Despite the volatility, data shows that high net-worth entities view BTC as a hedge

in LeoFinance2 months ago

Sometimes it pays to look below the surface...

People look at the volatility in bitcoin and think that it's not really a store of value or hedge, but that's not what a lot of institutions and high net worth entities seem to think.

Just because something is volatile right now doesn't mean it doesn't work as a hedge and it doesn't mean that it will always be volatile either.

Look at gold for instance, the thing that most people consider as the quint essential store of value.

If you go back 50 years, it had extreme volatility for a period of time after we went off the gold standard and gold ownership was no longer illegal.

In fact, the price action on gold during that period looked a like the volatility in bitcoin that we see today.

Either way, just by digging under the surface a bit, it looks like high net worth entities and institutions are already seeing bitcoin as a safe haven or hedge.

Check this out:

(Source:

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Ok, so what is this chart telling me exactly?

I'm glad you asked!

First, as you will notice, the high net worth entities balance is going up markedly over the last several months.

And the definition of a high net worth entity is any wallet (or cluster of wallets controlled by a single entity) that controls between 1,000 and 10,000 BTC.

And secondly pay attention to where that circle is on the chart, specifically what month that is in...

If you need some help that is back in March of this year, when the pandemic stimulus really started rolling out all over the world.

Now look at the line just below that one, the increase in money supply.

Basically is what we are seeing is that when the money supply increased significantly, so did the number of bitcoin being held by high net worth entities.

Which seems to indicate that with more dollars being printed they are more comfortable putting dollars into something like bitcoin vs. just holding those dollars.

The graphs are almost showing a 1:1 correlation.

So, irregardless of the volatility in bitcoin this data seems to indicate that high net worth entities are perfectly comfortable holding more and more bitcoin as the money supply increases.

And that sounds exactly like what someone would do when they are using it as a hedge.

Stay informed my friends.

-Doc

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You are very right. Despite the negativity as a result of it's volatility, People are beginning to see bitcoin as a safe haven.

It's funny how printing trillions of dollars will do that...

Exactly😁

Cool, what does this mean?

¯\_(ツ)_/¯

Institutions are pretty much the definition of smart money. They refuse to ride these emotional week to week trading waves that everyone else is on a regular basis. Rather, they take a step back and look year to year (or even 4 year blocks in Bitcoin's case).

And what do we see when we take a step back and look at the market from day one? It's done nothing but gone vertical consistently over time. Anyone who leaves their money in 4 years or longer gets a guaranteed 10x. That isn't volatility, that is consistency at an unprecedented level. Bitcoin will only get more consistent over time as liquidity increases, and they know it.

Yep, well said and I agree. I think the pandemic, and ensuing money printing, likely accelerated the adoption timeline of bitcoin by institutions and high net worth entities.

The timing of all this is perfect.
The stars are in alignment.

The end of 2020 and much of 2021 are shaping up to be pretty fun years for investors, as long as you aren't holding dollars that is.

Very good analysis my friend. Excellent.

Thank you. Follow the money!