A bitcoin analyst and blog writer validates that the recent rise in the bitcoin price was not due to any sort of organic financier circulation.
My theory was that crypto whale traders swooped in late last year not merely since of the 85release in BTC however because of a crucial technical trading element– and nothing more.
Willy Woo validates that the current rate rise was driven more by whales buying and attempting to make a brief squeeze.
This is both great news and bad news for bulls.
Good News for BTC Bulls
Fortunately is that bitcoin will act like most low-float illiquid stocks.
With low-float illiquid stocks, the limitation on share count implies that the stock will always undergo high levels of volatility and big spreads on the bid-ask.
It likewise indicates that any effort to short the stock down features inordinate danger considering an unexpected surge in purchasing will crush the short-sellers.
With bitcoin, there will constantly be a certain number of short-sellers, which implies short squeezes like this are going to be a more likely occurrence than not. That must in theory supply a level of cost support gradually.
Bad News for BTC Bulls
The problem is that bitcoin has a wrinkle that makes it more vulnerable than low-float illiquid stocks.
Willy Woo and other bitcoin bulls discuss “organic financial investment.” With even a low-float illiquid stock, a financier is really buying something that produces a great or service and produces an incomes stream (assuming the service itself is successful).
As long as that great or service is in need, and the business itself is at all competitive, then it will get real natural financial investment.
Bitcoin is neither an excellent nor a service. It is a vague investment product that produces nothing.
Bitcoin Is a Lousy Store of Value
It isn’t even an excellent store of worth for the very factor that Willy Woo explains– volatility.
Something isn’t a store of worth when that worth can fluctuate as much as 15%, or more, in a given day.
Over the past three years, bitcoin has an average yearly return of 144%, plus or minus 197%.
Gold has an average annual return of 1.8%, plus or minus 21%.
While I wouldn’t call gold the most steady store of worth, it’s a heck of a lot more stable a store of worth than bitcoin is.
Ultimately, speculation is going to die out. When that happens, possibly then bitcoin will be an actual shop of value.