Bitcoin Market Reflexivity This economic concept was popularized by the billionaire hedge fund manager George Soros. Kang’s take on this is that subjective beliefs of markets can influence their underlying fundamentals through increasingly stronger positive feedback loops. In other words if we collectively believe bitcoin is a solid store of value and invest in that belief, it will become one. Global Uncertainty He added that the main argument for bitcoin as a store of value is a hedge against global uncertainty. We saw this last year when US president Trump escalated his trade war with China. So far BTC has not been strongly correlated to gold, until very recently. The escalating tensions in the Middle East saw bitcoin and gold moving in tandem as the news broke. When Trump on Live TV made it clear that de-escalation was a priority, you could see both BTC and Gold drop hand in hand. Bitcoin Macro Event Trading More people will start to trade bitcoin on macro events. Most large moves are driven by speculators but figures revealed that a large number of bitcoins have been hodled over the past few years, as the SoV narrative strengthens. Macro events such as the threat of escalating military action or a global trade war will start to draw more traders into digital assets which increases their liquidity overall. Hedging Bets Recent economic woes, such as the FED pumping more freshly printed dollars into US financial markets, will lead investors into hedging against fiat currencies. Day trading or hodling doesn’t really matter according to Kang as the net result is further increased correlation and thus increased belief in BTC as a store of value/macro hedge. Feedback Loop All of the above creates a feedback loop which will draw more capital from other safe haven assets into Bitcoin as investors diversify their portfolios. This feedback loop will continue, causing BTC to continue to appreciate while capturing premiums from other SOVs and for enough data to be produced that even the strongest skeptics will not be able to deny BTC’s utility Kang concluded, adding that he is extremely bullish which is a sentiment shared by many experienced traders and investors. Will bitcoin grow as a SoV to match the status of gold? Add your comments below
Images via Shutterstock, Twitter @RewKang The post appeared first on Bitcoinist.com.
TheBitcoinNews.com is here for you 24/7 to keep you informed on everything crypto. Like what we do? Tip us some BATSend Tip now!