Bitcoin bulls are not the bigger fools

{"text":[[{"start":null,"text":"

"}],[{"start":11.33,"text":"The writer is chair of Rockefeller International "}],[{"start":15.01,"text":"Once dismissed as fanatics, the bitcoin bulls must be feeling vindicated. "},{"start":19.652,"text":"They made an accurate call on the cryptocurrency’s potential for gains — witness the staggering rally under way — and were right, at least in part, for the right reasons. "}],[{"start":29.23,"text":"When bitcoin was all the rage at the start of this decade, many serious investors and traditional economists spurned it as a useless fad — even a fraud. "},{"start":37.472,"text":"Their scorn, seemingly confirmed by its crash in 2022, persists today while the currency separates itself from the pack. "}],[{"start":45.61,"text":"Back in 2021, bitcoin was often grouped alongside other favourites of the day-trading crowd, such as unprofitable tech and meme stocks. "},{"start":53.638999999999996,"text":"Today those other bubblets are trading on average at half their peaks, while bitcoin recently hit an all-time high. "},{"start":59.282,"text":"It is extremely unusual for a bubble to burst and then recover to reach new heights so quickly, and suggests that something real and sustainable is going on. "}],[{"start":67.75,"text":"Bitcoin’s comeback is remarkable, as well, for defying the general shape of the current bull market, which is heavily concentrated in the Big Tech stocks. "},{"start":76.129,"text":"Investors have taken the tech heavyweights seriously throughout, perhaps even more so now that they are seen as the giants most likely to dominate the future of artificial intelligence. "},{"start":84.90899999999999,"text":"Bitcoin gets no boost from AI mania. "}],[{"start":88.51,"text":"The bitcoin bulls have been proved mostly right about its prospects as a long-term investment — and, in this regard, as the king of the cryptos. "},{"start":96.477,"text":"Since the low point in late 2022, its price is up around 300 per cent, more than all but one (solana) of the other top 10 cryptos. "},{"start":105.069,"text":"Moreover, it is growing fast from a much larger base: with a market cap of more than $1.3tn, bitcoin is now three times larger than its closest competitor (ethereum). "},{"start":116.024,"text":"Of the 100 largest cryptos, five are at or near all-time highs — bitcoin and four others that are specks in comparison. "}],[{"start":123.87,"text":"Sceptics doubted that bitcoin could ever be taken seriously while its price was swinging so wildly. "},{"start":129.374,"text":"But its volatility has been dropping sharply, according to Bloomberg, and is at historic lows — nearly five times less volatile than at the dizzy highs of the past decade. "},{"start":138.579,"text":"It is, though, still less safe as a currency than the dollar (which is seven times less volatile) or as an investment than gold (nearly four times less volatile). "}],[{"start":148.41,"text":"The fundamental story has not confirmed the bulls’ case for bitcoin in every way. "},{"start":152.927,"text":"They expected that, lifted by its popularity among the young, it would become the new “digital gold”. "},{"start":158.219,"text":"That’s still a dream. "},{"start":159.637,"text":"Gold has been more than holding its own, trading at all-time highs and far above its fair value based on inflation expectations. "},{"start":166.47899999999998,"text":"To diversify away from the dollar, central banks worldwide are buying gold, not bitcoin, at a record pace. "}],[{"start":173.97,"text":"More significantly, bitcoin is far from confirming the vision that it would emerge as a medium of exchange. "},{"start":179.862,"text":"A global index of “grassroots” crypto usage shows the adoption rate in general has fallen by about 60 per cent from the recent peak in 2021. "},{"start":187.917,"text":"Countries that are still rapidly adopting cryptocurrencies tend to be troubled ones with beleaguered national currencies, such as Ukraine and El Salvador. "}],[{"start":196.63,"text":"Bitcoin accounts for less than 10 per cent of the transactions in cryptocurrencies worldwide. "},{"start":201.809,"text":"Some 70 per cent of bitcoin accounts have been dormant for a year, suggesting people are buying the currency to hold as an investment, not to use for purchases at Starbucks. "},{"start":210.602,"text":"In the few places where people use cryptocurrencies for commercial transactions, they are turning to stablecoins, which were designed to track hard currencies and trade at a steady price. "}],[{"start":220.66,"text":"Nonetheless, trends favour the bulls. "},{"start":223.452,"text":"They had said that bitcoin would be propped up by the inherent limits on its supply. "},{"start":227.594,"text":"The output of bitcoin “mines” halves every four years, with the next cut coming in April. "},{"start":232.262,"text":"That is a big driver of the current rally. "}],[{"start":235.05,"text":"Many big institutions now see the cryptocurrency as a legitimate investment. "},{"start":239.51700000000002,"text":"In recent years, they have been increasing their holdings at an average rate in the strong double digits. "},{"start":244.484,"text":"In January, following approval by the US Securities and Exchange Commission, 11 of them opened new bitcoin ETFs to the general public, and that market is on course to grow from $50bn now to $300bn in 2025. "}],[{"start":258.24,"text":"Bitcoin increasingly looks more like an asset with staying power than a passing fad. "},{"start":262.932,"text":"Froth is a feature of any runaway bull market but for now it is the so-called fanatics, not the sceptics, who have good reason to celebrate. "},{"start":270.187,"text":"There is an old Wall Street saying for moments like this: only the fools are dancing, but the bigger fools are watching. "}],[{"start":null,"text":""}],[{"start":276.28000000000003,"text":""}]],"url":"https://creatives.ftacademy.cn/album/145827-1710159207.mp3"}