The investment world is not dominated by retail investors. It's dominated by institutions with mandates and heavy regulations. You and I may not perceive Bitcoin as a risk asset, but those institutional investors certainly do. When inflation is high and interest rates are high, institutional money managers go risk off. They sell off their risk assets to buy cash or cash flowing equity.
We live in a world where cash is still king. Bitcoin only has 10 years of network effects. The dollar has about 60 years of network effect. It takes time for people to understand what kind of money Bitcoin is, especially when everyone only knows money as government debt that can be created at infinite.
It took me about 5 years before I took Bitcoin seriously. Bitcoin is a CDS on government liability. Think of it as insurance against government created moneys
Remember, liquidity is what people need when the total number of dollars in the system is shrinking.
The world is becoming digitized. Money will be no different. My bet is that BTC is the best option we have for a secure, digital money that allows the users a degree of sovereignty to hold their own wealth without counterparty risk. Banks are counterparties, New York stock exchange is a counterparty, Fidelity is a counterparty. You own claims to the assets not the underlying assets themselves. You hope that the counterparty will uphold their end of the obligation and give what is owed to you when you need to liquidate them. Bitcoin flips this on its head using encryption, finite tokens, and a network that anyone can participate in.
New hodlers please familiarize yourself with the works of Jeff Booth, Saifedean Ammous, Preston Pysh, Luke Gromen, Lawrence Leppard, Jeff Snyder.
These individuals are among the best and brightest minds of macro economics. BTC is now a contender in macro economics and should be studied as such. Don't be lazy, do your research and know what you own. You all have unlimited potential and BTC will help you unlock that potential by giving you a lower time preference.
Making money is not the goal.
Retaining purchasing power is the goal.
Increasing your purchasing power comes after retaining your purchasing power.
Now,let,s me think the difference between stock and bitcoin.
When you break down the value of a stock (vs crypto) it’ll have figures that give an absolute value. You could say book value or assets minus some cost of liquidating. Assets is easiest. It’s an objective number. Just imagine the cost(figure) of all the stuff the company owns. We don’t need any charts or trading history or anything to establish this value. Add up all the planes at Boeing and the company is at least worth that right? We can agree? Now let’s do BTC. We could be here for hours, get it?
The company value (price) is tethered to some number. A figure. We can point to it and it wasn’t made up nor reliant on a past value. It’s just the price of all the assets added up. Just go with it for a sec.
Assets cost money because they make something or make something easier. If planes sell for 1mil and BA has the equipment in place to make them for 800k and sell 10/year they produce in cash 2mil per year right? We have some objective numbers to work with when we bid on the price of a given company now.
Putting it in extremes: imagine NVDA were trading at a price to asset ratio such that I, personally, could buy the entire company, the price to asset would be something like .0000001:1. I’d be able to easily sell it for that 1 in the ratio and I’d be rich immediately because ppl doing the math who can actually use the factories NVDA owns think “it’s currently worth at least the price of its equipment, storage, and factories.” and they’d buy it. And the price per share that would equal all those factories is thousands of times more than the price I would’ve paid. There’s no equivalent figures or prices to compare in the crypto world.
I’m going on and on about “figures” and “numbers” for a reason. There are two essential components that make up a stock price (lots of things contribute but at least these two must be present for price changes):
whatever price we all agree constitutes fair value if the company were just vacant tomorrow and everything had to be sold off and debts paid.
The expectations going forward on the revenue they’ll hopefully create from sale of products/services.
Now crypto: there’s no figure other than the market cap and the chart and derivative prices etc. - to use to judge a “fair value”. It’s just us arguing about whether it visits old highs (technicals) or gets used in the distant future for getting bj’s in the metaverse.
There are no FIGURES to compare the market cap to. Remember above, where the NVDA price dropped low enough for me to buy the whole company and flip it overnight? Imagine BTC drops low enough for you to own every single one…who tf do you turn to to sell it and what’s your pitch? “It’s clearly worth at least x” How’d you come to that fig. ure.?
If you could buy a leading company for x and x is drastically below the asset price you can point to that when selling it. What’s the “asset price” of BTC? If you had to sell it for 1bn vs NVDA for 1bn which would be an easier pitch?
So you see we only have component #2 fulfilled from above, and poorly. NVDA has a revenue and/or asset figure. Crypto doesn’t. It fulfills rule #2 by being based on expectations but what figure are those expectations based on other than past price performance?
When time to bid comes, the investors who can utilize NVDA’s assets to actually generate more money than the company is priced at, will buy it when it gets low enough that it’s demonstrably cheap. The figure for one is less than that of the other. They have proof it’s cheap.
When crypto comes up during the fake auction we’re having, the investors from above are grilling you: do you have a figure on how much the BTC can make per year, and or what if they stop making that much? If we have to liquidate all of Bitcoin how much would it be worth? How much did you say it was they make per year?
So: new information can’t do the same thing to crypto that it does to stocks. Theres no “news” that might change the figures used to analyze the price. The figures don’t exist for crypto. Yet.
All this being said, I personally believe in blockchain technology as I understand it. It’s just that it currently has no inherent value. And lots of things stay priced high w no inherent value anyway. Remember the autographed memorabilia. No inherent value, yet not going away anytime soon.
TL;DR “news” to a stock is about how the money they generate via producing goods/services might change. Crypto doesn’t produce any good or service, therefore there is only the expectations of future value. These expectations are still theoretical. The money used to buy crypto isn’t theoretical.
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