From CoinMarketCap:
What appears to be a 50% loss in value in Bitcoin. And it’s not recovering as the stock market corrects, surprising some financial professionals:
The stock market sell-off has been pronounced and attracted the most attention in recent days. The Dow Jones industrial average fell 3.9 percent for the week, while the broad-based S&P 500 shed 5.1 percent since Tuesday. The tech-heavy Nasdaq composite index fell 6.2 percent this week. But instead of investors pulling money out of the stock market and piling it into bitcoin, the pullback from crypto has been even faster.
“You’d think with the inflation we’re seeing, you’d see the opposite,” said Bob Fitzsimmons, the executive vice president for fixed income, commodities and stock lending at Wedbush Securities. “That’s been one of the selling points for bitcoin, so its correlation to stock prices has surprised me.” [WaPo]
The problem is that cryptocurrencies lack any unique or superior utility, so far as I can see – and, I think, the speculative investors in it would agree. No national entity, outside of El Salvador, is officially backing it, and certainly not any entity with any weight behind it. Because there’s nothing to anchor value in that set of currencies, it flows in and out like the tide, only the Moon controlling that tide is whatever the speculative investors see as positive or negative omens for the industry, and it’s all, so far, ephemeral.
And I think the entire inflation boast is a bit of an empty shirt, because inflation of the money supply is a good thing, in concert with the performance of an economy. Most investors are not aware of all the nuance that goes into the basilisk called inflation, as evidenced by the failure of the monster to appear during the “quantitative easing” of the Great Recession, despite the invocations of the economists & Republicans who claimed to be appalled at any attempts to ease the burdens of that recession. And I’ll readily admit that I’m among those ranks.
But combine the proclamations of the separation of the politicians from the levers of the printing presses with a word ungracefully gaining approbation, algorithm, and I don’t see cryptocurrencies gaining real prominence. This can change: a big country choosing to back a cryptocurrency, an entire industry embracing them while rejecting traditional currencies, these are how a currency gains superior function.
But until that happens, cryptocurrencies will not be a safe place to park spare cash, but rather a chance to watch it all disappear. And I’m not sure it’ll ever happen.
And I say that as a non-financial professional.
