Virtual currency, digital gold, inflation hedge, uncorrelated asset, store of value -- these are all the titles Bitcoin has been given. Now, bitcoin is just bitcoin.
In recent days, many people on Twitter have posted that 1 BTC=1 BTC, suggesting that the value of bitcoin doesn't really matter anymore when the price of bitcoin falls sharply, and that it is quoted at a fixed price that should theoretically support the price in the long run.
Joshua Lim, former head of derivatives at Genesis Trading, was quoted as saying recently:
"When the price of bitcoin continues to fall against the dollar, 1 bitcoin = 1 bitcoin is a tongue-in-cheek 'bitcoin maximalist' claim. That means Bitcoin will eventually become a unit of account, so just focus on the absolute number of bitcoins you have today."
"Bitcoin maximalists" is a term coined by Ethereum founder Vitalik Buterin, who in a 2014 article called those who believe that Bitcoin's monopoly in the cryptocurrency space is both correct and untouchable.
Ahead of 2022, Bitcoin loyalists have added many overviews of the cryptocurrency, including that it could replace gold at some point, or that it's a good inflation hedge. This year, however, bitcoin is down about 60% for the year, trading below $19,000 in recent days, well below its high of nearly $69,000 at the end of 2021, as central banks around the world sharply raise interest rates and inflation increases.
When the coronavirus pandemic first hit the world, cryptocurrency investors saw Bitcoin as a hedge against rising prices because of its limited supply. But this year, most cryptocurrencies are falling sharply. Many market watchers say bitcoin investors are looking for a new story for the digital currency market, and that the spate of Twitter posts declaring that 1 BTC equals 1 BTC might be the "new story."
According to media reports, Ilan Solot of Tagus Capital said the idea of bitcoin proponents as an inflation hedge is misunderstood. He said that while Bitcoin has not risen against the dollar, it should not be assumed that its intrinsic value has not increased. He said:
"Bitcoin is TIPS, not inflation trackers. Bitcoin is a hedge against the irresponsible printing of money by central banks."
Hardcore Bitcoin investors aren't deterred, though. Bitcoin's share has held steady for more than a year, at 68%, according to data compiled by FRNT Financial Inc. The gauge is now at its highest level since 2014.
FRNT CEO Stephane Ouellette told the media that Bitcoin is still subject to the macro environment, but has not yet broken its correlation with risky assets. He said:
"More and more bitcoin holders will never sell their bitcoin. At some point in the future, Bitcoin will start to behave differently from other risk assets, but it's clearly not there yet."
