Another winter

Bitcoin seems to be preparing for another crypto winter. 16% nose dive this week, below $70,000, and more than 45% from its peak in October. This is Bitcoin Achilles heel: out of the three qualities needed to be considered money, the storehold of wealth is a key one, and the historical high volatility episodes that Bitcoin has experienced, brings a lot of doubt about its ability to be considered money. There are a lot of speculators in crypto, and even though the U.S. government has announced de-regulation in crypto, and the fact that the Trump family seems to be heavily invested in the space, long term investors appear to shy away from it, making it appear like a meme stock. It may recover and reach back to new highs, but the stigma of high volatility makes it difficult to be considered a safe haven, which is what investors might be looking for these days. Gold and silver are also experiencing high volatility, but the narrative surrounding the precious metals is different: there is a disconnect between the paper market and the physical one; the physical metals still retains its qualities as a storehold of wealth, and the futures and options market are the ones trying to manipulate the price. In other words, there are no growing concerns on the value of physical gold and silver. For Bitcoin, there are growing concerns, although the jury is still out. We might be getting closer to a point where investors need to choose a safe haven asset, if fiat currencies keep losing value due to the amount of global debt. And the question is: what would you choose, an asset with 5000 years of track record, or one with almost 20 years that exhibit periodic big swings?

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