Bitcoin IS a Risk Asset
Friday March 11, 2022 - Issue # 7
Until it’s not. In my own view, it’s musical chairs until bitcoin decouples from risk-on assets like stocks and you don’t want to be one of the last ones scrambling for a seat when the music stops.
While BTC chops around the $40k range as it has since the start of the year, everyone seems to be watching for a substantial move in either direction. It’s worth noting that we’ve (Satstreet) noticed that many investors we talk to are praying for a massive move down. Funnily enough, even clients with meaningful exposure are also begging for a dramatic move down so that they can back up the proverbial truck to secure as much coin as possible (or maybe that’s just what they project to help themselves sleep better at night).
Look, we’re living in unprecedented times — covid, war, inflation, trust in governments and central banks (not to mention retail banks) seemingly deteriorating day by day — all signs point to a stock market crash and $20k BTC (or worse). However, if I’ve learned anything over the last 4 years or so, it’s that when the sentiment is strong in either direction — bullish or bearish — the opposite usually occurs.
Musical chairs is a game not to be played by the faint of heart. It can feel like a mad dash, a scramble, high in anxiety, risk, and can bring out the worst in people. Okay, maybe I took the children’s game a bit too far there, but you get my point.
I’m not saying that sitting on the sidelines during this period of uncertainty is a bad idea, but it’s important to know that there are catalysts out there that could have the price of bitcoin get away from you real quick, such as:
Another nation makes bitcoin an official currency
El Salvador announces the closing of it’s Bitcoin Bond and market buys $500,000,000 of BTC
Another “Tesla” like corporate treasury purchase announcement
These are just three very real examples of catalysts that can happen overnight. Waking up the next morning to check the price of bitcoin (like we all do) will likely be gut-wrenching for many folks who strongly believed in bitcoin’s success long term but got a bit greedy on a short term bet. You don’t want to feel like the only one standing when the music stops.
If the consensus is correct this time and we do go through a stretch of downward action — everyone expected it anyway! The good news is that no one seems to be giving up on bitcoin as they have after large corrections following euphoric bull runs in previous years. If bitcoin hasn’t yet broken out of its standard 4 year cyclicity, then the next halving is less than 2 years away — time flies nowadays, anyway.
In case you missed it…