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0/ Please read and weigh in on/share the following #BTC 
price analysis: @BTC_JackSparrow @100trillionUSD @PrestonPysh @RaoulGMI @woonomic @Breedlove22 @real_vijay @caprioleio and others, of course! In the meantime, much appreciation for all you do to support the CT community!
price analysis: @BTC_JackSparrow @100trillionUSD @PrestonPysh @RaoulGMI @woonomic @Breedlove22 @real_vijay @caprioleio and others, of course! In the meantime, much appreciation for all you do to support the CT community!
1/ What has become clear to me these past few months is that CT is conflating (and therefore arguing over) whether #BTC price is driven more by the nature of its halving cycles (supply-siders) or by global/crypto-specific/macroeconomic events/factors (demand-siders).
price is driven more by the nature of its halving cycles (supply-siders) or by global/crypto-specific/macroeconomic events/factors (demand-siders).
2/ For the HODLers among us, the good news is that it doesn’t matter which side you lean toward. It’s a “win-win more quickly” scenario, at least for the foreseeable future.
Let me explain…
Let me explain…
3/ I don’t think this will be news to anyone, but to state the obvious nonetheless, the price of anything is a function of both its supply and its demand. What may be slightly less obvious is that the relationship between the two is continually relative, and therein lies the rub.
4/ On the supply side, #BTC is unambiguously disinflationary, with block rewards getting chopped in half every 4 years or so. As such, demand automatically jumps relative to supply every four years, even if base demand remains unchanged. Enter @PlanB’s S2F(X) model.
is unambiguously disinflationary, with block rewards getting chopped in half every 4 years or so. As such, demand automatically jumps relative to supply every four years, even if base demand remains unchanged. Enter @PlanB’s S2F(X) model.
5/ In fact, the implicit assumption of the model – and arguably its primary point of contention – is whether demand for #BTC is constant. i.e., If you believe demand is constant, or at least won’t fall, then virtually all other factors are irrelevant to #BTC price. Full stop.
is constant. i.e., If you believe demand is constant, or at least won’t fall, then virtually all other factors are irrelevant to #BTC price. Full stop.
6/ In other words, global events, crypto-specific events, macroeconomic factors, etc. are merely noise that continuously (but ultimately meaninglessly) shake the S2F(X) model dots up and down along #BTC ’s path to its inexorable halving-cycle/S2F price point.
’s path to its inexorable halving-cycle/S2F price point.
7/ Like it or not, the S2F(X) model has fulfilled its destiny to date. Whatever you attribute to #BTC ’s price change over time, nothing can change the fact that #BTC ’s price is exponentially higher today than it was 4 years ago and highly (if spuriously) correlated with its S2F.
’s price change over time, nothing can change the fact that #BTC ’s price is exponentially higher today than it was 4 years ago and highly (if spuriously) correlated with its S2F.
8/ The question then is whether any factors/variables other than the disinflationary nature of #BTC ultimately influences its price. The “anti-S2F(X) maximalists” (demand-siders) argue that other factors clearly do matter, and perhaps almost exclusively so.
ultimately influences its price. The “anti-S2F(X) maximalists” (demand-siders) argue that other factors clearly do matter, and perhaps almost exclusively so.
9/ In other words, it is foolish to assume that demand is constant. Global events, crypto-specific events and macroeconomic factors all influence - if not outright determine - the level of demand for #BTC . Cue @michael_saylor and #Microstrategy.
. Cue @michael_saylor and #Microstrategy.
10/ Point in fact, it is all but impossible to argue that exogenous factors wield no influence over #BTC price. March 2020 ring a bell? Trump contracting COVID? #Bitmex investigation? Stimulus or no stimulus? All of these events have swayed #BTC price, sometimes dramatically.
price. March 2020 ring a bell? Trump contracting COVID? #Bitmex investigation? Stimulus or no stimulus? All of these events have swayed #BTC price, sometimes dramatically.
11/ The question is, however, to what ultimate end? I would argue that #BTC price is unquestionably influenced by such demand-side factors, and continuously so, but ultimately, the disinflationary nature of #BTC is the ultimate arbiter of its long-term price.
price is unquestionably influenced by such demand-side factors, and continuously so, but ultimately, the disinflationary nature of #BTC is the ultimate arbiter of its long-term price.
12/ More specifically, I would argue that demand-side factors either impede or expedite the speed at which #BTC finds its price equilibrium each halving cycle, but they have little ultimate influence on the price equilibrium eventually achieved each cycle.
finds its price equilibrium each halving cycle, but they have little ultimate influence on the price equilibrium eventually achieved each cycle.
13/ Support for this supply-side argument can be found in the varying strengths of #BTC price correlation with exogenous variables like changes in inflation rate, the DXY, the SPX, growth/tech stock prices, currency devaluation rates, bond yields, precious metal prices, etc.
price correlation with exogenous variables like changes in inflation rate, the DXY, the SPX, growth/tech stock prices, currency devaluation rates, bond yields, precious metal prices, etc.
14/ Numerous CTers have illustrated these correlations, and many of us have fretted, “When will decoupling FINALLY happen?” I would argue, though, that it is precisely because such correlations change so much over time that they only temporarily influence #BTC price.
price.
15/ Put another way, #BTC demand unquestionably ebbs and flows over time due to numerous exogenous factors. IMO, however, the now-entrenched #BTC user base puts a firm floor under its demand, so the S2F ratio is the only variable that ultimately matters in the long run.
demand unquestionably ebbs and flows over time due to numerous exogenous factors. IMO, however, the now-entrenched #BTC user base puts a firm floor under its demand, so the S2F ratio is the only variable that ultimately matters in the long run.
16/ Stated differently, if you lend any credibility at all to the Network Effect and/or Metcalf’s Law, then I would take considerable comfort in the fact that #BTC price will inexorably find its way higher over time, at least in the absence of a catastrophic network event.
price will inexorably find its way higher over time, at least in the absence of a catastrophic network event.
17/ The only question is whether global/crypto/macroeconomic events/factors will impede or expedite #BTC ’s inexorable rise in price. IMO, current exogenous events will most definitely expedite its rise, so rejoice HODLers: we will not only win, but we will win more quickly.
’s inexorable rise in price. IMO, current exogenous events will most definitely expedite its rise, so rejoice HODLers: we will not only win, but we will win more quickly.
P.S. Failed to originally tag @krugermacro, whose contrarian opinion to the anti-S2F(X) model "fan club" is important in the ongoing debate re: #BTC price.
price.
