Bitcoin's Biggest Problem Isn't Volatility - It's Trust

A year ago, one of the clients of rabbit.io made several BTC -> PAX Gold swaps involving very large amounts. Or maybe it was several clients - I honestly do not know, we do not collect personal data from people who use our service. I only noticed that there were several large swaps, and they happened right around the time when Bitcoin hit yet another all-time high, against the backdrop of Donald Trump taking office.

A year later, it looks like that client (or those clients) made a very wise decision. Over the past year, Bitcoin's price has fallen noticeably, while PAX Gold - a tokenized form of gold - has risen along with the price of the underlying metal.

That made me think: how did this happen? Why, in a year full of uncertainty, does gold remain the asset people turn to, rather than Bitcoin - which, by many of its characteristics, could reasonably claim the role of a replacement for gold as a reserve asset?

I suspect the answer lies precisely in those swaps that an anonymous user made on our website a year ago.

What did they actually do? When Bitcoin's price was high enough, they decided to lock in profits and move their capital into something more reliable.

In other words, the problem is that even Bitcoin holders themselves (and this person held a very large amount of BTC) still do not see it as a truly reliable store of value. They exit their position as soon as the profit looks sufficient.

Bitcoin is an excellent asset. It is easy to self-custody, it can be transferred peer-to-peer without restrictions, and it has a strictly limited supply. All of these properties once drove demand for Bitcoin - and, as a result, its price. But the price growth became so spectacular that it ended up overshadowing all those important fundamentals.

It seems that even large holders are primarily interested in Bitcoin as a speculative asset, not as the foundation of financial systems built on freedom. Once that changes, Bitcoin will finally take on the role of a reliable reserve asset it is so well suited for. Until then, savvy capital owners will keep selling Bitcoin after every major rally and rotating into more familiar stores of value.