Featuring the tortoise and the hare
We have recorded exclusive live footage of the Fed and the ECB making more rate hikes as the Consumer Price Index rose 5% in the last 12 months through March:
They keep printing money.
Meanwhile, Bitcoin bounced back from its -65% drop last year and it’s now priced around the $30,000 mark. Such a “left-field” surge could reach even higher highs as Balaji Srinivasan, an angel investor and former CTO of Coinbase, predicts that the BTC could reach $1 million within 90 days due to the impact of the regional banking crisis on Fed policy and the rush to exit the system into assets like bitcoin.
It’s the tortoise and the hare all over again.
The banking and political system wants you to think they’ve got everything under control on the heels of the SVB and Credit Swiss collapse. And, of course, why invest in something as volatile and unregulated as Bitcoin when you have your trusty financial institutions that keep playing with the value of your hard earned money?
The quick recent bail-out of depositors by the US Goverment from both banks show us that they’re in reactive mode, just pressing buttons trying to control something that should be uncontrollable (the free market). They’re applying a recipe born from more than a hundred years ago. Now the landscape is global and immediate: panic from depositors could translate into millions of people tapping our phones to withdraw en masse and, of course, the system would collapse if that happened. So the goverment institutions are trying to send a clear signal to the public. But we’re seeing the signs, and our trust levels are at an all-time low.
Are we heading towards an economic collapse?
We’re not trying to paint a doomsday scenario. We’re seeing the biggest monthly loss in deposits in US history. And if you don’t live in the US, it will affect you. Thing is, if they keep bailing out it means they’ll keep printing more money. They’ll keep pressing buttons. It’s a vicious cycle that needs to stop.
Independent investors like Cathie Wood see the signals that we’re heading towards a scenario of hyperinflation. Maybe not as bad as the one in the 1940s, where interest rates went over 50%, but we’re starting to reach double digits and a quick deflation of the US dollar could come next. Cathie suggests that investing in assets that can benefit from inflation, like commodities or real estate, could help people maintain the value of their money. And, of course, she thinks Bitcoin (here we go) might be a “flight to safety”, a way for the general public to by-pass these very direct interventions in the market.
Considering “crypto went bust” in the last 12 months following the FTX collapse and one of the biggest drops in Bitcoin history, for a lot of people, thinking crypto might be our only lifeboat sounds crazy. And the claims made by Balaji, even crazier. But… are they?
Well, they are. At least in the short term. Such an increase in 90 days could only come if Bitcoin becomes so popular that even your grandma has a hardware key for her wallet, or if private investment funds start moving all of their money. So it’s probably not going to be the case.
But here’s why you should be paying close attention to Bitcoin right now.
Bitcoin is both fast and slow
Here’s the thing about Bitcoin. It can be bullish and bearish. It can have bursts and booms. But, at the end of the day, its future only depends on the market. That’s why during the last decade its value was basically coupled with the financial market. But now these “black swan” events are happening more and more often as those institutions try to keep the situation under control in a fully globalized market. Which is nearly impossible without any serious consequences for the general public.
Thus, the great decoupling begins. Bitcoin is starting to move beyond banks and assets.
“Okay, but what about reaching $1M in the next 90 days?” you might say.
Again, Balaji’s claim seems like a marketing ploy, but looking closer and analyzing Bitcoin’s trajectory over time we see that it’s not as unstable as the media claims it to be.
Harold Christopher Burger made an intriguing Medium post about the long-term power-law corridor of growth for Bitcoin. He states that, even though its price might have drastic ups and downs, the tendency of the coin is one of growth over time, as you can see here (until late 2019):
His model shows that, when paying attention to the bubbles and bursts, it might look scary and unsafe, but when looking at the bigger picture, the whole model of a decentralized financial network starts to make a lot of sense. It’s an “antifragile” model, as Nassim Taleb argued, where there’s more instability short-tem but a bigger stability (and trustworthiness) long-term.
He then predicts that the price per bitcoin will reach $100.000 no earlier than 2021 and no later than 2028. And, after 2037, the price will never drop below $1,000,000. So, considering none of us here have a magic 8-ball that predicts the future, it doesn’t feel like neither crypto is doomed nor it will soar to make us all rich. Yet.
When Bitcoin started to become popular, several people thought the tortoise was represented by the financial institutions and the hare was the newer, flashy, crypto-bro related Bitcoin. And as prices dropped and soared, everybody got scared and stayed with the devil they know. But oh boy have the roles reversed.
Is bitcoin the safest investment right now?
Of course, people that bought BTC during a bubble might regret it right now, but who knows how big it will become in the future. This model shows, by the end of the day, it’s a safer, long-term investment than relying on banking institutions that change the playing field on a whim. Here, again thanks to Harold Christopher Burger, a logarithmic model with linear regression of the price of bitcoin over time until the end of 2019 (a predictive, non-linear scale, that evens out peaks and valleys to display exponential growth curves).
You might think we’re displaying data in a more convenient way, but if you read into it, it becomes more representative of the overall trajectory of Bitcoin. Considering this scale is logarithmic, and therefore exponential, growth has been slowing down considerably over time, but right now, it feels more representative than the +3 Trillion dollars and euros printed by the Fed and the ECB. Because, here’s the thing: what we’re suffering with inflation right now stems from this long term problem. You just can’t keep throwing fiat at a problem and hope it goes away eventually.
So, now, Bitcoin is revealing itself to be the tortoise (although a tipsy one), and the traditional financial system is acting like a crazy, cocaine-fueled hare, trying to flee forward but watching how their policies are catching up with them. The next few months are going to be critical for both of them.
We’ll be watching closely. But the race has just begun.