Today’s Stories: 🚨 Is Bitcoin a Geopolitical Hedge? 🇨🇳 China’s Moves Bullish For BTC
Today's newsletter is 688 words, a 3.5-minute good read.
Is Bitcoin a Geopolitical Hedge?
Yesterday, much of the world held their breath as videos emerged of bombs landing in Israel.
Within minutes of the news, stocks fell, oil rose, and the price of BTC dropped 4.5%.
Commentators were quick to point at the price chart and exclaim: “bitcoin falls on missile attack!!” and that, therefore, the asset is NOT a “geopolitical hedge.”
However, five minutes of research shows that this reaction is typical for bitcoin. In fact, it may just actually be a good thing.
As shown in the chart from BlackRock below, during times of geopolitical uncertainty, the price of bitcoin may be muted or even drop in the short term…
But in the longer term, it will regain its previous price and rally significantly.
Source: BlackRock
What’s this mean for you? It means to stop listening to the talking heads. It means stop looking at hourly price movements as a gauge of your portfolio.
However, it is also worth noting that bitcoin is still a volatile asset.
And while, yes, the volatility continues to decrease…
The drawdowns can still be gut-wrenching…
So find your happy spot where risks, like we saw yesterday, don’t cause you to puke.
And hold on for the ride.
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China’s Making Moves
Two recent developments in China may signal bullish momentum for bitcoin and the broader crypto market. Let’s take a closer look:
Stimulus injection: China's central bank has initiated a significant liquidity boost by injecting $71 billion into the economy. Measures include emergency funding for the stock market, rate cuts, reduced reserve ratios for banks, direct cash support to low-income households, and aid for the struggling housing sector.
Shift in Stance? Zhu Guangyao, China's former finance minister, has called for the country to pay closer attention to cryptocurrencies. In light of former President Trump's open support for crypto, he emphasized the need for China to “study” its position in the evolving digital asset landscape.
Why It Matters:
PBoC brrr effect: Similar to how US stimulus measures led to a surge in BTC prices by increasing liquidity, China's actions could have a comparable impact on risk assets. The news partially explains why we saw BTC prices get a boost over the weekend.
Signaling for a race: The call for re-examining crypto policies suggests a possible shift in China's strict stance on digital currencies. This could open some new doors for greater adoption in the world's second-largest economy.
Catch up: Despite China’s blanket ban on cryptocurrencies in 2021, over 55% of the bitcoin mining network is still controlled by Chinese mining pools. But that percentage has been slowly dwindling as more mining networks shift to the west.
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Moving Bricks: Money-Laundering Practices in the Online Scam Industry (Global China Pulse)
Ohio to consider accepting crypto for tax payments and fees (CoinTelegraph)
PayPal Enables Business Accounts to Buy, Hold and Sell Cryptocurrency (PayPal)
Tweet Of The Week
Dillon Newman @Dilnewm
Robinhood’s stock price now outperforming Coinbase on a 1yr time frame.
$HOOD $COIN
4:00 PM • Oct 2, 2024
8 Likes 0 Retweets
1 Reply
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