, including Bitcoin are very nearly worthless,” Jones says. “Over the years, the markets have disagreed with me. But it’s not uncommon for markets to behave irrationally, sometimes for many years.”
It’s hard, however, to present that argument to early adopters, and here Jones admits that those who have speculated on “Bitcoin specifically moving higher have been well rewarded.”
But Jones thinks Bitcoin’s days are numbered. For one, he points out data that shows Bitcoin’s overall trading volume has been steadily declining. “This indicates to me that something is awry,” he says. If Bitcoin is meant to be the “currency of the future,” then the fact it is being used less is not promising, opines Jones.
Moreover, he says the number of active addresses – i.e., unique wallet addresses that engage in blockchain transactions by sending or receiving cryptocurrency within a given period – have been falling. In 2024, the average number of active addresses reached 14.44 million, marking a 19.8% decrease from the 18 million recorded in 2023. This figure is also the lowest among all the years Jones analyzed since 2020.
“This, to me, looks like a bubble that is being propped up by ever shrinking activity,” Jones goes on to say. “Fewer people are utilizing Bitcoin today than they were in any of the last five years.”
The counter argument to that, of course, is that a lot of people are storing their BTC, rather than trading it. This is where the “digital gold” aspect comes into play. But Jones doesn’t buy that either. Unlike, Bitcoin, he says, precious metals are “truly tangible and will exist forever. Cryptocurrency is nothing but code.”
While Jones doesn’t rule out short-term price increases, he believes the declining number of users and shrinking activity signal trouble ahead.
“At the end of the day, this leaves me with no choice but to reaffirm Bitcoin as a ‘strong sell’ at this time,” Jones summed up. (To watch Jones’ track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.