A Strange Asset
Bitcoin is a rather unique asset, being extremely volatile in the short term and yet displaying amazing returns over the longer term. Traditional investors are unable to accurately class and explain Bitcoin, which leaves the asset being classed along with risk-on assets. This is the obvious but yet not so obvious issue. Being a unique asset, it cannot truly be aligned with or classed alongside any existing asset class. Bitcoin is unique and as such, ultimately needs to establish itself outside of existing molds. This is something that I have addressed before and believe to be a key progression in Bitcoin’s journey. Until such a time, I believe that BTC and the broader Crypto market will be “marginalized” by association with existing markets. This I find to be a bit of a concern, as it could take some time to actually unfold, if at all. It is the obvious “next move” for Bitcoin, but that does not necessarily imply that it will materialize. Obviously, we are all hoping that this takes place. However, the future is in no way guaranteed and we can only work with what we have.
The Essence Of Investing
This becomes a bit of an issue, as effective investing involves positioning yourself for the future. In Bitcoin’s case, a strong decoupling is imperative, if we wish to see the asset perform as it should. This causes concern if traditional markets remain suppressed and under pressure for an extended period of time. Many analysts believe that the stock market is likely to take years before regaining new highs. Bitcoin is likely to still appreciate due to other catalysts but it will definitely be weighed down by the broader market. However, breaking away in a real and meaningful way will be a game changer for the asset class. Bitcoin is not a tech stock, it’s actually not a risk-on asset, despite extreme short-term volatility. Perhaps, this is open to personal interpretation, but I view it as a fairly safe investment vehicle for the long-term investor.
This is something that is a bit frustrating for earlier adopters like me. An asset class that was originally unique is now lumped together with the very asset classes it was meant to supersede. Global adoption will obviously require this sort of shift, but only initially. After “acceptance” into the “gang”, Bitcoin can go on to establish a unique “identity”. Hopefully, this becomes the reality in time. Personally, I would consider it rather sad, if BTC never breaks away into its own unique class. It’s similar to a racehorse only being allowed to gallop around in an enclosed area. Bitcoin needs to be truly unleashed and this can only occur once a significant decoupling takes place.
An Ideal Shift
It would be great to see the Crypto market rallying while traditional markets tanked. A scenario where strong demand dictates due to unique and superior properties. This is how Bitcoin should be operating. Likewise, it can also edge lower while traditional markets appreciate. Bitcoin is unique, so why is it not classed as such?