BTC as Store of Value (#017)- interview with TBD
This space is hosted by AlexOttaBTC
Space Summary
The Bitcoin-themed Twitter space delved into the intricacies of market analysis and liquidity metrics, emphasizing the importance of corrections for sustainable growth in the Bitcoin market. The discussion highlighted Bitcoin's resilience when compared to traditional markets and explored the impact of stimulus measures on price action and market dynamics. Experts provided insights into the unique behavior of various assets during market cycles, advising attendees on prudent Bitcoin accumulation practices for long-term strategy and financial stability. The session underscored the significance of maintaining a positive outlook amidst market fluctuations and the importance of focusing on Bitcoin's long-term potential as a digital asset.
Questions
Q: Why are corrections important for Bitcoin's long-term health?
A: Corrections help ensure sustainable growth by correcting overvaluations and excesses in the market, making the asset more robust.
Q: How do different assets react during market fluctuations?
A: Assets exhibit varying behaviors based on their unique characteristics and responses to market dynamics, impacting their performance during fluctuations.
Q: What factors influence the real estate market's performance?
A: Real estate performance is influenced by factors like interest rates, employment trends, and overall economic conditions, affecting demand and property values.
Q: Are Bitcoin and the stock market primarily driven by liquidity?
A: Both Bitcoin and the stock market are considered liquidity-driven assets, with the availability of liquid funds impacting their valuations and market movements.
Q: What impact do stimulus measures have on market dynamics?
A: Stimulus measures play a significant role in influencing market highs, injecting capital and liquidity that can drive asset valuations and market movements.
Highlights
Key Takeaways
- Corrections in Bitcoin are essential for sustainable growth.
- Assets exhibit varied behaviors during market swings.
- Challenges might be faced by real estate due to interest rates and employment trends.
- Bitcoin and the stock market are driven by liquidity.
- Stimulus measures significantly impact market highs.
- Bitcoin's performance may excel in a deflationary environment.
Behind the Mic
Right, I mean, it is inevitable. It's going to happen. But the thing is to what degree and on what time frame? You know, will it be mild? Will it be this big credit pinch like people are calling for and people are saying it's going to happen next month or is it happening next year and that type of stuff, right? So there's so many different scenarios out there. Right. And in your view. Yeah, I mean, I would like to speak to the big pinch kind of scenario because I see it as a downside risk. So my background is in economics and we use a lot of econometrics and we assess risks in terms of green swans and black swans. So these are very low probability but very high-risk outcomes. And in the context of 2022, unfortunately, the Russia-Ukraine war kind of bite us in the ass. But you know, this idea of very, very high tail risk is something you always have to keep in the back of your mind. But the likelihood to actually materially adjust portfolios on a daily basis is actually very, very low. So I wouldn't recommend basing your strategy on this idea that something catastrophic is going to happen. So in my opinion, I don't think that a big reversal of the series that we saw in 2007 where there was a debt crisis and it just burst is on the cards at the moment. Okay. You mentioned that you come from an economic background. Can you explain to the audience what that means in practical terms? What knowledge does that give you of the current economic status quo? Sure. Yeah. So I have a master's in economics. I studied applied econometrics and microeconomics. I work for a few international organizations like the International Energy Agency, institutions like the IMF. And so a lot of my work has to do with running models, running big data sets and coming up with economic scenarios. And so we try to measure the impact on liquidity and monetary policy, fiscal policy. So what we try to do is we try to come up with scenario-based analysis or contingency-type analysis so that we can inform our decision-making. And right now I can tell you there's a lot of focus on the data and the numbers and the metrics and kind of this micro micro-analysis that's quite pervasive at the moment. But the bottom line is people are not paying too much attention to the macro picture. There's a lot of macro-level uncertainty both on a geopolitical level but also on a financial liquidity level that's permeating markets. And I think that uncertainty is presenting a lot of risk. Interesting. So from a practical point of view, how does that translate into an investment strategy then? At the moment, I'm fairly long cash not because I want to but because I think that's the most responsible way of behaving in a moment like this. I mean, if you look at some of the historical asset return series, you have to be willing to take risk at times when the market is really, really friendly. Right now the market's not very friendly in my opinion. So having a high cash allocation is something that I'm pretty happy with. Okay, great. Thank you. So let's zoom in a bit on the correlation between crypto and traditional markets. So what are your thoughts on that? How do you see that correlation evolving? Yeah, I think to be honest if you look at the historical correlations they are fairly low but they have I would say a positive trend over the last few years as crypto has gotten more into the mainstream. A lot of traditional hedge funds, traditional asset managers have crypto allocations. The fact that large institutions are actually participating in this market. The correlation between traditional and mental stats up and correlations tends to go up in crisis times. Right. So if you look back at the history of crisis, correlations go up because people are essentially reducing their risk as much as it possibly can. Right. And would you agree with that assessment Jason? Yeah. I think what's important in this situation and the beauty of Bitcoin in particular is that in general what its behavior is in the long run and in terms of catastrophic events like in 2009 during the global financial crisis this can be a good, I don't want to say hedge because its correlation will increase but because of its diverse long-term attributes. It just makes sense as an asset that can safeguard your wealth in time of turbulence. Adrian's on a mic, are you still there? I'm here. I was just listening. Okay. So basically then you say that in the long term it's a good bet. As you said like in 2009 your personal view on what's going to happen I mean I know you're not necessarily the bear in the room but It's a it's a difficult question The question of horizon is always a very very difficult one to answer But I think if you have a general mind that you can afford some volatility, which I can't even managed to be a perfect state Given there's so macro level risk and market risk I think Bitcoin is certainly a good a good place to be if you can hold the volatility the most important thing obviously But you understand the risk and you know the reason I can suggest something like this and I mean a leading economist in the Bitcoin space Michael Saylor Takes it very seriously the same John Pizzaferrato probably a lot of the well-respected folks in the economy They're expecting Bitcoin to be at the forefront of this movement in the long term, right? So then It so then if we agree that the long term it's a safe bet. Yeah where you have exposure to p2p network tremendous upside. So but Yep, not necessarily. Yep in long term long term. We agree It's the best store of value platform now We have to look at the short term how to how to position ourselves So we're kind of like discussing the big moves but in a short term Andres actually comes from a different angle everyone wants a safe world I think no one really dares to want to Guess what kind of fearful we're going into have they accepted in a short term exactly right? Yeah, so you look at 60k it's a range I see for bitcoin on a short term That's why we're I like the enthusiasm and quite so happy about the previous session yeah, what kind of price look at it's higher when it gets corrections because that just basically moves prices higher in the short term exactly, right? So I'm saying basically you look at price action I'm getting a bit of a static sailor mark That's fair. I'm a static I'm looking for some permanency, but I'm also expecting other ranges. OK for example 19k 20 x profit taking in future BTC correctives bull sided zone If you believe sanctions and weaken so come back down. Yeah, definitely that's why although I I'm not yet in disbelief on it being totally disappointing what I'm really cautious investing at this point Fair warning Jason anything to add? As a bitcoiner always keeping buy orders I found maybe short term not the best time entering market but I think it's important anyone invest significantly in uSupplement hold adequate cash resource dollar cost average big firm believer bringing assets huge rise opportunity world right so ok Andreas any final thoughts for listeners you trading on short term or more conservative approach. Yeah I'd suggest Holdings long term biggest stack but at the same time be aware of risks in short to medium term definitely isn't necessarily time, B2B Mondays too likely bigger drops due to uncertainty thanks Andreas for highlighting those in the end depends individual strategy let's summarize Ok we'll go through the next months or years on bitcoin bull market like altogether as bitcoiners. That said, do you have any closing remarks for our audience? No, just it's always important to accumulate as much bitcoin, but staying solvent the is the most important thing as well. They go hand in hand with one another, so and always have a positive outlook in life. And don't get too bogged down about the price action. It's usually a liar. Okay, many thanks I think. Very wise words. Also, one of the rules on bitcoin austrian economics is earn more than what you spend and the rest saving bitcoin. But you should earn more or what more than what you spend. Thanks all. Thanks to the audience and see you next week. We have the episode on Wednesday with Joe Cardassare. It will be done 19th for the rest. Have a nice evening and have a nice day. Thank you Alison thanks. Bye.
