Kaboom! Bitcoin crashes below $30k like I said it would. From the post last week, “[Bitcoin is recovering a bit, at $30k, but it’s gonna drop as always.]”. Sure enough, now at 29k:
Of course, it has a long way to go until $15k, but it will get there soon enough. There is no possible world in which crypto is not screwed, to put it bluntly. The US government is trying to shut down cryptocurrencies short of making them illegal. Regulation will continue to get worse. The government sees Bitcoin as a hole in its dollar hegemony, and is trying to plug it. (e.g. sanctions evasion, tax evasion, etc.) More exchanges will fail, too. Your own, personal opinion on this matter and the US government and its role as a world police, is irrelevant here…these are just the facts.
A decade later, crypto still has no adoption or use case beyond evading capital controls. Consumers don’t want to pay in crypto. Merchants don’t want to deal with the complications of processing crypto payments, and converting back to fiat. I discussed this earlier–not going to belabor the point. Regulation will make adoption harder, but at the same time, rampant fraud necessitates the government to take action to protect consumers. Whether or not such protection is effective is debatable. Likely it’s not, as it’s too late, much like operating on a dead patient.
High interest rates hurts crypto badly, but stocks will outperform. Tech stocks boomed in the 1980s and 1990s despite high interest rates, while gold and other commodities did poorly. Likely the same will play out here, too. Crypto is more like a commodity than an equity.
Balaji is wrong, imho. Crypto has no future as an ‘exit’ or a ‘network state’. The future is ‘big tech’. With Bitcoin at $29k and the Nasdaq $13k, we’re at a junction. Maybe I will be wrong and Bitcoin goes to $100k+ and the Nasdaq sputters out, but I think this is exceedingly unlikely.
Third, Bitcoin and Ethereum are in the grip of hedge funds, who have turned it into another highly-correlated risky asset class. This is why there is no crypto volume on the weekends, when the futures markets are closed. Pre-2020 crypto was not as highly correlated with the stock market and economy, but not anymore. Hedge funds have the power to destroy any asset class by shorting it into oblivion. [Kenneth C. Griffin made so much money, out of boredom, he bought the naming rights to a Harvard department for $300 million. The odds you are going to make money going up against him are poor.] We saw this with oil, which briefly went to $15 in 2020 during Covid. Or natural gas. Conversely, hedge funds can also inflate bubbles, but for the above reasons, this will not happen with crypto anymore.