Since 2023 began and the markets started rising in my mind there is a constant debate between a Bear and a Bull both debating on who will prevail. But the arguments and the debate became even more heated now that traditional Banks are starting to collapse.
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The Bear
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Legacy markets are yet to bottom. Given the strict correlation between the two (BTC/Equities) - There is a high chance BTC will follow the inevitable capitulation in stocks. Markets are forward-looking yes - but seeing as we haven’t yet started a recession in the US, I find it hard to believe we have priced the worst in yet. We printed our way out of the 2008 recession - because we had to. Then covid and we covered over the cracks once more. Eventually, the chicken comes home to roost - and with sticky inflation still lurking it removes a major fed weapon - QE. If they deploy then they delay the impending doom for a while but create a bigger monster. I don’t think the FED is stupid enough to QE - certainly not in an obvious way.
So then why are markets pumping? Because markets just want to go higher. It’s how they’re programmed. If bad news filters through then they think great - no more rate hikes or maybe even rate decreases (as like recently because of SVB), ignoring the underlying issues at large (US recession - increase in unemployment - poor earnings - inflation). They ignore them until they become a problem - and right now they aren’t - but they are bubbling up to the surface.
BTC more specifically I believe was shorted more heavily and a factor in the rapid squeeze higher - but also crypto ferns are more degen and it’s always been more volatile than legacy (though recently that’s proved a little untrue).
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So I expect a slow grind up in equities - BTC sharper moves…all until the 💩 hits the fan. Now I also expect BTC to fall less far than stocks. Crypto in the main has fallen further and harder. It’s taken more hits to date - yet to be replicated in TradFi.
I think if there is a sniff that BTC is becoming a real threat - and an alternative to mainstream finance then they will do all they need to crush it.
Bull
Starting with this: So bitcoin was created in 2009 after the 2008 collapse… So what we’re seeing in markets today is exactly WHY bitcoin was created. One thing that always got mad was the market's fascination for Alts… to get rich quickly. The satoshi in me wanted everyone to go to bitcoin and understand WHY bitcoin is here and WHY is so powerful. Become your bank.
One observation from yesterday is the trending data on Twitter: 1 Bitcoin OR just Bitcoin. Alongside this, you had trending tweets like ‘’Financial crisis’’ and ‘’Market crash’’ etc. So this activity was special and I think people realizing your deposits are only covered up to 250k got people wondering… where can you hide. Gold? Yeah, maybe but have fun with storage.
Given how quick it is to withdraw money from a bank, send it to exchange, buy bitcoin and withdraw I think this is a preferred option over physical gold.
Increasing institutional adoption:some of it is declared but I reckon lots haven’t been yet.
Currency devaluation: In countries where the national currency is experiencing significant devaluation or inflation, Bitcoin can be seen as a way to protect wealth and stimulate economic growth eg. in Venezuela and Zimbabwe. Also used to aid Ukraine as was easy and fast to move.
Regulatory uncertainty: As governments all over the world grapple with how to regulate Bitcoin and other cryptocurrencies, some investors see regulatory uncertainty as a reason to invest in Bitcoin. As traditional financial systems become more heavily regulated and face disruption, Bitcoin is the viable alternative.
Google search data: So shit started hitting the fan with Banks on Friday… Then shit really did start to get scary on Monday – Since then we have seen a sizable spike in the google search data, showing searches for bitcoin rallied since Monday. So people are searching it heavier during this tumultuous period. And these are NEW people… no one crypto native goes on google and searches ‘’Bitcoin’’
But what’s going on is a war for a new world reserve currency. Just as we moved from the Dutch to the British to the USA we are now transitioning to a decentralized reserve for everyone. It’s easy to assume we are going to shift from USD to YUAN but that's were Bitcoin comes into play after everything that is going on.
Conclusion
In both cases i believe the arguments are valid so i will play it carefully and trade with less capital on more valid and better structured patterns.
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