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US riots and Bitcoin want to go to the moon Will the flames cause an increase?

June 4, 2020

Another twist in the plot. And that’s getting more and more intense. This year was a real Pandora’s box. The long list of unfortunate events now includes riots, protests, and looting. George Floyd’s death by the police has outraged the public about a cruel old illness: police brutality and racism in the United States. There have been street demonstrations since May 25, some peaceful, some not. Six states and thirteen cities have declared an emergency, and curfews have been imposed in 26 cities. However, How did the markets react? How did bitcoin react?

It is clear and obvious that Bitcoin is not just a digital asset. Bitcoin is also a movement. And within this movement there are many people with political ideas. The Bitcoin narrative was largely written by early libertarians. In other words, the project attracted many libertarians in its early phase and laid the ideological foundation for the movement. However, over the years, Bitcoin has attracted more people, and libertarians aren’t as overwhelming as before. There is still an inherited rhetoric. And libertarians are still among the strongest voices in the community. We inherited the idea of ​​digital gold as a hedge against inflation and crises from libertarians. We also inherit anti-system sentiments, rejection of central banks and contempt for all government intervention in the economy.

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US riots and Bitcoin want to go to the moon Will the flames cause an increase?US riots and Bitcoin want to go to the moon Will the flames cause an increase?

The point is that the libertarian current in the world is very small. And for many it is not viable. For this reason, it has been limited to theory. So here we have the perfect conditions for radicalization. A small group with great ideas, but in constant opposition. This has the great advantage that a libertarian is always right because his ideas are not on the street, but in the head. It is a strong and consistent ideology that makes everyone a keyboard hero. In the big world there is of course pragmatism. It’s not about being right. It’s about being right and strong. And by violence I mean consensus. In other words, support for the population and the institutions. And I’m afraid that libertarians are a very small minority. There is no strength. Most have other ideas.

The crypto community has become more diverse in recent years. Libertarians are no longer the absolute owners of the story. There is a new group, numerous but silent. This group believes in Bitcoin, but does not follow the ideological values ​​of the first Bitcoiners. They are more pragmatic and less idealistic. They are more moderate and less radical. We could call the former “evangelists” and the latter “pragmatic”.

And each of them sees Bitcoin with its filter. Evangelists see a turtle in Bitcoin. And pragmatists see a lion. The turtle is a safe haven from a cruel world. Faced with the threat, the turtle takes refuge in its mighty shell. Protects yourself. The lion is strong as a king and he prays with pride on a good day, but when he hears the hunter’s gunshots, he flees for his life as a big coward. Gold is a turtle. And the SP 500 is a lion. Gold is based on fear. The S P 500 relies on optimism.

With the arrival of the corona virus, the evangelists predicted with great certainty that Bitcoin would go to the moon. because during the crisis, the public would choose Bitcoin as a safe haven. Pragmatists and Nobitcoiners were very surprised to hear this. Bitcoin is a very volatile asset, and investors in crisis tend to take shelter in much more stable instruments. However, There are no valid arguments for the person of faith. And evangelists believe that a burning world implies that Bitcoin’s price will hit new highs.

We arrived in late March, all markets collapsed due to corona virus concerns. What did Bitcoin do? Despite the evangelists’ predictions, he behaved like a lion. Autumn was a big surprise. Nobody understood. An increase was expected, but the price fell. That was left to history. The forecasts failed miserably.

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Restrictive measures imposed by various governments strangled the economy and governments were forced to provide the economy with plenty of liquidity to stop the deflationary spiral of the crisis. These impulses and plans for non-fulfillment encouraged the markets. Prices started to rise as investors began buying and awaiting the recovery. Meanwhile, the evangelists were outraged and offended by central bank pressure on money, but Bitcoin continued to behave like a lion and lined up for the SP 500.

All actions taken by central banks have been sharply criticized and condemned by Protestant Bitcoiners, but Bitcoin and the markets have responded positively. During the worst crisis, investors fled in dollars and government bonds. In the recovery phase, investors gradually return to the markets. Liquidity drives demand. And demand increases prices, stimulates growth and inflates the markets. Exactly what we need now.

Now the unrest is coming. And the evangelists are coming back. Headlines like this appear: “Street riots and Bitcoin are rising in price“” “In the middle of the protests you see posters with the Bitcoin symbol.” Once again, the evangelists come to a conclusion according to a very specific logic. The unrest will negatively impact the economy and cause people to take refuge in Bitcoin. The turtle theory again. Don’t die. It’s hard to kill. Now every positive day in the Bitcoin market is thanks to protests, because people see Bitcoin as a safe haven in difficult times. Another victory for libertarians in the fight against the evil system. Really?

Now there are two ways to go through life. Build a narrative from reality or a reality from a narrative. Here is the detail with the ideologies. You become part of our identity. And they are difficult to jump. There they become dogmas. This explains how a person can see a photo of the Earth from space and see no hard scientific evidence, but a cheap montage as part of a large global conspiracy. He also explains that in a ruined country like Venezuela, there are still people who say that the place is an earthly paradise and things have never been so good. That is ideology for you, gentlemen.

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What do the markets say about the unrest? Well, the unrest didn’t affect the markets. At least not until now. The stimuli work. There is optimism about a lack of trust. And recovery is on the way. Bitcoin continues to follow this stream. The recovery was gradual, as there are still fears. A further escalation of the contagion is feared and there are concerns about new tensions between China and the United States. Although the unemployment rate is really alarming and many macro data are bad, there is optimism that consumer confidence will remain strong and liquidity will revive demand.

Ideologies are important. And it’s always good to respect them. It is perfectly valid for the crypto community to promote values ​​and defend a narrative. However, we have to be careful with the dazzling effects of dogmas. It is always good to analyze the evidence and then make a judgment. How is Bitcoin behaving in this crisis? Why did the predictions fail? We cannot achieve anything by deceiving ourselves. Not because we’re more radical, we’re purer. It is also valid to hear Bitcoin. We can watch their behavior. And learning. We can change our mind when new evidence comes up. Things change. Ideas develop. Suddenly, being a lion is not that bad anymore.