Bitcoin hit an all-time high two years ago, will it replicate this playbook this year for Christmas?

Coming from: Coindesk

编译:比推BitpushNews Mary Liu

Let me first take you back to the happy times.

Two years ago today, on November 9, 2021, Bitcoin believers took to social media to put on their "red laser eye" avatars, FTX had just closed a $420 million funding round and there were rumors that Dogecoin (DOGE) "spokesperson" Elon Musk would be a guest on the Saturday Night Live show (often abbreviated as SNL, Trump's eldest son's hand slide as "S&L"). On this day just two years ago, Bitcoin hit its highest price ever.

! [Bitcoin hit an all-time high two years ago, will this year's playbook be replicated for Christmas?] (https://img-cdn.gateio.im/resized-social/moments-69a80767fe-c1c3e8980b-dd1a6f-cd5cc0)

Bitcoin's "all-time high" is a controversial issue. Numbers vary from exchange to exchange, with Coinbase showing a maximum price of $68,569 (November 8, 2021 at 7:00 p.m.), CoinMarketCap at $66,953, and CoinDesk showing just over $67,000.

I, like many people, tend to set the maximum price at $69,000 – because rounding is an interesting meme number, and because reaching consensus in such a fragmented and illiquid market is really a subjective matter (involving which exchanges you follow and which data sources. ）

In retrospect, the price itself is not important, what matters is that Bitcoin has gone up. Fueled by collective belief, it's rebounding. Many people do believe that Bitcoin will not end, and as long as we believe, $100,000 will come soon. Hence the spread of the "laser eye".

It is now widely believed that this most historic rally was fueled by the stimulus of Covid 19, dreary life during lockdowns and historically low interest rates. Cryptocurrencies can be affected by macroeconomic fluctuations, which is a bitter pill that is hard to swallow. Bitcoin is considered an inflation hedge, but it trades like many other assets at the end of the risk curve.

To borrow the words of Nobel laureate Robert Shiller, the months leading up to November 2021 ATH were a period of "irrational exuberance."

At the time, regulators in various countries were very concerned about the risks that cryptocurrencies posed to the broader financial system. Jon Cunliffe, then Deputy Governor of the Bank of England, likened the trillion-dollar cryptocurrency market to the subprime mortgage industry in 2008.

There are few practical use cases for cryptocurrencies, but there is a lot of leverage in the system. For better or worse, cryptocurrencies are primarily a market built for speculators.

The main innovations come from more than a decade of technology research, billions of dollars in venture financing, and tens of thousands of startups, and these innovations are financial products such as "perpetual swaps" and novel indices (not to say that ZK technology is bad here).

Cunliffe is right to worry about the crypto industry's brewing credit risk. Tellingly, the first wave of bankruptcies after the market crash was centralized lending companies like Celsius and BlockFi. FTX's main failure lies in piling billions of dollars in loans on illiquid collateral. But his view of the potential impact of the cryptocurrency crash was wrong.

Despite the fact that pension funds, hedge funds, and millions of Americans have invested in cryptocurrencies, the crypto market itself remains relatively independent.

Today, cryptocurrencies seem to have somewhat decoupled from the broader economy. Although Bitcoin hit an all-time high during the same period when the S&P 500 peaked in the Long Bull Decade, it started rising at a time when the idea that tech stocks were in recession caught on the wave. Bitcoin has risen by much more than 100% so far this year, and altcoins have risen with it.

Much of the excitement around Bitcoin is driven by a "narrative" of growing institutional interest. It's not exactly a false story: many Wall Street giants like BlackRock, VanEck, and Fidelity are poised to launch cryptocurrency-based exchange-traded funds. Banks are being built on the blockchain, and "tokenization" has become a buzzword in the financial world.

Few people are still talking about the "banking problem" of cryptocurrency, and the industry has successfully worked together to eliminate a dangerous political campaign that is trying to tie Hamas money to cryptocurrency.

If you go to Grand Central Terminal in New York and randomly interview white-collar workers what they think about cryptocurrency, they're likely to say "well, it's not going away." ”

In the long run, cryptocurrency prices are likely to remain driven by macroeconomic forces. Bitcoin fell to lows and traded sideways as Fed Chair Jerome Powell raised interest rates, and how the asset, launched in response to the greed and macroeconomic policies that triggered the financial crisis, will behave in a possible recession next year remains an open question.

In other words, despite the signs of a "warming-up", the crypto winter may not be over yet. The hope is that months-long freezing will weed out bad actors and that the brightest minds can continue to develop. While the "killer app" hasn't been found yet, it's clear that the industry has a determined user base. But with the arrival of institutional capital after the listing of BTC ETFs, there may be another wave of speculators and scammers.

I don't know if the increasing institutionalization of cryptocurrencies will justify Cunliffe's point about the risks that crypto poses to the traditional economy, but if the price continues to rise without a real reason, such as an actual use case, it can only be explained by speculation – another round of "FOMO", and another round of leeks.

But I can say that if Bitcoin reaches $100,000 because of an ETF, it could pay a price.