One Bitcoin Equals One Bitcoin Turns into the Narrative because the Drop Will get ‘Too Painful’

(Bloomberg) — Digital cash, digital gold, inflation hedge, uncorrelated asset, retailer of worth: these are phrases as soon as utilized by Bitcoin’s followers to explain the cryptocurrency’s virtues. Its new narrative? A Bitcoin is a Bitcoin.

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That’s the expression that’s making its rounds on Twitter in current days, the place customers, amid a deep decline in costs, have been posting that 1 BTC = 1 BTC. The concept is that it doesn’t actually matter what the coin’s worth is. Its provide is mounted and that ought to, theoretically, act as a buoy for costs in the long term.

“1 BTC = 1 BTC is one thing Bitcoin maximalists say tongue-in-cheek when wanting on the USD worth of BTC turns into too painful,” mentioned Joshua Lim, former head of derivatives at Genesis Buying and selling. “The implication is that BTC will finally grow to be a unit of account so simply deal with absolutely the variety of BTC you personal at present.”

Anybody listening to the crypto market has grow to be accustomed to the numerous cloaks Bitcoin has donned through the years. Followers had, earlier than 2022, utilized quite a few narratives for the coin, together with that it may in some unspecified time in the future exchange gold, or that it’s an awesome inflation hedge. Most of these narratives have fallen by the wayside this yr as costs plunged amid financial coverage tightening. Bitcoin has misplaced roughly 60% this yr and has been buying and selling beneath $19,000 in current days, down from a near-$69,000 excessive on the finish of 2021.

When the pandemic first broke out, crypto buyers ran with the concept Bitcoin, because of that restricted provide, may act as a hedge towards rising costs. However client worth pressures have remained sticky this yr all of the whereas costs for many cryptocurrencies plunged. Many market-watchers say that buyers at the moment are looking for a brand new narrative for the digital-assets market. Twitter has been flooded with posts proclaiming that each one that issues is that 1 BTC equals 1 BTC.

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Tagus Capital’s Ilan Solot says that the Bitcoin-as-an-inflation hedge narrative argued by the proponents has been misunderstood. It’s incorrect to consider it as Bitcoin not rising whereas costs skyrocket. “The narrative was by no means actually Bitcoin is an inflation tracker, it’s not TIPS,” he mentioned. “Bitcoin was a hedge towards irresponsible money-printing by the central banks.”

Nonetheless, that’s to not say that diehard crypto buyers have been deterred. The proportion of Bitcoin that has not been moved for over a yr has held regular — at 68%, the metric is at the moment at its highest stage since 2014, in keeping with information compiled by FRNT Monetary Inc.

Bitcoin continues to be caught up within the macro atmosphere and hasn’t damaged its correlation with danger belongings, mentioned Stephane Ouellette, chief government of FRNT.

“Narrative are likely to observe markets, extra usually than the opposite approach round,” he mentioned. “When issues are correlated, a method of taking a look at it’s that it’s the identical type of merchants of methods which might be concerned. In the end, there’s a rising and important proportion of BTC holders who won’t ever promote their BTC and those who use it for industrial functions. At a sure level, BTC will begin behaving otherwise than danger belongings, however clearly it’s not there but.”

But it’s clear that Bitcoin’s different narratives haven’t borne out, mentioned Peter Mallouk, president of Inventive Planning. “We now know that cryptocurrencies should not an inflation hedge, it’s confirmed that to us now,” he mentioned. “It’s an enormous, large speculative play for anyone that’s focused on it.”

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