Mere words can’t describe the enormity, and diversity, of human nature – and Mother Nature. Seismic shifts in mindset can be glacial, and usually are – but sometimes, occur overnight, as they have now.
In my lifetime, I cannot recall an event that so thoroughly shocked the global zeitgeist so quickly – including 9/11. Back then, it significantly scared the world, given the uncertainty about the future 9/11 generated. However, few truly believed an Armageddon scenario was possible.
This, compared to today’s COVID-19 scare – where in a matter of days, anticipation of a real-life version of “Contagion” has become the consensus opinion. The facts of what COVID-19 is would seem to suggest otherwise - but of course, the worst-case scenario is always possible. Neither I, nor anyone, has a clue how it will play out; so all we can do - as individuals, communities, and nations - is take prudent action to mitigate the effects.
As expected, financial markets are crashing – which frankly, have been seeking a pin to pop the greatest Central bank-driven bubble in global history. How far they fall is also pure speculation – as they will use every last ounce of their dwindling monetary and manipulative ammunition supporting them, praying they don’t run out before the crisis ends.
To that end, the hideous Financial Frankenstein they created in the process of bailing out the 2000 and 2008 crises is unprecedented, too. So, despite the prevailing mindset that Central banks will ultimately regain control of stocks, bonds, commodities, and currencies, there is a material possibility they don’t.
As for Bitcoin, there has never been another asset like it – and likely, never will. It is unprecedented in every imaginable way, nearly all of it positive. However, its volatility is equally unprecedented – and far worse in altcoins, which is why I (luckily) sold the one alt I owned, Beam, 24 hours ago.
The fact is, the soaring level of political, economic, and social uncertainty rekindled the “maximalist” tendencies I have had from day one (for anyone who has read and listened to the hundreds of articles and podcasts I published from 2016-18) – and likely, after the circuitous route I took since the 2018 bear market, will remain for the rest of my life.
The fact is, that despite all Bitcoin has been through, it is still a nascent, misunderstood asset. Moreover, it represents the biggest threat mainstream financial markets like stocks, bonds, currencies, and Precious Metals have ever seen – which is why so many commentators, institutions, and politicians attack, disparage, and propagandize it.
From my standpoint, of someone who understands what Bitcoin is – short of a worst-case scenario (of global social chaos), logic says it should be one of the best performing asset classes.
Only a draconian event like shutting down of the internet can stop it – but then again, such a scenario would harm mainstream assets equally, perhaps even more so. At least Bitcoin can be stored on a Trezor until electricity and/or internet connections can be restored, which cannot be said for digital accounts at banks or brokerages!
Given what Bitcoin is – the most perfect financial asset ever created – it is not going away…particularly as it is about to HALVE, as Central banks DOUBLE, or perhaps TRIPLE their monetary output. To that end, it seems nearly incomprehensible that BTC’s hash rate will materially decline in any circumstance – aside from a global electricity shut down; which, if it were to occur, would put Bitcoin’s price WAY down the list of one’s priorities.
Is today the peak of fear and capitulation – for Bitcoin and financial markets in general? I have no way of knowing, but it’s certainly possible – even if the spread of COVID-19 has a ways to go.
Bitcoin will eventually bottom, with the only questions being when, and where. However, today’s capitulative low of $5,600 (thus far) was no coincidence, in my view – just above the Hoffman Line, a $100 billion market cap, at $5,500.
If it does hold there, amidst historically oversold conditions - both technically and sentiment-wise; it presents a very bullish scenario for the coming weeks and months. If not, there’s no telling where it will bottom – with the ONLY thing I am certain of, that Bitcoin is NOT going away.
As for altcoins, the situation is unfortunately, far more tenuous. From day one, it has been obvious 99% have no use case – and thus, it wouldn’t surprise me if 99% die off, in what in hindsight may be viewed as a POSITIVE event for crypto…once and for all weeding out the ONLY coins with viable, defensible use cases.
As noted in last month’s “Altcoin State of the Union,” I no longer think ANY coin competing with Bitcoin as a store-of-value can survive, whilst ONLY the handful of coins offering material value-addition to the crypto ecosystem have the opportunity to generate significant valuations.