My theory was that crypto whale traders swooped in late final 12 months not merely due to the 85% decline in BTC however due to a key technical buying and selling issue – and nothing extra.
Willy Woo confirms that the current worth rise was pushed extra by whales shopping for and making an attempt to fabricate a brief squeeze.
That is each excellent news and unhealthy information for bulls.
Good Information for BTC Bulls
The excellent news is that bitcoin will behave like most low-float illiquid shares.
With low-float illiquid shares, the limitation on share depend implies that the inventory will all the time be topic to excessive ranges of volatility and huge spreads on the bid-ask.
It additionally implies that any try and short the stock down comes with inordinate threat contemplating a sudden surge in shopping for will crush the short-sellers.
With bitcoin, there’ll all the time be a sure variety of short-sellers, and which means brief squeezes like this are going to be a extra possible incidence than not. That ought to theoretically present a degree of worth assist over time.
Unhealthy Information for BTC Bulls
The unhealthy information is that bitcoin has a wrinkle that makes it extra weak than low-float illiquid shares.
Willy Woo and different bitcoin bulls speak about “natural funding.” With even a low-float illiquid inventory, an investor is definitely shopping for one thing that produces a very good or service and generates an earnings stream (assuming the enterprise itself is worthwhile).
So long as that good or service is in demand, and the corporate itself is in any respect aggressive, then it should obtain true natural funding.
Bitcoin is neither a very good nor a service. It’s a imprecise funding commodity that produces nothing.
Bitcoin Is a Awful Retailer of Worth
It isn’t even an excellent retailer of worth for the very purpose that Willy Woo factors out – volatility.
One thing isn’t a retailer of worth when that value can fluctuate as a lot as 15%, or extra, in a given day.
Over the previous three years, bitcoin has a mean annual return of 144%, plus or minus 197%.
Gold has a mean annual return of 1.8%, plus or minus 21%.
Whereas I wouldn’t name gold essentially the most steady retailer of worth, it’s a heck of much more steady a retailer of worth than bitcoin is.
Ultimately, hypothesis goes to die out. When that occurs, maybe then bitcoin shall be an precise retailer of worth.
Disclaimer: The views expressed within the article are solely these of the writer and don’t characterize these of, nor ought to they be attributed to, CCN Markets.