FinGurú - What is behind the fall of Bitcoin? by horacio gustavo ammaturo

Since 2008 bitcoin, the most known and widespread cryptocurrency in the world, has generated adepts and detractors. In both extremes with such fundamentalist plans as the best investment alternative, because its value would exceed the million dollars per unit, while the other that is a fraudulent and unfounded scheme designing a value for the future of zero.It is curious that those who defend such opposing positions are, in many cases, vexed analysts and investors in the world of finance who manage assets and portfolios of several billion dollars.Analyzing what are the main arguments that fend each part we observe that on the side of the anti bitcoin stand out:

that has no support,
that produce nothing,
that complies with all the precepts of the most foolish theory.

Perhaps, at the last point, we can summarize all positions.In finance, the most foolish theory raises that sometimes people make bad investments, for example buying an overvalued asset, hoping that another investor thinks it might be worth more. Bill Gates appealed on several occasions to this explanation by referring to cryptocurrencies.On the other hand, bitcoin fans argue,

A world in which the central banks of the countries discreally issue their currencies cannot guarantee that the offer of money maintains a correct relationship with the demand of it, in a few words, that sovereign money maintain its purchasing power in time.
that Bitcoin resolves this circumstance, uncontrollable by investors, because its emission logic is pre-established, as a result there could never be more units than expected, in this case 21 million.
that any person may be registration authority, i.e., with just running a program on a processor, we can become miners, i.e. in emitters and checkers of the operations that take place in this cryptocurrency.

If we do so from an absolutely abstract point of view, that is, in an economic laboratory, bitcoin would comply with what any account unit or value reserve could claim, i.e. predictability in its issue. If this adds acceptance by buyers and sellers, the future would be assured.However, there are other factors, perhaps more important, to take into account that are the geopolitical and sovereignty issues, particularly the currency.Undoubtedly one of the main banners that has a nation is worth its money, stability in its parity with the most used currencies in the world and the local and international demand it generates. Flags, slippers, hymns or commemorative parades retain a symbolic value, but at the time of demonstrating our commitment to a state the first variable we should take into account is the acceptance by its inhabitants of its own currency.No country that has its own sovereign currency would lose or share this attribute with anything else that suits it, even if it is accepted by the community.Pandemic, halving, international inflation and the invasion of Ukraine.Over the past three years, four events have been combined to give the desired impulse to bitcoin. Facts of such an impact that to fulfill the prognostics of the most fundamentalists of the cryptocurrency would have lacked imagination to conjugate them in the most desired of their dreams.On the one hand, pandemic that multiplied online commerce and transnational sales. Payment processing systems, the tax regimes of the various countries and banking regulations, presented an ideal scenario for bold traders to approach the crypto payment means to overcome the limitations of the old models.Bitcoin halving, which is a variable of the cryptocurrency mining program, reduced the emission speed of this finite series of codes to half, i.e. double resources, processing capacity and energy to continue generating the same amount of units.All this in a context in which the decommunal monetary expansion that occurred during the years of pandemic, when most major countries in the world have driven consumption with tax subsidies and incentives, arrives to charge the cost of such technical misfit between gross and circulating product. At present, the world is debating between inflation and inflation, little is said of growth and a lot of loss of money buying power.And as if all this was little, the invasion of Russia to Ukraine. The dubious international sanctions, in terms of economics and finance, freezing funds from The country, its main public and private companies and remove them from the international transfer system, among others have made the coins war weapons.In summary, commercial and international market opportunities, algorithmic incentives provided by Bitcoin software, inflation in the world's main currencies and use of intentional payment systems as wararms gave the ideal framework for anything that could solve functionality for transactions, acceptance by the international community, clear emission rules that make their value predictable to future and independence in the registration and governance authority would be the product of the century or more of the new era.And what's going on?The fall in the value of Bitcoin over the past few months have doubted the fundamentals of those who support it most.Bitcoin, Despite complying with all the logical laws of the market economy, scarcity, predictability as to its total quantity, liquidity, storage and transfer security and global reach, has not convinced, at least for now, to make an anticyclical alternative, that is, before inflationary processes serve as protection for those who retain their purchasing power at least.All the opposite, so far followed the luck of the traditional markets following up and down the stocks of the American stock exchange, including accentuating the falls in front of the other more traditional alternatives.With its fourteen years, Bitcoin has become rich in tens of thousands of young and poor to hundreds of thousands of elderly. For now the world continues to bet the dollar Although the principal responsible for the avatars of international finances continues to focus the trust of most investors in the world who consider it a reserve of value and shelter.Maybe this is the real challenge, something that's not happening yet.

6/27/2022 - technology-and-innovation

What is behind the fall of Bitcoin?

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