Two Minute Crypto – The Sky is Falling (?)

Please click the link below to listen to the 72nd episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.

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Two Minute Crypto – The Sky is Falling (?)

Welcome to Two Minute Crypto – with chaos in the markets in recent days is the sky really falling? No, no it’s not but it’s sure going to feel that way. Negatives abound:

Stocks – are well on their way to a savage correction with plenty of room to fall. In tandem, the global economy is heading towards a sharp retraction as trade, travel and manufacturing all take a hit. A currency near you is on its way  – down, down and then a little further down both in absolute terms and relative to the US dollar.

Is the everything bubble party over? Far too early to tell but if Hong Kong is anything to go by not yet. Helicopter money is likely on its way in one form or another. From Trump’s desire to be re-elected to the EU house of cards balancing act – power blocks and nation-states are exceedingly unlikely to go meekly into the dark. It seems the party simply must go on.

Stimulus on an epic scale is the most likely response to the slow-down and nascent market panic we see before us. Doubtless a long-term negative for the very economies that so badly need a return to the mean but a giant silver-lining for Bitcoin.

This does not necessarily apply to the alts as only BTC represents sound money. Sorry folks this is just the state of play; Ethereum, Cardano, EOS, and so on all represent opportunity and a pushing of the blockchain envelope but they are most definitely not sound money. In each case their monetary policies can be changed more or less on a whim. I hold all of these assets but not because of their monetary properties.

Bitcoin, in due course, however, stands to benefit massively from the unfolding economic turmoil. In the short to medium term, BTC itself is much more likely to tank in value too if global markets really get the jitters. Remember for all the bravado – most retail investors have only a surface level understating of Bitcoin and its potential place in the financial system. Many ‘investors’ will rush to sell what they perceive as a risky asset should the global economy go into a tailspin.

So, sell Bitcoin? Er, no – hold on to it and prepare for the ride of your life. Volatility and the sharp swings that go with it await. With a perfect system you could, of course, sell your BTC and rebuy at the bottom but let’s face it you have no idea what that looks like. Now what you can probably count on, is that, if governments start printing money on an even more massive scale, cutting rates while doing so – the value proposition that is BTC will become ever more obvious. Buyers will return, slowly at first and then all at once. The time frame for this is frankly unknowable though we can all hazard a guess. The halving, of course, complicates any assessment of BTC’s prospects in the coming quarters.

Zooming out, a world where over the course of this decade, Bitcoin fails to hold value against its fiat competitors, starts to look extremely unlikely.

States will certainly roll out their version of altcoins but these will suffer from all the ills of fiat in terms of supply. Add in surveillance and control for good measure and the likelihood is that central bank cryptos won’t pose a credible threat to BTC.

Bitcoin is built to weather crises – this is its first and the market will take time perhaps even years to take the resilience and ever-increasing scarcity of BTC onboard but they very likely will and when they do….

Thanks for listening…

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