- “Spend cash, invest in bitcoin. Cash is trash.” – A ‘bon mot’ from one of the Winklevosses
- “As of the end of Q2, we have converted approximately 75% of our bitcoin purchases into fiat currency,” – Tesla Quarterly Earnings Statement (July 2022)
- “Bad coin and good coin cannot circulate together.” – A version of Gresham’s Law
This week brought news of “the merge”—a purportedly momentous singularity in the history of humankind, or at least a big new loop in the tangled story of cryptocurrency. We are told that, from now on, Ethereum (the second most popular crypto offering) will no longer be based on “Proof of Work” but rather on “Proof of Stake” (whatever that turns out to mean). The big selling point of the merge is that the cost of “mining” the stuff will be reduced. In fact, mining won’t even have to happen anymore (too bad for Nvidia, by the way, which has floated its market capitalization on sales of the mining hardware—its share price is
92.88% correlated with the price of bitcoin since November 2021).
In any case, “Merge parties” are said to have broken out world-wide, live-streaming from every time zone. Meanwhile, the hedge fund world has crowded into the options market to trade on the volatility that they expect.
- “‘A lot of smart money [is] buying’… Outstanding option contracts have risen from 1.2mn at the start of the year to more than 4.6mn by Wednesday. About 80 per cent of these contracts are call options… It’s a sign of ‘massive bullish sentiment.’”
Of course, the existence of “massive bullish sentiment” would normally signal a decline in the market (investor sentiment is usually a contrarian indicator). The next few weeks will reveal how the Merge will play out for speculators. But we already know that in practical terms it won’t make any difference for the long-run fundamental prospects of crypto.
Continue reading:
https://www.forbes.com/sites/georgecalhoun/2022/09/18/the-biggest-crypto-fantasy-of-all/?sh=186d7dc46aee
