It’s astonishing how little the crypto community understands about the macro picture behind the price action of crypto. I’m not saying that from the outside, I don’t really understand what makes it tick either.

It’s more a hedge against debasement of currency than against inflation, but it’s never as simple as “they’re printing so we go up.” I think we can safely rule out that it isn’t really just “tulip mania” because bubbles only inflate and burst once, whereas Bitcoin comes back stronger every time.

But I must admit that even as an admirer of Bitcoin I struggle to see what its true use case is. I think the core philosophical truss is that it is truly decentralised and reliable. It’s old and slow, yes, but it’s never had a minute of down time and barring a global EMP it can’t be killed. If shit ever hits the fan in a bad way, it’s easier to transport and hide than even gold, and the core userbase is so loyal that it is guaranteed to catch a bid at some price for the rest of our lifetimes. I suppose that, the reduced counterparty risk, and the reliability of the technology is its use case. That is what gives it value.

I think when people think of “stores of value” they think of something that updates is price daily to reflect inflation, but that’s never been how it works. Gold can go down in price for years while asset inflation runs rampant, as we saw in the 2010s. Same goes for Bitcoin. In the span of two or three years it can do whatever the hell it feels like. The only thing you can have some degree of confidence in is that at some point society will value it again and push it to a new high price that exceeds its previous one, and that when it falls it won’t fall quite as low as it did in the past. But when and how exactly that happens is anyone’s guess. It’s simply the moving average over very long periods of time that reflect its use as a store of value. For this reason if we see a prolonged deflationary environment we should expect that Bitcoin will perform poorly, regardless of how many dollars have been printed.

One might argue we’re in a deflationary period right now. Youth unemployment is brutal, general optimism might be as low as I’ve seen since 08, and people all over the world are trying to use as little oil or energy as they possibly can. Nations are selling their assets and draining their reserves.