Barclays says Bitcoins is dead, Bitcoin then grows 14% in an hour
Barclays says Crypto is dead
Sometimes Banks and Financial analysts say really stupid things. They make big models and use a lot of intelligent sounding models. It is important though to really think through what they are saying, because sometimes beneth their shiny veneer is really silly set of assumptions.
Barclays is a bank, and banks have traditionally been wary of cryptocurrencies. I would say that generally their skepticism falls into 3 areas:
1) Seeing Cryptocurrencies as a competitor to their business and a danger to their business model.
2) Not understanding how cryptocurrencies work.
3) Sometimes banks come out with a legitimate warning about some of the scammy tokens that do exist in the space.
A few days ago Barclays came out with a model that compared Bitcoin to a temporary fad like Influenza with the idea that as people get vaccinated/immune it will die out.
This is a horrible comparison to make against an entity that is designed to literally never die, and is just now beginning to hit the mainstream. Would Barclays use this model on the US Dollar or the British Pound? Both of those currencies have far greater longterm weaknesses than does Bitcoin.
But as if to illustrate how wrong the Barclarys model was Bitcoin and other cryptocurrency prices jumped.
Bitcoin spikes 14% in less than an hour
Wait Barclays hold the phone I thought this worked like Influenza and was burning itself out? What you mean that a 14% spike was not in your model? What you mean Influenza does not work like that? Whoops that obviously was a stupid comparison. This best response to the Barclay's model is a simple........Duh. Yet because it was created by an organization with a veritable name the story was reported everywhere.
Anyone who has followed Bitcoin since it was a $100 has dealt with literally hundreds of these arguments a week. What amazed me about this one is how much it was pushed, for being so totally stupid. I could tear through every premise of the arguments that their model was built on.
Differences between Influenza and Bitcoin is that Bitcoin and the people that support it are not going anywhere. Why is this true - Well
- Bitcoin can never die. It is designed to be a digital city of undying mutant cockroaches.
- Bitcoin holders will never stop cheerleading and supporting the space. Most of the original bitcoin supporters worked for 10-15 years because they simply liked the idea of it. They are political fanatatics who not only will go to their grave supporting cryptos but also train the next generation to carry on the torch. Bitcoin is a political movement and philosophy as much as it is a currency and technology.
- The mainstream population still has only the vaguest notion of what Bitcoin and cryptocurrencies are.
- The current monetary system is riddled with a variety of cracks leading investors to take longterm hedged stakes in alternative wealth storing systems like Gold, 22 round ammo and yes........Bitcoin. The more cracks that appear (and more show up everyday) the more all alternative wealth store mechanisms will gain notice. Of all the alternative wealth store mechanisms cryptocurrency is by far one of the easiest to enter and has the highest potential as a full on replacement system.
So if you accept that Bitcoin and a large amount of supporters will always exist then it can not be an influenza that dies out. It would not even surprise me tomorrow if a country said we are making Bitcoin our official currency then what happens to your influenza model?
I make absolutely no promises on where Bitcoin goes and honestly I think Bitcoin has a lot of problems which is why we are seeing the rise of certain Altcoins. However, an Influenza comparison is downright stupid and any financial analyst or bank that publishes something that dense should get laughed off the stage.
Lets get a few things straight, Bitcoin / cryptocurrency is still far from perfect!
1) Cryptocurrency's have a value that can go up or down.
2) Models determining what that value should be are in their infancy and there is a tremendous amount of volatility in the space. As a value investor this greatly frustrates me.
3) When it comes to Cryptocurrencies it is very difficult to imagine scenarios where cryptos fully die. Even cryptocurrencies like Bitcoin that have been left leaderless will continue to live. They will in some way or form outlast almost everything. A crypto can lose a lot of value but it will always be there.
4) The thoughts and ecology of cryptocurrency is still in its infancy, it has a tremendous amount of people left to bring in, and institutions AND YES EVEN COUNTRIES.
5) The smartest people in the world are leaving banks for the cryptocurrency field. The most brilliant and best minds on our planet are in this space right now. If I did a townhall at Harvard or MIT on cryptocurrency it would be standing room only. Barclays and the other banks can not afford the top tier crypto talent. The crypto world can afford their top talent though. The banks are being raided for their best minds as we speak.
In short, if Bitcoin is an influenza it is at the very beginning and by the time it ends Barclays won't be around to worry about it anymore.
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