Are we finally exiting the "don't care or understand it but smell money" phase in crypto?


I noticed a trend and numerous relevant questions lately which I think deserves our attention:

"Bitcoin has been remarkably resilient the past few weeks despite the stock market losing trillions in value”

"If the bitcoin price remains stable while everything else continues to crash, it would be a massive signal that more people recognize its value proposition"

"Despite all the above adverse events, bitcoin was able to somehow keep its price in the $19,000-$20,000 range, with record-low volatility" 

"the S&P 500 got whipped around even more than bitcoin...this marks the second week in a row when bitcoin’s relative stability showed the stock market who The Adult in the room was"  

I'm old enough to remember when Bitcoin didn't follow the stock markets or get influenced by government threats. Fast forward a few years, and every government announcement, interest hike, stock market crash has Bitcoin and all other cryptos follow in their trail. Let's quickly summarize why.

We are now in the "Ohh look, this is the next big thing to make money" phase of crypto. Investors and other institutions with what they call "institutional money" have discovered the crypto success and are jumping aboard without really caring about it, which is making the Bitcoin price follow their lead. This is comparable to a module in macro economics my old professor once taught us. He explained it in a very simple but still rather very interesting way which I think is also relatable to the crypto markets, so let me replace a few terms here and there and try to relate:

The first to discover Bitcoin are the children, which ironically makes sense since they have loads of free time compared to the rest of the world, so after they start learning about it begin spending their time and money on it. They are spending whatever money they get or have left from their allowance and let's say that most children get their allowance once a week on a Monday, this systematically led to a weekly major price jump in the Bitcoin price come Monday. After a while other children started to think ahead and wanted to make extra profits so they asked for an advance the weekend prior.

Soon enough, the parents noticed their children's newly found interest and wanted to know what they are spending all their allowance on. Most parents saw potential and also started to get Bitcoin. Let's for the ease of things say the parents get their salary at the end of the month. Suddenly, Bitcoin's major jump on Monday is reduced to a small increase as now even bigger and historically unprecedented price jumps occur at the end of the month as the previous allowance which influenced Bitcoin was a mere drop in the bucket compared to the entire salary which it came from. But the parents and their bigger wealth which brought about bigger price jumps, comes with bigger responsibilities. When e.g. the holiday or tax season comes a knocking, the Bitcoin price falls badly as almost all the parents need to quickly get their hands on some money and even Bitcoin hodlers that don't need money, foresee that others most likely will so they also cash out around those times, creating a prefect chaos which results into pointless online opinions on how it's "really all over for Bitcoin this time". But over the next few months, things get stable again and back on track so ultimately this was no serious issue.

Soon enough the parents' employers get involved and they get their profits at the end of each yearly quarter. Now, the biggest price increase occurs every three months and all other previous historic price trends are reduced to small fluctuations. But the bigger money from the business owners have even bigger responsibilities, hence translating to even bigger price swings at different phases of the year.

It goes on for a while with some more details but I think most get the idea behind it. The bigger money always influenced the price the most and at this point in time it's coming from the same people who also invest with large sums in stocks, the "employer" phase if you will. Some fools laugh at Bitcoin for this without realizing that just a few short years ago the children could only dream of their parents' employers getting involved, but what's even more important is they do not realize that this is just a phase. Just how the children's allowance was once leading but faded away, so will the phase of the stock market/investor's money fade out as we slowly but surely reach world-wide mass adoption.

But are we finally there? Are we no longer correlating with the stock markets and other global fiscal issues? I personally think it's too early to tell. The power of the global markets are not what they were before the pandemic and it's only getting worse. Billionaires saw a literal fortune evaporate within their asset holdings and were left with record losses, nations saw record inflation and in the midst of all this, Bitcoin has indeed managed to remain stable but will it remain that way? What if things get back to normal, will their Bitcoin influence make a comeback well? Or have we prevailed and are they down and out forever precisely because they only saw it as an opportunity to make money instead of hodl and prevent what happened to them now?

Only time will tell I guess but I personally think it's too soon to celebrate. Let's hope I'm wrong though and that this indeed is a first step into Bitcoin no longer following any specific group, but after a mere 14 years start leading the world.

 

 

 

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Geo-Political & Economical developments
Geo-Political & Economical developments

Things are almost never as they seem. If you sincerely think that world powers would spend their money and resources in order to just "help" citizens from foreign nations, you might want to ask yourself why they've been neglecting and out right murdering their own citizens for decades. What are their true motives for wanting to fund foreign (terror) groups, start global confrontations and wars? I'll let you in on a little secret; It has NOTHING to do with "human rights" nor "democracy".

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