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Bitcoin should be absolutely in the dumps. The SEC is trying to put the crypto genie back in the bottle and the whole U.S. crypto industry is in trauma. The biggest player Binance is well and truly in the crosshairs of the global regulators and regulatory actions are fierce.
So why is bitcoin and crypto so strong?
Firstly let’s state as bitcoin goes, so do all the cryptos. A strong bitcoin means a robust crypto scene.
BitcoinBTC is incredibly strong.
Why?
I’ve been writing on and off that gold is underperforming because bitcoin is a better flight/haven asset than clumsy gold. My example is the challenge of getting more than 1KG through customs without getting into trouble. Meanwhile $100 million in bitcoin is no trouble at all.
If the end is nigh, always a theme that’s been a friend of gold, why buy gold when you can buy bitcoin?
So let’s look back at when the balloon went up in Afghanistan. It is said a senior member of the Afghan government had to leave $5 million in cash on the tarmac because his chopper was full to the brim with old-fashion money. As the bitcoin Maxis say, “bitcoin solves that.”
I believe the second peak in the previous bitcoin boom/bubble/rally was all down to Afghanistan where you can imagine the then-ruling-group had suckled for untold years on the U.S. tax payer’s largesse and needed to get it out of the country in a hurry when unexpectedly the U.S. decided to leave because it knew what we now know, that there was a chance of WW3 in Europe.
Here is that chart:
So if you accept this model then this is easy to now explain:
The current bitcoin chart – looks like trouble
Credit: ADVFN
You can see the reaction in what the youngsters call “boomer bitcoin,” i.e. gold. This chart has BTC and gold together:
Bitcoin has risen but gold remains flat
Credit: ADVFN
Gold has about an hour lead, which makes you wonder who is making that call. In any event, you can see why traders love the BTC volatility and you can clearly see the connect.
So bitcoin is strong because of the volatile geopolitical situation in Russia and where once that would be a gold play, it is now a crypto play.
This establishes bitcoin as the go-to asset in times of trouble and thus a permanent use case of significant value. There are more than enough hotspots in the world to sustain this kind of traffic.
It also suggests that what happens next is likely to drive wild gyrations in crypto because the value is all about the need to run fast and run far and the more people that need to do so, and the richer they are, the higher the spike.
It also means bitcoin is advance warning of “something wicked this way comes.” It also means gold is going to continue to underperform expectation based on its use case as the ultimate haven asset as it no longer holds the crown for flight capital haven and therefore that inherent value is diminished.
It will be interesting to see if bitcoin’s price leads the news because that will be not only most interesting but also most useful.
