Selling is “flows,” rising is “adoption,” and the blockchain remains a glorified spreadsheet with mood swings.
Bitcoin slipped under $90,000 yesterday, losing more than 4% in early US trading hours. It’s down about 30% since October 5.
According to K33 Research, the analytical arm of Nordic digital-assets broker K33, this drop ranks as one of the currency’s biggest since 2017.
Vetle Lunde, K33’s head of research, says the current 43-day drawdown already ranks among the worst compared with the seven corrections that lasted over 50 days since March 2017.
The ETF crowd is heading for the exits, too, with over $2B vacating US spot Bitcoin funds in just five consecutive sessions.
“BTC swept lows below the average cost basis of US BTC ETFs, and if the current drawdown mirrors the two deepest drawdowns over the past two years, a bottom may form between $84,000 and $86,000,” he said. “If not, a revisit of the April low … may be a natural leg lower.” That was under $75,000.
What gives?
Wasn’t this supposed to be a crypto-friendly administration? Wasn’t Bitcoin going mainstream? Wasn’t it the hedge against hard times elsewhere in the financial casino? No, no, and not so much?
Well, there were questions along the way:
Excerpt: “We’re back to the primary merit of Bitcoin being that its price has gone up. … A key difference between the appreciation of Bitcoin and the appreciation of stock shares is that the former is driven by rising demand only, while the latter is driven by rising demand fueled by rising earnings. Investors have wanted more shares of Nvidia recently because of its soaring earnings on the growth of artificial intelligence, and more shares of the Nasdaq 100 because of the rising aggregate earnings of its components.”
Excerpt: “…fiat money does not have intrinsic value. It’s just trust. Monetary paper and metal, or indeed numbers on screens in most cases, are worth nothing if we stop believing in them. But if we already have money from nothing, managed by sophisticated institutions backed by governments, why do we need a new class of money from nothing, backed by online spreadsheets dressed up in the sophisticated sounding name blockchain technology?”
Excerpt: “I conceded to my ‘digital gold’ companion that scarcity could boost the value of crypto and any other asset, but asked if he would concede that it would not necessarily do so. ‘Yes,’ he said cautiously, ‘but the value of Bitcoin has risen through such doubts for a decade and a half now.’ It has, but the fact that a price has risen does not explain the reason, nor offer confidence that it will keep doing so. A catalyst beyond speculation would be nice.”
Excerpt: “There seems to be no fundamental reason for a digital, non-productive asset to grow in value. Its price fluctuates, which can be useful, but absent a reason to achieve overall growth over time, how can we be sure it won’t reverse entirely toward zero? It features no earnings foundation.”
With that, let’s take a closer look at this latest drawdown.
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