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I have to thank Charlie and Warren for keeping me clear-eyed about crypto. Their blunt assessment made me immune to the claims that they really might have some useful niche or value. Nobel prize winning economist Paul Krugman had some interesting comments today:

" First, today’s price action shouldn’t change your view about Bitcoin’s usefulness or lack thereof. If, like me, you consider the whole thing a delusion — BTC isn’t a medium of exchange, nor is it a reliable store of value — then you already knew that and the fact that we seem to be having a Wile E. Coyote moment isn’t information about the fundamentals. (There are no fundamentals.) If you have some story about why this aging financial innovation is actually useful — do tell...

Second, the fact that BTC is now lower than it was before the 2024 election is significant in two ways. It shows the limits of political favor — all the boasts about making American a crypto superpower, all the deregulatory talk and pardons for cryptocriminals, in the end couldn’t defy gravity...

And in general the whole “Say what you like about Trump, but markets are up” mindset must be under severe strain."

Richard Farr, chief market strategist and partner at Pivotus Partners, has issued a stark prediction for Bitcoin (BTC-USD), setting a price target of zero for the cryptocurrency.

“Our BTC price target is 0.0. That’s not just for shock factor. It’s where the math takes us,” the strategist said, noting that Bitcoin (BTC-USD) has failed to function as a dollar hedge and instead operates as “a speculative instrument correlated to the Nasdaq.”

According to Farr, the cryptocurrency faces insurmountable obstacles in gaining institutional adoption or serving as a legitimate medium of exchange.

“No serious central bank will ever own something where Michael Saylor controls the float,” he said on X, referring to the Strategy (MSTR) executive who has accumulated massive bitcoin holdings.

https://seekingalpha.com/news/4547997-bitcoin-s-pr...

From a theoretical point of view, BTC is the same as gold; whether it can serve as a medium of value all depends on people's trust. Gold is a physical thing and has earned trust for thousands of years from people all over the world; there is no reason to doubt that will change. BTC is new, and subject to all digital risks, and only a small number of people have trusted and used it, how long that will last is still in question.

I’m on the same page. On paper, BTC checks the same boxes as Gold: it's a store of value outside the banking system. You could even argue it's 'harder' money than Gold because the supply is hard-capped, whereas Gold supply increases every year. Plus, you don't need a vault to store it.

Also and as an aside: BTC isn't anonymous. It’s a public ledger. If you can link a name to a wallet ID, you can track every penny they’ve ever moved. And while the industry is full of grifters, the underlying protocol is solid—it’s tough to crack.

I’ve done the deep dive—I’ve read the 'basics' like The Bitcoin Standard (which is excellent, regardless of your stance)—but I’m currently sitting out.

Here is the issue: If Bitcoin were truly 'digital gold,' it should have rallied alongside the metals during this recent currency debasement. It didn't. It acted like a tech stock. Until the market stops treating it like a risk asset, the 'safe haven' narrative is just a theory that hasn't survived first contact with reality.

I ran a finance forum with over 3,000 folks in it, at work, before I retired. Young folks would often ask me "what do you think about [financial matter/investment]". This came up about crypto. Essentially I said that I have no interest in:

- a currency (for want of a better word) subject to wild swings based on the tweets of a mercurial, possibly drug using billionaire,
- a currency that takes 20-40 minutes to complete a transaction,
- a currency that seems to be eagerly accepted for drugs and dodgy porn on black markets on the internet, and
- a currency unusable for any real transaction...as in the last couple years (knowing the reaction would be of the "are you insane" type) I asked a car dealer, a real estate broker, and a general contractor if they dealt in crypto.

For the last one, as they say in a Christmas Story, they looked at me like I had lobsters crawling out of my ears.

Of course, these young people are gonna FOMO/HODL, regardless of what I said, so I told them that as I knew they were going to do this anyway, keep it to 5% of their investable assets.

Until the market stops treating it like a risk asset, the 'safe haven' narrative is just a theory that hasn't survived first contact with reality.,/I.

Every bubble is built on a "story line" that makes sense to many - until it doesn't.

That test of reason is now occurring with BTC.

If it doesn't behave like a duck, and doesn't quack, it isn't gold. Or silver. Or real money.

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