Bitcoin will wrongfoot you time and time again
IN case you don’t bother to read all the rubbish the various crypto blogs, influencers and outright charlatans in the cryptoverse put out (and why would you), here is a (short) summary of the last few weeks...
FED cut will propel BTC to All Time High
Massive Chinese stimulus will drive BTC to All Time High
Chinese rate cut will drive BTC to All Time High
...I could go on but there really is no point. Yes BTC went up a bit – not that much. Yes it might go up more. Or down again – it did. But no, these things on their own will definitely not have the effect the cryptoverse wants.
In particular, the Chinese stimulus is actually a flea bite. Quite apart from anything else the empty properties weighing down the entire banking sector need more than a $1 trillion just to stay afloat (as opposed to some $120 billion of stimulus).
What would seem to be happening here is what everyone tries to do. Feed a bit in at a time and keep doing it, which inevitably doesn’t work – but you keep hoping just a bit more will turn the corner.
Ask Japan. Ask Europe. But don’t ask the US. Their TARP program was the nuclear option and it worked. You may recall if you want to win a battle, you should have three times the number of soldiers the other side has. The same applies to monetary “war”. It’s no use thinking you can finesse it.
The Chinese, of course, have quite a number of apt, clever and witty sayings. In this regard, I’d say “Dig the well before you are thirsty” is quite appropriate.
The problem is they may well have been thirsty for some considerable time. Evergrande on its own could pretty much swallow the present stimulus and there are dozens more just like it.
But let’s not be too downhearted. Let’s talk about something both exciting and interesting in the world of crypto. That would be the boost that the election of Donald Trump has given crypto as a whole and Bitcoin in particular. Until the night of the election it was going nowhere, and suddenly the traders sensed the difference.
What has been the most correct predicting survey company in the last year or so? Answer, Polymarket. It’s not the only one, but what it does is allow betting on outcomes using blockchain technology.
Apparently, people asked a question frequently lie in response (who knew?) but if you have to put money where your mouth is, you are much more likely to tell the truth (or at least bet on the truth). So much so that the surveys they put out (based on the way people are betting) are far more accurate than asking the same people questions.
Now I don’t find that totally surprising. It has been known for a long time that if you ask a large number of people for an answer (eg where something has sunk) they will be much more likely than a series of experts to get the answer correct – in aggregate. So Polymarket predicted Biden would withdraw, long before there was any question of it. And that Trump would win by a large margin, and some considerable time ago.
You can bet on lots of wonderful things like will Man City end up bottom of the table next year. And before we go any further, I have to say I would love to see advertisements for gambling completely banned – it looks like everything else is going to be.
What does Polymarket say about Bitcoin? Interestingly, it says it won’t be much higher by the end of this year – and only a 14% chance at that. People continue to bet on the halving graph recreating again. But as I’ve said before, it feels different this time.
I’d rather take the 86% that it won’t – and that is not an investment recommendation and in the event just shows how little I know.
Every exchange now has a disclaimer which roughly says expect to lose everything you put in – and, by the way, no one is going to recompense you.
Interestingly, although the bet was Trump would win, the rise in Bitcoin was somewhat discounted. In the event it shot up about 9% and holding.
As I always say, Bitcoin will wrong-foot you every time.
