Bulls don’t just run in Pamplona
Views expressed in the article below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
Like a hot knife through butter, or a trillion-dollar asset through major resistance, Bitcoin steamrolled past $53k on Wednesday with a bullish Q4 firmly within its sights. As tradfi markets continue to consolidate, BTC has mounted a rampant charge, seeing gains in excess of 20% since October’s open.
While such rapid growth may see short-term consolidation, $53k has been a significant level to reclaim
A keen eye for chaos
While there are certainly no oracles in any speculative market, let alone the most volatile one at present, PlanB has certainly come close in recent months. Back in June, the long-time BTC analyst shared his “conservative” predictions for the remainder of 2021. With August closing at $47k, and September closing a hair shy of $44k, his Stock-to-Flow model has held steadfast through the tumble-dryer of FUD and macro-market bearishness that has come to light since May.
Stock-to-Flow has played out well since PlanB’s June calls
While tradfi markets have seen steady recovery in recent days, BTC’s blistering run has ushered in whisperings of the long-awaited decoupling. Since Bitcoin’s inception, its price sentiment has correlated closely with global markets, with crypto experiencing significant drawdowns during times of heightened uncertainty, as was observed during last year’s Covid crash. However, in order to truly function as a Store of Value, BTC needs to act as an independent asset with intrinsic long-term value akin to that of gold.
Too early to decouple?
The past week’s run from lows influenced by news of Evergrande’s collapse has provided a small glimpse of what a safe-haven BTC may actually look like. However, attention should be paid to the size of the crypto market in relative terms. At its peak of $2.4T, the entirety of crypto still claimed less than a quarter of gold’s $11.2T market cap. BTC alone, while having again surpassed a $1T valuation, still has a long way to go in establishing itself as the predominant store of value globally.
As fiat continues to lose value due to aggressive inflation of monetary supply, major institutions have begun to enter the crypto market to hedge against the dollar. The influx of key role-players in 2021 has validated the thesis that BTC could act as digital gold – eventually. With the likes of Microstrategy, Tesla, and Square amassing vast stores of BTC over the past year, the question of decoupling seems to be shifting – from if, to when.
Carefully, carefully