brightstars
I have only written one article on Seeking Alpha about cryptocurrencies, suggesting in August 2021 here investors should avoid Bitcoin (BTC-USD), when its price was around $45,000. My story explained how Bitcoin was in a bubble that would eventually burst. I have never owned cryptos, because I have no clue how to value them without concrete, verifiable math. Bitcoin could be worth $100 or $1,000 or $100,000. Who knows, it’s all guesswork and hoping a “greater fool” will show up willing to pay more. Just like every other tulip craze, at some point you reach maximum ownership and speculators become net sellers, instead of buyers over time. Well, it appears we reached that balance in 2021, with a peak price above $65,000 achieved.
Now price is around $16,000, while crypto exchanges are blowing up and exposing serious accounting and fiduciary issues underneath the surface of this go-go asset backed only by owner over-enthusiasm and excessive liquidity in the global financial system. An explanation of last week’s FTX (FTT-USD) saga and bankruptcy is linked here. Unfortunately, the U.S. Federal Reserve central bank has decided to mop up liquidity by raising interest rates and selling bonds on its balance sheet. This action has poked a whole in the higher “forever” hopes of crypto lovers. What if a lower forever trend is the new reality?
Conversely, gold has been successfully used and valued as base money for thousands of years on every part of the globe. Paper currencies have always been tied to it, whether done officially with a gold standard or not. Trading precious metals since 1986 and engaging in all kinds of historical research, it remains fascinating to me that gold prices are clearly tethered to fiat money printing and sovereign debt issuance in every nation on earth, even in 2022. I have written many articles explaining how gold and silver prices are a function of paper monetary levels, alongside the relative pricing of alternative…
