The Bitcoin bulls are... back
Bears, your day are numbered. Bitcoin is back above 44K and I think the past 100 days of red are behind us.
I'm a bitcoin maxi, I must admit, but after 6 months of down days I forgot this coin can go up too and I'm off the hopium.
It seems like Russia, Texas, Turkey, and other are looking more and more at Bitcoin as a solution. KPMG just said they are holding BTC.
All it's going to take is 2 countries (or states) declaring it as a legal tender and we go to 100K. Or so a man can dream...
Trending on Indie Hackers
Hardly call this a "bull market" - 20% increase in an asset that has 70%+ annualized volatility. Also, Russia and Turkey are much more likely (or already have) BANNED BTC and lean toward issuing their own token. No major country will use BTC as legal tender - no central bank (other than Ecuador) wants to introduce that kind of vol into its money system and lose control over supply of money.
Volatility is always relative to something else. When people talk about the volatility of BTC they are normally talking about BTC/USD and are assuming that USD is the more stable currency.
But have you ever stopped to think about how stable USD really is? When you consider how many US dollars have been printed into circulation over the last couple of years you have to wonder, are asset prices going up against USD or is USD going down against everything else?
It's no coincidence that many people are talking about rising inflation just a year after the US printed 30% of their money into circulation. They'll blame it on supply chain issues and what not, but if history tells us anything, debasing the currency always has negative side effects.
When you think about it, it's actually very strange to price things in a currency with an unpredictable supply / stock to flow ratio.
Your right. You should convert all your liquidity into BTC and see what's it like to experience a 50% drawdown in 2 mo. The 7-10% in buying power you lost from the "debasing" of the USD will seem like a pretty good deal in comparison.
For all the talk of inflation / BTC being the ULTIMATE hedge - it trades like a risk ON asset. Goes up when tech goes up and goes down when tech goes down. When inflation peaked, BTC experienced the worst drawdown of the year.
"When you think about it, it's actually very strange to price things in a currency with an unpredictable supply / stock to flow ratio." <-- Of course, its better to price things in something that has 70% annual vol and and large amounts of supply are locked up by a few whales who can dump it or pump it - whatever suits them.
I get what you're saying and you're absolutely right.. in the short term.
BTC is a long term investment. If you're thinking about it on a short term timeframe (< 4 years) then of course the volatility looks scary. Zoom out and look at the 200 week moving average instead.
Secondly, it's been a very long time since BTC has had a 70% drawdown. The last few large drawdowns have been around 50% and that's only if you measure it from the ATH. If you DCA in your cost basis tends to be a lot lower (mine is around 36K). Yes, I'm in profit even after this recent drawdown.
I don't buy the argument that whales dumping on the market are the primary reason for volatility. The largest known BTC address (that isn't an exchange and actually trades) holds 0.6707% of the total supply.
Whales are whales for a reason. They believe in Bitcoin. The data shows that the whales are accumulating more BTC over time, not selling it.
"I don't buy the argument that whales dumping on the market are the primary reason for volatility. " << Yea, I don't mean to say that they are the reason for volatility. But there are significant players behind the scenes that can pull and push BTC - whales are part of this group but other operators may include Tether that recycle the cash that ppl park with them into BTC.
Going back to what you said central banks debasing currencies - BTC is also prone to manipulation from interest groups tied to stable coins such as Tether, etc.
Systematically trading any asset that has significant vol to make money on price-action is great. I have nothing against that. I just not sure about it being a store of value that people can trust to not lose half their life savings in a month. USD - as much as the FinTweet crowd hates on the Fed for printing - I can still trust to not lost 50% in a few months.
Time will tell I guess. Maybe BTC will be trading lower 5 to 10 years from now, obviously, I'm taking the long bet.
What I do know is that holding cash in your bank account for the last 5 years hasn't historically been a good idea. We all need cash for living expenses of course, but if you're holding a lot of cash, it's probably a good idea to consider investing some of it in assets. Maybe Bitcoin is not your thing, that's cool, but there's no doubt in my mind cash is a bad long term investment.
To put that into perspective, if you've been saving up for a deposit on a house, by the time you've saved up enough money for the deposit, housing prices have also got a lot more expensive. It's pretty difficult to keep up with inflation over the long term.
Yea of course - holding pure cash is a bad idea. I am definitely not advocating for that.
We're not in a bull market - yet. But I'm optimistic we have broken the recent slump and are back on track.
And you'd be surprised re: legal tender, BTC isn't any more volatile than fiat currencies. In fact, it's even more stable YoY. Have you seen the Lira lately? Or the stock market? FB fell ~30% in a day, looks a lot like a cryptocurrency to me...
Check out VanEck's recent report (and I realize their bias, but disregard it) on Bitcoin volatility compared to stocks:
Ok. First Turkish lira is a victim of Erdogan's nonsensical central bank policy where he will push lower interest rates at any cost - and argue that higher interest rates lead to inflation. But someone like Erdogan will also never lose control over their money supply to a cryptocurrency that the Turkish state has no control over - it's why Turkey banned cryptocurrencies earlier.
Second, we are talking about "legal tender" - Stock market and FB are not legal tender. Liquidity doesn't make something legal tender ;)
And of course you can cherry pick a stock like FB to argue that BTC is more "stable" over some time frame of your choosing. But for argument's sake lets take a 1 year time frame for FB, BTC, and SPX:
[1] FB YoY: 2.53% Daily Std Dev
[2] BTC YoY: 3.86% Daily Std Dev
[3] SPX YoY: 0.85% Daily Std Dev
[4] DXY YoY (US Dollar Index): 0.3% Daily Std Dev
It's very clear that annualized std dev for BTC higher than most other non-crypto assets.
And if you are going to compare BTC stability - use an index such as DXY (US Dollar Index). USD has a 0.3% daily std dev relative to a basket of major currencies. I imagine a basket of crypto currencies - which all trade now as RISK ON assets - is going to be a TAD bit higher.
Sure - have exposure to BTC as a RISK ON asset. Bet on it - that's all fine. Bet 100% of your money on it. But please don't argue BTC "isn't any more volatile than fiat currencies. in fact it's even more stable YoY." That's absolute nonesense.
Good points. I don't want to say it's less volatile than fiat currencies (this is harder to prove empirically). But I will say it's less volatile than most blue chip stocks, specifically FAANG.
Per CoinCloud (another biased source, just a heads up):
There are a lot of good arguments against bitcoin, and a centralized power banning it isn't one. At least to me.
What does this post have to do with indiehacking?
LOL. same question. I really don't know why I can see this type of post on Indiehackers
lol @windmill @phong point taken, I was just curious what y'all thoughts were on the current bitcoin situation. Sounds like we're pretty split as a community on the topic, and some of us don't even care about it. I'll keep your feedback in mind for the future ;)
let me take a toke of that sweet hopium.. ahhhh
Just wanna say - HODL for the long term, in the short-term it keeps going up and down.
I sure hope you are right Seth! But as hard as it can be at times, having a long-term mindset and approach to investing allows me to stomach the short-term volatility!
Hah, I hope I'm right too. But like you, I also have a 10 year investment horizon for Bitcoin, so I'm not sweating the short-term volatility either.
I like that Bitcoin is going up again. Should of bought more when it was in the 30's!!!
you should buy now
This comment was deleted 3 months ago.