Wall Street, Bitcoin, and the markets in general are breathing new positivism as uncertainty over the United States presidential election subsides as the polls widening gap between the two candidates. This means that the risk of closed results is diluted. This was received as excellent news as there will be no transition issues. Nobody wants a political issue with the validity of the results. The possibility of a resounding victory has therefore brought great optimism.
Now let’s talk about this week’s most-read crypto news.
Personally, I have no experience with GoodDollar as I am not a user. To be honest, I’m not interested. Suddenly it is the phrase “free money” that makes me think that everything is an expensive scam. I dont know. It seems to me that it is these kinds of elaborate schemes that sooner or later end in disaster. DeFi mania is sometimes too much for my liking. I don’t doubt that there are people who make money out of it. But it’s not my style. I prefer simpler business with less euphoria.
In these matters it is not uncommon for us to fall prey to our prejudices. In other words, we cannot be suspicious of anything new. That would contradict the innovation. While it is true that there are bad systems, it is also true that good companies are not all created equal. We have to be open to paradigm shifts. The old models are a guide, but we cannot ignore the new one.
In other words, between skepticism and naivety there is a third way: Caution. What he means is that we need to study these new projects very carefully. Basically, we have to give new projects the benefit of the doubt. However, this does not mean that we should accept them without question. The smartest option is thorough research. That means we have to do our homework before investing. It is a mistake to be mistaken. But it is also a mistake to be dull. It is best to be demanding but open-minded.
In my opinion, things must be called by their names. Efforts to bring everything under a lens that fits a particular narrative sometimes go to extremes. Few have the courage to admit that the Federal Reserve’s injection of liquidity was primarily responsible for the rebound in financial prices during this crisis. Bitcoin included. Bitcoin is said to be “decoupled from traditional markets” as it has a negative correlation with the dollar and a positive correlation with the euro.
These desperate attempts to present Bitcoin as an anti-establishment movement sometimes reach absurd proportions. That doesn’t make sense to me. Who are we kidding? The aim of the monetary stimulus is to precisely weaken the dollar in order to increase the price of assets. That is the point. The crisis is bringing prices down and the momentum is trying to raise them to help the recovery. Of course, the weakening of the dollar is related to the rise in prices in the markets. That is the intention. Liquidity injections increase demand. And demand increases prices.
It’s not quantum physics. In fact, it is very easy. Ah, but we can’t say that. We have to color everything with the usual conspiratorial tone. “Bitcoin is not connected” “The negative correlation with the dollar.” Wall Street is criticized a lot, but at least there they are more sincere in that regard. They welcome the incentive and celebrate when the stock indices gain in value as a result. In the Bitcoin community, the matter is discussed in a dishonest manner, inflating the pathetic bias to (forcibly) accommodate an ancient narrative. He’s like the boxer who lost the fight, but instead of admitting defeat, he tells everyone that he hit his opponent’s hands violently with his face. The victory is yours. Seriously? Who are you kidding?
If the crypto market is to grow, it should expect much more scrutiny from the authorities. Much is said about the arrival of institutional capital. And a lot is said about the importance of institutional capital to the future of Bitcoin. But what is institutional capital? One way to put it is that it is other people’s money that is managed by specialists. In other words, the public that trusts others. And I fear that this public only has the law as a guarantee.
It is said in the bitcoin community that in a few years time, the total capitalization of bitcoin will match the capitalization of gold, which orbits nearly $ 8 trillion. The only way to get such numbers is through the involvement of institutional capital. Banks, funds, pensions, governments. Would it be realistic to expect that a large fund would not require closer scrutiny from regulators? Let’s say the United States Social Security, the Federal Reserve, the Mayor of London, the California government, and the French law enforcement agencies have decided to invest in Bitcoin. Will regulators allow a Wild West?
The most radical Bitcoiners speak of trillions of dollars per unit in a few years. At the same time there is talk of a totally libertarian paradise. Is this realistic? I fear that we will have to make certain concessions along the way.
The role has its cost. Now that Bitcoin has come out of the shadows, we can no longer pretend we have the same freedoms as before. We forget that even the most liberal tax havens have to obey certain rules. Bitcoin has to find its place. I don’t think the regulatory extreme of fiat currencies will be reached, but it certainly won’t be a no man’s land today.
Well, there has been exchange control in Venezuela for a long time. This is not new. The dollar market has always been a black market. Currency exchange has been an “illegal” activity for many years. The process of “dollarization” in Venezuela is a kind of citizens’ movement. It’s not official. It has always been something “secret”. Of course, the Venezuelan government does not agree very much with their actions. And the official discourse is ambiguous and changing. But the Venezuelans are used to it. Suddenly, this new announcement is made to intimidate the banks for a hidden agenda of the regime. I dont know. Everything is strange in Venezuela. And nothing is clear.