The narrative surrounding cryptocurrencies have evolved among its supporters as values fell amid tighter monetary policy. This year, Bitcoin has lost around 60% of its value, and in recent days, its price has fallen below $19,000.
The words “virtual money,” “digital gold,” “inflation hedge,” “uncorrelated asset,” and “store of value” were originally used by Bitcoin supporters to characterize the benefits of the cryptocurrency. It’s a brand-new story? Each Bitcoin is unique.
This idiom has recently started to circulate on Twitter during a sharp drop in prices, where individuals have been stating that 1 BTC = 1 BTC. It is proposed that the coin’s value is essentially irrelevant. Since its supply is set, prices should, in theory, be supported throughout the time.
Anyone who has been following the cryptocurrency market is aware of the various disguises that Bitcoin has worn over the years. Before 2022, the coin’s supporters used a variety of storylines to promote it, such as the notion that it may eventually replace gold or serve as an excellent inflation hedge. The majority of those stories have been disproved this year as prices have plummeted along with tightening monetary policy. In recent days, Bitcoin has been trading below $19,000, down from a peak of about $69,000 at the end of 2021. This year, Bitcoin has lost about 60% of its value.
Cryptocurrency investors jumped on the notion that Bitcoin, because of its limited supply, might function as a hedge against price increases when the epidemic initially started. However, despite the fact that the prices of the majority of cryptocurrencies fell this year, consumer price pressures remained persistent. According to many market observers, investors are currently looking for a fresh narrative for the market for digital assets. The message that 1 BTC = 1 BTC is the only thing that counts has been widely shared on Twitter.
Ilan Solot of Tagus Capital claims that the story put up by supporters of Bitcoin as an inflation hedge has been misconstrued. It’s inaccurate to believe that Bitcoin is stagnating as prices soar. The claim that Bitcoin tracks inflation but is not TIPS was never actually true, “added he.
According to Stephane Ouellette, CEO of FRNT, Bitcoin is still entangled in the macro environment and hasn’t severed its association with risky assets.
“When things are connected, one way to look at it is that the traders and trading methods are the same. In the end, there is a rising and sizable proportion of Bitcoin owners who never sell their cryptocurrency and those who utilize it for business. BTC will eventually begin to behave differently than risk assets, but it hasn’t arrived yet.”
But it’s obvious that Bitcoin’s other stories haven’t come true, according to Creative Planning president Peter Mallouk. “It has now been demonstrated to us that cryptocurrencies are not an inflation hedge, “added he. If you’re interested in speculative theatre, you should check it out.”
