We’re Back To Square One With Bitcoin

Just when the bear was peeking out of his cave (me), Amazon squashed the rumor. People speculated Amazon would enable Bitcoin payments because they listed a crypto related job.

Speculators did their magic and briefly got Bitcoin back up to $40,000 per coin. However, the rally died out due to overextension and Amazon’s eventual response.

Despite this, Bitcoin still trades higher than it did before the Amazon rumor. With the major catalyst gone, you would think Bitcoin would return to the pre-rumor price point. However, that hasn’t happened.

Some will argue that Tesla holding onto their $1.3B Bitcoin position helped Bitcoin regain momentum, and I wouldn’t be surprised. However, one company’s decision to hold onto Bitcoin shouldn’t influence the asset’s price.

Bitcoin is by no means the first asset to confuse investors. Stocks go up or down for very little reason in some cases. Buy the rumor, sell the news stocks don’t immediately reach their pre-rumor price point for a while if ever.

I mean, Nikola Motors stock is still a thing…so the stock market can be just as baffling at times.

What if Bitcoin were an actual currency rather than a speculative investment? We’ve heard for years about this scenario but haven’t really seen it come to fruition.

Amazon accepting Bitcoin would have completely changed the narrative. Even though the rumor was squashed, it got more people to think, “Can Bitcoin actually become a main currency?”

Previously, the light was emerging at the end of the tunnel, but we’re still deep in the “speculative investment” stage. Bitcoin is seen more as a trade rather than a stable currency.

Once Bitcoin or something like it becomes a stable currency adopted by many popular retailers, I’d be interested.

Regarding the asset…no one truly knows. Shocker, right? But other than that, it’s pretty much the same.

We still have a volatile asset that will receive plenty of coverage on the media and YouTube because of its popularity. People are searching for Bitcoin news and scouring the web for any information they can find.

Bitcoin will continue trading at a volatile pace. Despite being touted as an inflation hedge, Bitcoin moves surprisingly in tandem with the stock market. My personal opinion is that the earnings season propels stocks in the short-term. Macro concerns and high valuations regain center stage immediately after the earnings season (i.e., mid or late August).

Although the stock market should, in theory, not affect Bitcoin prices, it does. The stock market affects speculative investors, and Bitcoin is a speculative asset. That’s the best reasoning I can come up with for the correlation.

Bitcoin is just more volatile than the stock market, so it generates above average returns and losses. It also generates above average emotions compared to other investments.

The recent news around Bitcoin has been a whole lot of nothing. It’s generated unreasonable price movement over the past few days. The big news that catalyzed that movement was a squashed rumor, what-if investors who want that rumor to still be true, and Tesla holding onto their Bitcoin position.

None of these news items should have moved Bitcoin the way it moved (with the exception of the Amazon news before Amazon put an end to it).

This week seems to provide an accurate view of many Bitcoin movements…a whole lot of nothing in most cases. A big brokerage firm buys a load of Bitcoin. Who cares?

Some smart investor who predicted Amazon stock in 1999 says Bitcoin will reach $500,000 by the end of 2022. That’s one person’s opinion and a single pick of their many. How were their other stock picks?

Furthermore, who cares about them getting Amazon right in 1999? Plenty of other people did too, and not all of them are Bitcoin bulls.

It’s impressive if you bought Amazon stock in 1999 and continued to hold to this day. However, it doesn’t make your future investing decisions more valid than someone who didn’t spot Amazon stock in 1999.

The media likes to include those types of details in their clickbait headlines in an effort to drive traffic to a whole lot of nothing. Just another prediction centered around predictable catalysts.

I still smell tulips now that Amazon denied they were planning on accepting Bitcoin as a payment model. However, if those plans change or some other big retailer starts to accept Bitcoin as a payment (i.e., Walmart), I’ll change my tune once again.

I’ve written two other articles about Bitcoin. The one on the top presents a bullish take. It’s the what-if for Amazon accepting Bitcoin as a payment.

The other article is a bearish take that more accurately reflects my current stance since what-ifs don’t reflect reality.

I don’t often write about Bitcoin unless something big happens (i.e., different from someone making a big price prediction). The Amazon rumor was big, but now it’s not. That puts me back in hibernation mode.

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Source: https://medium.datadriveninvestor.com/were-back-to-square-one-with-bitcoin-567cdd2519e0?source=rss——-8—————–cryptocurrency