Why has BTC held up (decently) well over the last month while everything else has gotten slaughtered? A few thoughts🧵
First, we need to address why everything else has gotten killed and that is an adjustment upward of the market's expectations of inflation.
With higher inflation cemented comes higher rates and a sell-off in fixed income. As rates rise, equity prices must go lower to compensate for the increases RFR.
If rates have their desired effect and negatively impact economic growth, equities get repriced even lower as earnings expectations come down.
But what if you have an asset that has no yield and no earnings to rerate lower? Enter BTC
We have obviously seen a massive drawdown from the
BTC peak, with spectacular dramas along the way. But, for the same reason, the fallout from the crypto space didn't impact tradfi, BTC may also more insulated from the fallout fixed income and equity markets are experiencing
Finally, the demographic of the investors is different. Many holders still view this as a long-term asset that will become a dominant currency, so why would you sell now while faith in every other institution is waning?
Curious to hear you guys' thoughts? @DylanLeClair_this twitter thread.