#bitcoin reached historical levels today touching a price of almost the $90k levels..as appearing in the chart, this is considered bitcoin growth trajectory after the 4th halving..nevertheless, bitcoin is still below its historical trend despite its new high prices..
Why this could be happening?
There could be different reasons such as Bitcoin and other #cryptocurrencies don’t have true intrinsic values like other #financial #assets ..this was evidenced by FTX collapse..
But this brilliant research by Ulrich Bindseil and Jürgen Schaaf via European Central Bank provides another dimension to the Bitcoin analysis..
This paper analyze the #economics benefits from rising prices of bitcoins..in short, it doesn’t bring benefits to economy or #markets instead actually the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society.
This paragraph well summarized the paper’s conclusion :
“The original promise of Nakamoto (2008) to provide the world with a better global means of payment has not materialized. Instead, the focus has increasingly shifted to Bitcoin as an investment asset promising high capital gains. Promoters of this investment vision put little effort relating Bitcoin to an economic function which would justify its valuation. While most economists argue that the Bitcoin boom is a speculative bubble that will eventually burst, we analyse in this paper the impact of a Bitcoin-positive scenario in which its price continues to rise in the foreseeable future. What sounds intuitively promising or at least not harmful is problematic: Since Bitcoin does not increase the productive potential of the economy, the consequences of the assumed continued increase in value are essentially redistributive, i.e. the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society. If the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non-holders and latecomers. While previous discussions on the redistributive effects of Bitcoin assumed that badly timed trading was a necessary condition for losses, this paper shows that neither poor timing of trades nor holding Bitcoin at all are necessary for impoverishment under a Bitcoin-positive scenario.” #Nostr #Bitcoin #asknostr nostr:note1shqjj3q240lrhdqm85p0xq3jya44fmljrqtw6emh8mvhqt5x5kds2msta6