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Is Bitcoin a Bubble?

Was chatting with a smart money friend last night about Bitcoin. Got into it a bit about bubbles. You guys know I’m a TA guy but I’ll do my best to share the view I have on fundamentals.

1) The sooner you stop equating $BTC to $USD or fiat terms, the sooner things start making sense. We know Honey Badger doesn’t give a damn about shitcoins… well, USD is no exception, my friends.

You can’t compare Bitcoin to fiat, it’s apples to oranges. Bitcoin inflation is known and anyone with a grip of math can figure it out. CPI, by contrast, is infinitely more complex and requires no math at all to know it’s complete BS.

2) Bitcoin is working as designed. Its economic model is proving to be valid and sustainable as seen by real deflation in $BTC priced goods. Even Bitcoin fees, which have no correlation to $USD, are decreasing in $BTC terms while transaction value skyrockets in $USD.

3) If Bitcoin were in a bubble, you would expect increased volatility as it struggles to find fair value range. We’re not seeing that pattern at all. $BTC volatility is ridiculously low. Look at the comparison between 2013 and now.

4) We are seeing stronger participation on average than ever before. Participation indicates the market is accepting value at this range. The year isn’t done but no 500% 1M yet, like we saw in 2013. Slow grind up in 2017. Strong volume establishes strong support.

Unlike 2014, extreme distribution volume on the historic scale would barely put a dent in this rally by comparison. Further, the market is far less centralized today. A Mt. Gox type event is far less likely and would not present the same systemic risk.

5) While cataclysmic failure may be possible, Bitcoin has shown amazing resilience on horrible news. It’s proven it doesn’t care what governments do and that it can repel massive attacks on the network. It’s survived everything thrown its way without deviating from core values.

Nobody does decentralization and immutability like Bitcoin – no one. As a store of value, this is a financial revolution of unprecedented scale.

6) It’s only just begun.

Bitcoin is far more rare than gold. How rare? The total supply of Bitcoin (21M) is just 0.36% that of Gold ounces (5.8B). At full $BTC supply circulation, it would need to reach over >400K/$BTC to equal the current market current cap of $Gold. That doesn’t consider lost coins, which is a considerable amount. When you factor how much more rare and useful Bitcoin is, we could be talking magnitudes beyond $Gold’s market cap.

I’m not saying we’re going to 400K anytime soon. What I am saying is that 10K is piss on the fundamental scale. We’re at ~185B market cap today. Plenty of upside potential by all accounts.

Complaining you can’t afford a Bitcoin today? Just wait until you can’t afford 1 mBTC.

Note:

Originally published on Twitter.

 

Aurie Philipchuk

Bitcoin fellow. Entrepreneur with a trading and investment background. Jack of all trades @Tractai.

 

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