Thank you for this. If anything, it answers the question, is there evidence that we are in a stable Bitcoin trading range right now? The answer is clearly yes we are, and there is no inherent reason to expect a major draw down any time soon, though one could always come for unforeseen reasons (government actions, fraudulent actors, exchange hacks).
It is often argued that bubbles are essential to onboarding new bitcoiners, as the FOMO nature of bubbles attracts retail. I have heard Giovanni make this argument. But I don't buy it. Bubbles also create huge draw downs, and without them we may see even more adoption as retail sees there hasn't been a 70-80% crash for years. In other words, lack of crash history could be as or more important to retail as the FOMO bubbles that bring them in.
I also don't buy the halving story as a bubble-driver. It could be a contributing factor, but it just so happens global liquidity cycles coincided with past Bitcoin halving cycles. Small sample size either way but Austrian economic theory is grounded the idea that credit cycles create sustained asset bubbles and crashes. It feels like this halving cycle is reinforcing that idea, as we are now 16 months past the halving and, as you point out, no bubble in sight. Meanwhile, we have had the most anti-inflationary Fed regime since the early 1980's (albeit that is a low bar).
Perhaps we'll see a grind upward from here that persists past the four year cycle, until liquidity causes a bidding up of prices and creates the next bitcoin FOMO bubble. It will be interesting to watch for sure.
Thank you for this. If anything, it answers the question, is there evidence that we are in a stable Bitcoin trading range right now? The answer is clearly yes we are, and there is no inherent reason to expect a major draw down any time soon, though one could always come for unforeseen reasons (government actions, fraudulent actors, exchange hacks).
It is often argued that bubbles are essential to onboarding new bitcoiners, as the FOMO nature of bubbles attracts retail. I have heard Giovanni make this argument. But I don't buy it. Bubbles also create huge draw downs, and without them we may see even more adoption as retail sees there hasn't been a 70-80% crash for years. In other words, lack of crash history could be as or more important to retail as the FOMO bubbles that bring them in.
I also don't buy the halving story as a bubble-driver. It could be a contributing factor, but it just so happens global liquidity cycles coincided with past Bitcoin halving cycles. Small sample size either way but Austrian economic theory is grounded the idea that credit cycles create sustained asset bubbles and crashes. It feels like this halving cycle is reinforcing that idea, as we are now 16 months past the halving and, as you point out, no bubble in sight. Meanwhile, we have had the most anti-inflationary Fed regime since the early 1980's (albeit that is a low bar).
Perhaps we'll see a grind upward from here that persists past the four year cycle, until liquidity causes a bidding up of prices and creates the next bitcoin FOMO bubble. It will be interesting to watch for sure.