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So been thinking about this a lot.. Bitcoin performs like a tech stock and is correlated to S&P tightly according to big brained. We saw this in 2020-2022. It pumps when there is money entering the system. When people receive stinky cheques etc. nothing more that a speculative asset pump by degens.

But Bitcoin also pumps when they quantitively tighten… like the last 3 or so months. When they pull money out of the system to reset the damage done by printing and in turn do more damage Bitcoin pumps.

So either Bitcoin pumps when ever fiater’s destroy their own system (very regularly), or Bitcoin is in a forever upward trend with pullbacks now and again due to the natural ebb and flow of adoption.

Is it possible that the correlation and similarities to anything in the Fiat world is illusionary and momentary?

I’m beginning to think so.

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Discussion

davies 2y ago

That seems to be the thesis we’re all aligned with

SatoshiSamurai 2y ago

I’m not sure it is though. My understanding of the base case for “most” bitcoiners is that bitcoin goes up cause Fiat becomes more worthless and in dollar terms this is correct. As the denominator decreases the ratio increases. But I’m beginning to think that human psychology actually has an influence on the price. The longer Bitcoin is around the stronger the case it makes for itself hence greater adoption in general. Variances in external factors and views individually can trigger lower market moves collectively which is more likely in a free market as opposed to the shit show that is the stock market. I guess I’m trying to say that Bitcoin is actually independent of everything except perception of itself. Maybe I haven’t gotten this till now and am playing catch up in public?

davies 2y ago

Actually I shouldn’t have said “we’re all aligned with”. What I meant is, that’s what I’m aligned with. In simple terms my thesis is: it’s going up forever, Laura :)

SatoshiSamurai 2y ago

100% agree.

( -_-) 2y ago

Correlations do not imply any causal connection. A (free) market price is an emergent phenomenon arising from many individual entities buying and selling - each with their own reasons for doing so.

Some may think it's a tech stock, others may consider it the hardest money in existence, both can be reflected in the market price simultaneously.

SatoshiSamurai 2y ago

Agreed!!

stupleb 2y ago

People often see patterns where none exist. It's possible there's no real correlation with anything.

One sign this may be true is that one half of "experts" say bitcoin follows stocks, another half say its a leading indicator. Can't possibly be both.

SatoshiSamurai 2y ago

I’m beginning to think that all markets are determined by human emotion/sentiment rather than hard facts or actual truths. When the government and media are tilting the market in one direction, heavy hitters are betting on the other side hoping it doesn’t go well. And then they reverse. In the end it won’t matter. It’s all a shell game.

Phundamentals 2y ago

Illusion based on the liquidity difference between Bitcoin and the rest of the market.

It’s very difficult to normalize out one’s swimming ability when swimming with or against a tidal wave.