The graph on this tweet is one of the most beautiful things I’ve seen lately.
Click the tweet and follow the discussion, there is some clarification there, on why he chose 20x for example and a few other things. It’s not my fault twitter discussions are stupid like that, figure it out. I don’t use twitter. Now, I’m not one to get excited and believe these random occurrences and colourful charts. Anything can be manipulated in a chart to distort the information gained from it.
But let’s break it down, shall we?
- The halving is real.
- The cyclical nature of Bitcoin is real.
- The stock to flow model seems to be spot on.
Now, will bitcoin reach an All-Time-High of 400.000 before 2022? I don’t know. I’m sure it will rise, maybe not that high.
With the large institutions and corporations going into bitcoin right now, there’s a level of stability and growth. People no longer expect those 90% crashes that have happened many times already. There’s a lot of money carried around by bitcoin and that acts as a cushion of sorts. So maybe that also dampens upwards mobility.
I was talking about this with my brother and he has an extremely intelligent friend who sent us this regarding the rainbow chart:
The implicit assumption here is a phenomenon called exponential growth
the basic law of biology things that grow via contact experience an exponential growth phase
that growth will cease once the size of the thing approaches the carrying capacity
this has been observed in product and innovation adoption. look up “bass curve”. same thing is happening to btc. adoption growth exponentially, and so does price.
the math model for this is called Geometric brownian motion with drift. you can build btc trading strat with that and it could have been successful
but some day you will reach carrying capacity and growth stops. when is that? if you get wrong u might lose all your gains. [sic]D
I’m quoting this exactly as it is. Never mind the chat lingo, this guy is being employed by billionaires to make fintech tools for them. Take the time to fully grasp his reply.
As I saw the first tweet I also happened to listen The Bitcoin Standard’s podcast about Bitcoin and Market Efficiency.
In this podcast there’s a part where he explains how he believes that Bitcoin will become the international monetary standard. He talks about Mises I think who spoke about economics and how you can’t make accurate predictions since there are no absolute constants. It’s like trying to work with an elastic ruler, sometimes it’s 30 cm, other times it’s 29.4 cm. And then you compare the shelf you made but the other guy used a ruler that was 31.2 cm, so you’ve essentially made a mess. Economics needs a solid monetary standard, and gold, although it’s the only thing we have so far that comes close, is still hidden in the crust of the Earth in unknown quantities.
Enter Bitcoin which has exactly 21 million coins in quantity, and the network itself tells you how many bitcoins are in circulation right now. That level of detail was unimaginable. Saifedean seems to think that Mises dismissed the possibility of such a monetary standard, since with the technology of the time it seemed just a theoretical construct. Now we seem to have such an impossible thing.
So maybe, Bitcoin will become the international monetary standard. Some bitcoiners have started to measure everything in satoshis in their mind. Just like I need to change the currency to euro in everything I use because the USD is way lower and pisses me off, in the same way at some point in the future I might have satoshis on my mind and convert everything to that. By that time the price fluctuations of bitcoin will have smoothed out and you’d be able to glance at the price once a week or even once a month and then go about your business, making calculations in your head.
I can certainly see Bitcoin engulfing the entire world and becoming digital gold. The network effect is there, the security and dependability is there, the intelligent community is right there behind bitcoin.
At the same time I don’t argue that exponential growth in unsustainable and there is a limit to BTC carrying capacity. I just think that it’s much larger than we expected.