(image: ideogram.ai)<\/p>\n
It was with some surprise that I read a column written last week by a colleague and co-columnist on these pages, in which he commented that \u201cBitcoin and other cryptocurrencies are long into bubble territory\u2026 as with all bubbles, eventually it will burst.\u201d Nothing could be further from the truth; Bitcoin\u2019s ascendancy has only just\u00a0begun.<\/p>\n
I will explain, but first an\u00a0aside:<\/p>\n
The \u201cBitcoin-as-bubble\u201d idea has been around for about 14 years but, in fact, Bitcoin has been the best-performing asset during that same period. It has made every other asset\u200a\u2014\u200astocks, bonds, real estate, commodities and collectibles\u200a\u2014\u200aappear positively flaccid by comparison. Not a bubble, by any definition. My colleague, an economist by trade, is a clear thinker (as well as a fine writer) so I take his opinion seriously. I suspect he may have been talking about the recent run-up in the Bitcoin price rather than making a general statement about its (startling) long-term resilience and buoyancy.<\/p>\n
It seems redundant to restate the original Bitcoin proposition after so much has been written about it, both in the popular press and in various techno-covens, so I\u2019ll go super-reductive and just say that a bunch of very smart developers and mathematicians decided that central bank-distributed money was inefficient, inflatable, easily corruptible and generally sucky on numerous axes. They used cryptographic wizardry to invent another sort of money\u200a\u2014\u200aefficient, inflation-proof, incorruptible and definitely not\u00a0sucky.<\/p>\n
After much laughter and derision, followed by years of vicious state pushback, Bitcoin seems to have won the day, if not the century (if not the future). It\u2019s no longer speculative or risky. It is currently in the process of being crowned the world\u2019s newest safe asset from the US to\u00a0Bhutan.<\/p>\n
The first big win for the cryptocurrency\u2019s legitimacy was the approval by the SEC late last year of a BTC ETF (Exchange Traded Fund, publicly traded) after more than 5 years of stonewalling. One of the applicants was BlackRock, the biggest asset manager in the world, with assets under management greater than the GDP of most countries. This was huge news. If BlackRock wanted in on Bitcoin, then surely this was not a flash in the pan? The January 2024 launch of BlackRock\u2019s ETF was the most successful in ETF history, by any and every\u00a0measure.<\/p>\n
A flurry of activity followed. From corporations to financial institutions to lawmakers, to regulators to media\u200a\u2014\u200aeveryone sat up and took notice. And some took action. ETFs were launched in multiple jurisdictions, pro-crypto bills were written, regulators softened, lawmakers got the message. Most importantly, the cash-flush crypto industry (supported by their powerful investors) started pouring money into relentlessly lobbying everyone in politics.<\/p>\n
Their argument ran\u2026There are 50 million people with crypto wallets in the US and 500 million globally. Either you support us, or we will give our money to those who do. Trump heard them, loud and clear. Harris did not. Outside of the US, similar arguments are being made. Moreover, it has gone way beyond the grubby business of political funding\u00a0now.<\/p>\n
Which brings us to the point of this column and my fervent rebuttal of my colleague\u2019s position. The crux is the matter of a national \u201cstrategic reserve asset\u201d which is defined as a collection of assets held by governments to promote (even, some would say, ensure) \u201ceconomic stability, currency stabilization, confidence in the economy\u201d.<\/p>\n
These assets are typically securities (like government bonds), blue-chip foreign currencies and\u00a0gold.<\/p>\n
Soon to be joined by Bitcoin?\u00a0Really?<\/p>\n
Yes.<\/p>\n
Here is where the matter stands (remembering that this has all happened in the last few\u00a0months):<\/p>\n
\u25cf Donald Trump and his economic cabinet cluster have expressed enthusiastic support for Bitcoin as a strategic reserve asset\u00a0(SRA)<\/em>\u25cf Senator Cynthia Lummis has a Bitcoin SRA bill in front of\u00a0Congress<\/em>\u25cf President Javier Milei of Argentina has expressed his support of Bitcoin as an\u00a0SRA<\/em>\u25cf Brazil has just introduced a Bitcoin\u00a0SRA<\/em>\u25cf Joana Cotar, a member of the German Bundestag, is championing the use of Bitcoin as an\u00a0SRA<\/em>\u25cf S\u0142awomir Mentzen, a presidential candidate in Poland, has pledged to adopt legislation to establish Bitcoin as an SRA for his\u00a0country<\/em>\u25cf There are well-sourced rumours of a similar initiative in\u00a0Slovenia<\/em>\u25cf Texas is exploring the idea of establishing a strategic Bitcoin\u00a0reserve<\/em>\u25cf Bitcoin is already an SRA in Bhutan and El\u00a0Salvador<\/em><\/p>\n I could go on and list the extraordinary collapse of anti-crypto sentiment across the globe\u200a\u2014\u200afrom Morocco to China to Portugal to Russia, but it is entirely unnecessary because it is the US that matters. If the Lummis bill passes, as it is expected to do, the rest of the global skittles will quickly fall and Bitcoin will move onto the podium with gold-standard national assets. Its price will continue to rise to some figure not yet predictable but certainly dramatically higher than the piddling $100,000 per Bitcoin currently being\u00a0tickled.<\/p>\n The word \u201cbubble\u201d will quickly disappear from the Bitcoin narrative.<\/p>\n As a postscript, had I the inclination, I would challenge my worthy colleague to a public bet about Bitcoin and bubbles and price but, as a long-term Bitcoin holder, it should be clear to all that I am not a\u00a0gambler.<\/p>\n Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg. His new book It\u2019s Mine: How the Crypto Industry is Redefining Ownership is published by Maverick451 in SA and Legend Times Group in UK\/EU, available now. Copy edited by Bryony Mortimer.<\/em><\/p>\n Originally published at <\/em>https:\/\/stevenboykeysidley.substack.com<\/em><\/a>.<\/em><\/p>\n A Bitcoin Bubble? Not a Chance\u200a\u2014\u200aA Rebuttal<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" A Bitcoin Bubble? Not a Chance\u200a\u2014\u200aA\u00a0Rebuttal (image: ideogram.ai) It was with some surprise that I read a column written last week by a colleague and co-columnist on these pages, in which he commented that \u201cBitcoin and other cryptocurrencies are long into bubble territory\u2026 as with all bubbles, eventually it will burst.\u201d Nothing could be further […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-25126","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/25126"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25126"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/25126\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}