Adam Back, Early Architect of Bitcoin: BTC Never Failed, Pain is Just the Price of Growth Author: Helene Braun Compiled: Deep Tide TechFlow Deep Tide Introduction: Faced with the recent violent fluctuations and corrections of Bitcoin, the market sentiment is anxious. Early Bitcoin pioneer Adam Back pointed out at the Miami conference that this volatility fully conforms to the historical pattern of a four-year cycle and is not a collapse of investment logic. He believes that the entry of institutional funds is still in its early stages, and as adoption rates expand, Bitcoin will experience a period of "wild volatility" similar to early Amazon stocks and eventually mature. This article takes you to learn about the profound insights of this cryptographic OG into the current market. Key point summary: Adam Back, an early figure cited in the original Bitcoin whitepaper, stated that the recent decline of this cryptocurrency is consistent with its performance over the past four-year cycle, reflecting its inherent volatility rather than the collapse of investment logic. Despite a more favorable policy environment in the United States and the launch of spot Bitcoin ETFs, Bitcoin has still fallen by about 26% in the past year, while traditional safe haven assets such as gold and silver have seen significant gains. Back believes that institutional involvement in Bitcoin is still in its early stages, and over time, wider adoption will smooth out the drastic price fluctuations. After experiencing a series of milestone events in institutional entry, investors had hoped for a smoother trend, so the recent decline of Bitcoin has left them feeling frustrated; However, Adam Back, one of the early crypto punks cited in the 2008 Bitcoin white paper, stated that long-term observers should not be surprised by this volatility. Bitcoin is usually volatile, "Back said at the iConnections conference held in Miami Beach on Tuesday. Although there are many positive news [...], in the past four years of the market cycle, this is almost at the point of a downward price cycle. He pointed out that some market participants may be trading around this historical pattern rather than reacting to fundamentals. There was once an expectation or possibility in the market that due to the presence of different types of investors, the market conditions would be different. So I think some people believe that prices may rebound later this year. People had expected that Washington's more friendly cryptocurrency policies and long-awaited transparency in spot ETF regulation would unlock deeper institutional participation this year. For many investors, this is also a touchstone. For a long time, the core selling points of Bitcoin have revolved around scarcity, independence from government monetary policy, and as a digital value storage tool aimed at hedging against currency depreciation. Against the backdrop of persistently high US fiscal deficits and doubts about the long-term purchasing power of the US dollar, the overall environment seems highly aligned with this investment logic. However, the market did not follow the script. In the past year, even though the policy environment has become more supportive and institutional entry channels have improved, Bitcoin has still fallen by about 26%. This asset has not been decoupled from macro uncertainty, but often resonates with a broader risk market. At the same time, traditional safe haven assets have seen an increase. Gold has climbed to a historic high, and silver has also reached a multi-year high. It seems that at least a portion of the funds seeking to avoid inflation concerns and geopolitical risks have flowed into precious metals rather than digital assets. Back, who currently serves as the CEO of Blockstream and Bitcoin Standard Treasury Company (BSTR), also pointed out the structural changes in the Bitcoin holder community. ETF holders are more sticky investors than individual investors on the exchange, "he said. Retail investors usually invest most of their funds in rising markets, resulting in a lack of 'dry powder' during downturns. In contrast, institutions can rebalance their entire investment portfolio. However, Back warns that institutional adoption is still in its early stages. I don't think there are as many institutional funds entering the market yet. In his opinion, large-scale capital pools have not yet fully entered the market, although major regulatory barriers have been cleared, clearer rules are expected to pave the way for more institutional funds to flow in. He expects that over time, wider adoption will reduce its volatility. He compared the current stage of Bitcoin with early high growth stocks. You can refer to some analogies, such as the early stock of Amazon (AMZN), whose price once had crazy fluctuations, mainly because the market was full of uncertainty. This rapid adoption of curves is inherently accompanied by volatility, "he said. Back stated that as adoption rates mature and more institutions, companies, and sovereign states gain exposure, the price volatility of Bitcoin should tend to ease. He doesn't believe that volatility will completely disappear, but he believes that Bitcoin will start to become like gold, with less trading intensity than younger assets. Back also stated that he uses the total market value of gold to measure the long-term potential of Bitcoin. He believes that comparing the market value of the two can provide a rough benchmark for adoption rate; In his view, the current size of Bitcoin is still about 10 to 15 times smaller than gold, which means that if Bitcoin continues to occupy market share as a means of value storage, it still has great growth potential. Despite short-term price fluctuations, Back believes that Bitcoin's long-term investment logic remains solid. As an asset class, Bitcoin has stood out overall over the past decade, outperforming all other asset classes and having the highest annualized return rate, "he said. For Back, volatility is not contradictory to the investment logic of Bitcoin, but rather a characteristic of its adoption phase. Volatility is already a part of the overall picture, "he said.