Introduction
In the world of finance, traditional perspectives on cryptoassets in 2022 were divided. Some viewed them as high beta equity market replacements, while others considered them uninvestable due to FTX-related reputational damage. However, the first half of 2023 has debunked these characterizations, revealing the resilience and value of the crypto market.
Simplistic Narratives Conceal the Value
The correlation between bitcoin and equity market indices has shifted from positive to negative, confirming that bitcoin and equities are fundamentally different assets. Bitcoin’s value as a store of value and an alternative monetary system has been overlooked due to its portrayal as high beta equity, but this is overly simplistic and disregards its underlying value.
Bitcoin and Equity Markets Are Uncorrelated
Sources: Glassnode and Sound Money Capital
Cyclical Cleanse Cycle Complete
The recent FTX-induced crypto bear market served as a cleansing process, prompting long-term crypto investors to consolidate their bitcoin holdings. This shift indicates a focus on underlying technology and resistance to panic selling.
Percentage of Bitcoins Held by Long-Term Investors Tends to Rise in Equity Bear Markets
Sources: Glassnode and Sound Money Capital
Allergic Reaction? Look Closer
The fallout from the FTX debacle triggered an allergic reaction in the investment world, leading to a closer examination of the potential value of bitcoin. Despite initial skepticism, the rally in bitcoin since then has been substantial, and even institutions like BlackRock are beginning to show interest.
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