BTC failing to break past $40k, a previous interim high, on the recent rally shows weakness in buying power, perhaps even exhaustion.
Meanwhile, altcoins seem to be getting their sea legs back. Should the bull market in altcoins resume, a decoupling will come where the price of BTC no longer affects the beliefs of millions of speculators, i.e., the market psychology.
Over time, a decoupling will happen as the U.S. and some other developed countries move toward blockchain economies. Those coins like eth, which fuel smart blockchain transactions have prices reflecting commerce.
Crypto like bitcoin that depends solely upon hoping others will pay higher prices to possess it will fade far into the background. Back in 2014, when BTC was priced in the $600s, I wrote a work about bitcoin and how bitcoin is much like the Beany Baby craze (see: THERE ARE 1,297 TRILLION BITCOINS NOW AVAILABLE!).
While there are real costs associated with producing Beany Babies and bitcoin (electricity, computer hardware, labor to write software), all prudent men know that costs never set prices (see: BUT I SPENT 150 HOURS HANDCRAFTING THAT OIL ON CANVAS! OR THE LABORER'S SILLY THEORY OF VALUE.)
A bit more than month ago, BTC hit its all-time high of $64,824.19. Days later, the U.S. government released the worst inflation report in 30 years. Touted as the ultimate inflation hedge, Bitcoin should have skyrocketed. Instead, BTC plunged 30%. Ultimately, bitcoin crashed by -49.7% from its all-time high.
Clearly, then, no one can consider bitcoin as an inflation hedge. As it is a weak payment cryptocurrency owing to inherent technical design flaws (e.g., small block size), what is the purpose of bitcoin? How can it last?
Back in 2014, a price of $649.16 seemed like Tulip Mania, during a time of great uncertainty in the U.S. economy and Federal Reserve banking system. Then, no one truly knew if quantitative easing would not cause massive destruction of the buying power of the dollar. The truth is, it is hard to destroy something that is almost destroyed already.
But right now, enough people on earth believe one BTC is worth roughly $39k. In some countries, like Nigeria, residents there use BTC to circumvent banking restrictions. On a planet with nearly 8 billion, there will be millions, likely, who can put bitcoin to use, to circumvent governments whether evading taxes or overcoming so-called capital controls.
Yet, overtime, with DeFi and altcoins actually powering commerce, those seeking to escape the clutches of greedy politicians likely will have better chances to do so through altcoins powering smart, programmable blockchains.
Once men and women realize this, decoupling will begin in earnest. Bitcoin will become a relic, the Model T Ford, a grand experiment that kicked off a revolution for mankind.
Gab It
