Born out of a crisis, Bitcoin is perfectly adapted to the current situation
The institutional investor PlanB is a formal investor, there is no reason to be depressed about the health of Bitcoin in the midst of this crisis.
In his recent interview with Anthony Pompliano, the investor who has a degree in Economics in Quantitative Finance and Financial Markets Law shared some key reasons why the BTC is suited to the crisis we are currently experiencing and is expected to appreciate – not depreciate – over time.
Is Bitcoin a good investment?
Among other things, he discussed the Bitcoin network effects, the strengthening of “cointegration”, etc. Read on instead.
Bitcoin is like the Internet. It will survive any crisis.
What will be the fate of Bitcoin in the economic downturn that has just begun with general containment?
PlanB answers that digital assets were created in the midst of the 2008 global financial crisis and add that even if “we haven’t had crises to test it”, Bitcoin is fit for the current situation.
Drawing inspiration from the underlying workings of the Internet, the investor asserts that “Bitcoin is very decentralized, a bit like the Internet,” recalling in passing that “the Internet was conceived as a communication protocol that continued to function even during the great wars…”.
By analogy, he concludes, even when there is a “big crisis or nuclear war, Bitcoin would continue to relay transactions” because there are “hundreds and thousands of nodes and thousands of relay nodes around the world.
For the rest of the interview, the institutional investor refers to the fundamentals of the BTC to support his point of view on the future of the BTC.
Cointegration” is getting stronger, the Sharpe ratio of the BTC is greater than 1.
In justifying the accuracy of the CTS price forecasts based on the stock-to-flow model, PlanB reminds us that it is important to keep in mind that cointegration continues to increase.
Indeed, he notes, there are no exchanges in almost every country, with markets for derivatives, futures, and options, whereas “in the beginning, it wasn’t as easy to get in or out of the cryptographic ecosystem.
He also points out that Bitcoin has a characteristic that very few – if any – cryptographic assets have: a Sharpe ratio greater than 1.
Technically, this means that its rate of return is higher than its rate of risk.
He believes that this is why there are people – HODLers – who really believe in Bitcoin no matter what happens, who cares about it, and who keep the cryptography for as long as the crashes last.
For PlanB, these “true owners” are like “loyal shareholders of a company” who don’t try to sell their shares when that company goes through the rough waters, but give it time to build itself up, because they believe in it.
Once again, we understand that the BTC crisis is a crisis of confidence that is not related to the fundamentals of crypto.
The game will, therefore, be played over time. Investors will have to hold on.
And if you really want to, this crypto-Monnaie that just dethroned the BTC could be a good bet for you.