Analysis: What the #&%$ Is Happening With Bitcoin?!
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Analysis: What the #&%$ Is Happening With Bitcoin?!

7 months ago

Inflation is up, all-time highs are rising and falling back, and over the long term, Bitcoin investors who bought the dip in May are looking smug.

Analysis: What the #&%$ Is Happening With Bitcoin?!


What's happening with Bitcoin? 

Well, let's look at the news for the last couple of days.

On Nov. 9, the total market capitalization of cryptocurrency briefly topped $3 trillion. Wasn't $2 trillion big news back in April? And $1 trillion back in January? 
Popular crypto analyst PlanB pointed out that his stock-to-flow model was running "like clockwork" — and it puts Bitcoin at $100,000 before the year is out.
On Nov. 10, the Consumer Price Index — i.e. inflation — was up more than 6.2%, the worst in 30 years. Bitcoin hit yet another all-time high of $68,789.63

The standard answer is: With the CPI shocking everyone, investors started buying Bitcoin — Gold 2.0 — as a hedge against inflation.

Of course, Bitcoin promptly tanked on Nov. 10, briefly dropping more than $5,000 over about three hours to around $63,200. This could be profit taking — or potential jitters surrounding the ongoing debt crisis engulfing the Chinese property developer Evergrande.
On November 11, the day began with Bitcoin crossing back above $65,000.
Chris Weston, head of research with Pepperstone Financial Pty Ltd, told Bloomberg in the wee hours of Nov. 11: 

"The last few days we've seen some really big information coming through which has made people want to go out and hedge themselves against inflation risks. Bitcoin's been doing well, crypto's done well as a hedge I suppose, gold's been moving up concurrently with the stronger dollar."

So, at the risk of being repetitive, what's happening with Bitcoin?

Well, one answer is that the average investor's traditional reaction to bad economic news is: When in danger or in doubt, run in circles, scream and shout.

Translated into crypto: Bitcoin is volatile and when the markets are going haywire, sell anything volatile. Because how else can you be sure you'll sell low and buy high?

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Run in a Straight Line

However, a lot more smart money — institutional money — has jumped into Bitcoin and crypto generally in the past year or so. Wasn't that Apple CEO and billionaire Tim Cook revealing that he owned Bitcoin just yesterday?

So, maybe what's happening with bitcoin is: Same old, same old. 

The day traders are taking profit then jumping right back in. The smart money is holding the highs, buying the dips. The FOMOs are, well, running in circles.

And a fair chunk of crypto is waiting for the really important price point. As Quantum Economics founder Mati Greenspan noted on Nov. 10: 

"Everyone get ready to catch a screenshot. $69420 is coming."

Also, assume that when sex and marijuana work their way into Bitcoin's price, Elon Musk will tweet something that will move it (and likely Dogecoin) up when that happens.

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