Looking for a New Bitcoin Narrative? It's the Same as the Old One
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November 7th, 2022

For some people, it's not enough that bitcoin’s price is at a historic low. They need a different reason to put money into this market.

A key level on a trading chart. Some macro or technical signal. A leading indicator. A key milestone in some data model or cycle theory. The halving. 

World peace.

Others think we need a new story to attract new buyers. So many people have been burned by crypto crashes, scams, fraud, recession, and losses that the old narratives don’t work anymore.

Bitcoin as an inflation hedge?

Failed. Its price is up only 300% since the pandemic money printers revved up.

Bitcoin as a store of value?

Failed. Its price is barely higher nowthan it was in 2017 and 2020.

Bitcoin as money?

Failed. Nobody spends it, saves it, or trades with it.

Narrative, where are you?!?!?

What about utility?

Bitcoin allows you to send money electronically to anybody, anywhere, anytime, in any amount, without restriction, without giving away your sensitive personal information, without putting your assets in another person’s control, with certainty that your transaction will go through and every payment you receive is authentic and valid. Nothing else does all of those things.

Boring, Mark! Nobody cares!

Ok, so what is the narrative?

The same as it ever was: 

Price. Go. Up.

Mind over matter

Do you think it’s funny that some people bought bitcoin at $60,000 but won’t buy it at $20,000?

Those people never wanted to buy bitcoin in the first place. They wanted to sell it for more than they bought it for.

Buying was a necessary first step.

When bitcoin’s price hit $60,000 on an upswing, they thought they could make money. When its price hit $20,000 on a downswing, they thought they couldn’t.

Price. Go. Up.

Immutability, censorship-resistance, permissionless innovation, open finance, anti-fragility? A monetary system that sustains itself without political violence, military coercion, government manipulation, or sovereign debt?

Meh. All nice things to think about but they won’t buy you a Lambo!   

What about supercycle? Stock-to-Flow? Four-year cycles? Expanding cycles?

They all have the same thing in common: 

Price. Go. Up.

Whatever it takes

Also, they have another thing in common:

You can fit these models to pretty much anything.

Bitcoin’s price has gone way above and way below S2F’s predicted price for years at a time. Look at Glassnode’s “S2F Deflection” chart, which tracks how far bitcoin’s price has strayed from the S2F model.

Price mostly doesn't follow S2F.
Price mostly doesn't follow S2F.

For all of its history, bitcoin’s price was almost never where S2F says it should be. S2F is as valid now as it ever was.

Perhaps you prefer the four-year cycle theory? Cycle theories can be left- or right-translated, meaning the highs and lows can come at any price at any time. You can say the same about expanding, shrinking, and halving cycles. Backtest them for yourself, you’ll see.

You could also try my U2R model:

See My U2R Model

I made it up, but it’s a line on a chart. There’s even some math involved (I think 🤷‍♂️).

Once bitcoin’s price goes up long enough for people to think that it will keep going up, they will come up with all sorts of reasons to buy it. Then you will find all sorts of narratives emerge.

They all come from one desire and lead to one place:

Price. Go. Up.

Stealth technology

As bitcoin’s price goes up, let’s assume that brings in more people who want to make money from its price going up. The network will grow. Its reach will expand.

At that point, maybe the narrative will change to something more substantive and valuable. Perhaps people will realize all of the boring things I mentioned above. 

It is, after all, the truth.

--

Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.

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