Bitcoin plunging to $30,000 is a sign the system has already collapsed
The system has collapsed. Bitcoin falling to $30,000 is the proverbial canary in the coal mine. A complete asset collapse in bitcoin is likely to be seen over the next couple months. We are in the ninth inning of a long ball game that is about to end.
Inflation will accelerate shortly followed by a sell-off in bonds and a massive increase in interest rates. Bitcoin bulls say that bitcoin is the perfect inflation hedge. But we think that is far from the truth. Bitcoin is a speculative instrument that gamblers have taken control of. There is no intrinsic value. Zero competitive advantage. And anyone can throw together code to create a competing cryptocurrency anytime they want.
Take Dogecoin as an example. Started as a joke that went mainstream when Elon Musk endorsed the coin. While many of the hardcore bitcoin bros state that Dogecoin is a joke and bitcoin is superior – the fact is both are speculative pieces of code thrown together. When Elon bashed bitcoin as inferior and damaging to the environment, the canary in the coal mine began to sing.
Elon calling out bitcoin as inferior and damaging to the environment was the first knife in the bear thesis of bitcoin. Sure, if bitcoin didn’t have thousands of other competitors (shitcoins) this wouldn’t really be an issue. But when individuals have thousands of different cryptocurrencies to invest in, the idea of “scarcity” really becomes a joke.
Following the Elon debacle was the Portnoy allegiance to SafeMoon. Another large influencer putting his money behind a cryptocurrency other than bitcoin. If you think this is the last influencer choosing sides think again.
This cycle of allergenics to different cryptocurrencies will not end. When there is an unlimited supply and different variation do you really think one coin will remain superior? Is bitcoin even the best code out there to run an internet currency? Probably not given how fast technology develops. So saying that bitcoin has a competitive advantage among an unlimited supply of computer code (that is ever changing) and in the face of billionaires choosing different crypto allegiances – the top is likely here.
Circling back to the main narrative – bitcoin collapsing to $30,000 is a sign the system is already crashing – is just one sign in many that this speculative mania is about to end. Higher inflation will lead to higher interest rates. Higher interest rates will lead to higher discount rates. And higher discount rates will lead to lower asset valuations.
Discount rates have been at record lows for too long. Low discount rates have lead to nosebleed tech valuations that make zero fundamental sense. The shift from tech to value has begun. The canary in the coal mine is dead.