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Bitcoin's latest drop isn't without a silver lining



Bitcoin has seen increasing price volatility over the past few days. However, despite the recent dip, Bitcoin has been able to hold above the critical $10,000 mark. Bitcoin’s value proposition as a store of value asset appears to be holding strong despite increasing uncertainty in global markets following governments’ money-printing spree to keep their economies alive.

In a recent discussion on the "What Bitcoin Did" podcast, Bitcoin analyst PlanB, author and commentator Jeff Booth, and Investor Podcast host Preston Pysh ) discusses how Bitcoin might perform in the current macroeconomic situation. According to Booth, assets like Bitcoin are very important in today’s macroeconomic situation, and he also stated that a deflationary world needs a deflationary currency.

Three Arrows Capital CEO: Bitcoin has a broad and long-term low correlation with other assets: Three Arrows Capital CEO Su Zhu tweeted that no asset will automatically rise when other assets fall. What you can expect is broad and long-term low correlation, which Bitcoin did exhibit, with its price still well above its December 2019 low. [2020/3/10]

Over the past few years, PlanB's "Stock To Flow" (S2F) model has been widely used as an example to illustrate that the value of Bitcoin is only possible to increase when the theory of scarcity plays a role. This has led more and more people to view Bitcoin as a long-term asset, comparable to monetary metals such as gold and other assets such as real estate.

News | Bitcoin ATM Appears in a Shopping Center in Milan: Jinse Finance reports that a Bitcoin ATM has been set up in the Milan shopping center Bicocca Village, offering the opportunity to buy Bitcoin as well as shoes, handbags or food in Italian. The ATM showed that people could sell bitcoins for 7,600 euros ($8,400) or buy them for 8,200 euros ($9,000 more). [2020/1/22]

The S2F model means the model of stock/production, that is, how many years the current average daily output can produce the current stock scale". As the stock continues to increase, the inflation rate is also declining under the condition of constant output. Only when the S2F data is high, this product has investment value, because the output is slow and the stock will not increase rapidly, so the stock is valuable.

News | Bitcoin Black Friday announced permanent closure: According to CoinTelegraph today, "Bitcoin Black Friday (Bitcoin Black Friday)" founder Jon Holmquist said that the mission is complete, and "Bitcoin Black Friday" will be permanently closed. Holmquist said the Bitcoin Black Friday event was about demystifying cryptocurrencies, and the job has been done. [2019/11/26]

PlanB went on to add that even if governments print less fiat money and there is a massive economic depression, a model like S2F could be correct. While quantitative easing has played a role, bitcoin's portability and ability to store value allow it to maintain a reasonable position relative to assets such as gold, he said.

"The truth is that bitcoin has a natural place in gold, silver diamonds, real estate, etc., all of which can be used as a store of value, and is one of the few assets with high S2F data ... I think, even if they don't print bitcoin Coins also have advantages over gold, for example, it is easily verifiable and portable.”

Pysch backed this up, claiming that as Bitcoin's value proposition remains strong, it will continue to outperform any other currency in existence today. In addition, he also highlighted the value proposition of Bitcoin, when the security of Bitcoin is questioned, it can be answered by looking at the increase in hash power that Bitcoin now maintains.

In fact, according to data provided by Glassnode, Bitcoin’s average hash power has grown significantly over the past two years, surpassing 120E.

Interestingly, despite the seemingly strong long-term outlook for Bitcoin, a recent Ecoinometrics chart shows that there is a very strong buying opportunity for new investors entering the market. Looking at Bitcoin's growth trajectory, its recent price decline has pushed the indicator to the bottom of its range since the third halving, making it the best entry price point for long-term investors.


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