Are Michael Saylor and Jack Dorsey lighting the fuse for a Bitcoin melt-up?…. revisited one month later.

Now that $20,000 #Bitcoin is in view, perhaps it is time to revisit this thread from exactly a month ago (https://twitter.com/harrigan_pete/status/1318272524182958080). Oddly enough, it seems to have held up fairly well, even though there is a lot left to play out.

Anyway, here it is:

Are Michael Saylor and Jack Dorsey lighting the fuse for a #bitcoin melt-up? Will there be a feedback loop like the feedback loop that melted down real estate in 2008?

To clarify, a positive feedback loop can push things up or down. It is any process where the result of the process drives the process. It’s a fancy term for a snowball effect.

With mortgages, as real estate prices rose, even mortgage securities made up of subprime performed well. This led to more investment dollars going into such mortgages, which meant more money available for real estate, which led to higher prices, and so on.

On the way down, it all reversed. Real estate began to erode in price. This meant fewer mortgages were bailed out by the market. Worse performance led to tightened lending standards, which meant less money for real estate. Then the foreclosures started, etc.

What does this have to do with #Bitcoin? Corporate treasurers have started to move some balances to Bitcoin. Certainly, @michael_saylor and @jack have changed the landscape.

As this news of these purchases spreads, and as the #Bitcoin price rises, other corporations will start to get uncomfortable questions about why they own none.

This will only accelerate as the price rallies. At $20K #Bitcoin, a few people will ask why a company has not invested. At $50K #Bitcoin, everyone will ask.

So, as the price rises, the pressure will increase to buy, which will drive the price higher.

Ta-da!!

Positive feedback.

But here is the interesting part. When a positive feedback loop CAN start, it very probably WILL start.

The market is FRAGILE to the feedback loop.

And, once it starts, it can rip.

Or, I suppose I should say….