Episode 23: Price Predictions
Or How I Learned to Stop Worrying and Love the Vol
Bitcoin: is it a safe haven or a risk asset? This week we are (for once) talking price. We try to make sense of the recent run ups and retracements and we explore how the valuation of bitcoin and other cryptocurrencies fit into the larger economic landscape.
Show notes and links for the episode 👇🏽 below
This month officially marks the longest expansionary period in US history. It’s been over 120 months or 10 years since the US economy started to rebound from the financial crisis-lows.
What does this mean? The economy tends to go in cycles — both long term cycles and short term cycles — of growth and contraction. Growth is often fueled by debt, that at a certain point catches up with the economy leading to a big debt crisis and a contraction.
The peaks and troughs of these economic cycles have tended to come at semi-regular intervals. But sometimes there are outliers. And it looks like this cycle we are in right now is an outlier.
At different points in each cycle, different types of assets outperform. By and large, you can divide these assets into “risk assets” and “safe haven assets”. In a downturn, investors will flee to the relative safety of assets like gold, strong and stable currencies, and even shares in companies that provide goods and services resilient to a bear market (like healthcare and consumer staples). In a stronger market, however, during an expansion, investors seek out more risk in hopes of a higher return. These risk assets include everything from technology stocks to emerging markets debt.
So our question is: where does bitcoin fit in? Is it a risk asset or a safe haven?
To find out we ran this poll. Let’s just say the results were inconclusive.
Tune in to listen to us talk economic cycles, central bank activity, and most importantly… what prices are doing and our predictions for the rest of this year. We might just be reading tea leaves, but, hey, we might just also be right.