In early August, the cryptocurrency market crashed. You probably remember that. In response, mainstream media (including Interia) remembered bitcoin. A flood of texts about the digital currency appeared. Were they prepared reliably?
Interia: Bitcoin price drops, the myth of “digital gold” collapses?
At the beginning of August, the bitcoin price plunged. The market was terrified by the unemployment data in the US. In addition, the topic of the risk of a war in the Middle East returned. As a result, many assets fell in price. Not only cryptocurrencies, but also shares on the Japanese stock exchange. But did this destroy the thesis that BTC is digital gold?
At that time, Interia published an article Bitcoin Fails in Hard Times: Cryptocurrency Doesn’t Claim to Be ‘Digital Gold’. I must admit that its author, Jacek Brzeski, presented the opinions of both critics and BTC fans. However, it is worth “rebounding the ball” of the former, from whose opinions the editor began his narrative.
The grist to the mill of cryptocurrency critics was the situation when bitcoin behaved like company stocks and fell dramatically in price during the stock market crash. In their opinion, this is further proof that the narrative about the exceptionality of digital currencies is a myth. Bitcoin has acted as a risky asset, not a safe haven.
– we read in the text. A paragraph below, there is a thread about halving, which has not yet raised the bitcoin price.
And this is where the cryptocurrency misconception begins. A temporary, sharp drop in the value of a group of assets does not mean that these assets are not safe havens. Take a look at the chart below from bankier.pl. It shows how the price of gold has been growing. It does not grow constantly. Corrections happen. And this is at a time when the rate should theoretically be growing – in periods of uncertainty.
The first major correction on the left side took place in March 2020, at the time the COVID-19 pandemic was announced. Almost everything lost value at that time – stocks, bitcoin and gold. Did that erase the metal of kings and make it stop playing the role of a safe haven? No, because the bull market started almost immediately afterwards. Bitcoin behaved similarly at that time.
Another thesis: halving fails. Just look at the BTC/USD chart to understand that the distribution of rewards for miners has a positive effect on the valuation of bitcoin, but not immediately. At first, miners who are trying to adapt to the new, post-halving conditions sell their BTC holdings, which slows down the growth.
And again, just look at the chart. In 2020, the halving occurred in May. The strong gains started in the last quarter, not right away.
Bitcoin doesn’t protect against inflation?
As you read the article you will eventually come across the following quote:
According to popular theory, bitcoin is also a hedge against inflation. However, practice does not confirm this. The value of the cryptocurrency has indeed increased during persistent price increases, but it has also fallen more than once when high interest rates began to take their toll on the economy.
In the long term, the price of bitcoin is rising (and in percentage terms much faster than gold), which makes it a great platform not only to preserve the value of savings, but actually to increase it. Personally, I think you have to be very determined (and probably a bit of financial masochism) not to notice that!
ETFs? It’s the end of BTC!
Throughout almost the entire article, the author cites expert opinions. At one point, he reaches the “favorite” of BTC fans – Peter Schiff, who “believes that new funds (ETFs) destroy the decentralization of bitcoin and are contrary to its idea.”
“(Bitcoins) They are no longer decentralized, they are easily seized by authorities, they cannot be used as a currency for payments, they cannot be sent across borders. They are not your keys, not your coins,” Peter Schiff wrote on X
– quotes Schiff Interia.
Here again we are dealing with a misunderstanding. Bitcoins are not “easily seized by the authorities”. ETFs have simply made cryptocurrencies more accessible to ordinary investors. Now Smith, who does not know blockchain and cannot set up his own BTC wallet, can more easily invest in coins. And that’s it. Bitcoin issuance is still decentralized, as are its flows. It is not the case that BlackRock will buy all BTC. Or more precisely: at most its clients can buy them. However, the vision in which ETFs will take over, for example, more than half of the cryptocurrency’s capitalization is naive. In addition, holders of “paper” bitcoins will also sell them, which will force the fund to release these BTC.
The text goes on to include apocalyptic visions of BTC dropping to $40,000. Today we know that this did not happen. Besides, such “analyses” appear cyclically whenever the price of bitcoin drops by double digits. They are only worth so much that they usually help smarter investors determine the bottom of the chart.
At the end, BTC supporters Michael Saylor and Senator Cynthia Lummis are also mentioned. This is good, because it is worth showing the other side in such articles. However, I have the impression that there are few positives about Bitcoin in the text. The senator’s idea for the US government to start buying Bitcoin is immediately countered by the opinion of – of course – Schiff, who criticizes him.
Summary: Polish mainstream still doesn’t understand bitcoin
In summary, Interia’s article is an attempt to criticize bitcoin, which is unsuccessful. Above, I have shown how easy it is to refute the theses presented in the text using basic charts.
The advantage of the article is that the author also tries to give a voice to the supporters of cryptocurrency. However, the tone is pessimistic and there is simply a lack of understanding of what BTC is.
The text also lacks even a single sentence stating that Bitcoin is not only a currency, but also the largest computer network (with the greatest computing power) that allows you to keep your savings outside the banking system and in a safe way.
What’s worse, the article devotes more space to the negative (according to critics) aspects of the functioning of cryptocurrency. I myself am curious about what Interia will write about bitcoin, for example, in a year. If the current cycle proceeds similarly to the previous ones, strong growth may continue, which will facilitate the multiplication of capital. Will the mainstream then write about BTC as a safe haven or generally an investment asset in which it is worth investing your funds?
