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In the midst of international crises and a fragile crypto market, debates rage on which role Bitcoin actually serves as an investment. Is that digital gold or just another risky asset?
In a recent tweet, ki young ju – ceo of crypto market analytics firm cryptoquant – weighed in on this issue. He believes that as long as institutions like microstrategy continue to purchase Bitcoin, the narrative "digital gold" asset continues to apply.
Know Bitcoin Fundamentals.
Ju offered his thoughts in response to a thread by FTX CEO Sam Bankman Fried (SBF) earlier today. The owner of the billion dollar exchange gave a personal analysis on how Russia's recent invasion of Ukraine affects crypto prices, and why.
After the invasion made headlines yesterday, Bitcoin’s price tumbled below $35k, before recovering to approximately $36k at the time of writing.
Going by Bitcoin "fundamentals", sbf predicted that Bitcoin should not have moved drastically in either direction. Theoretically, whereas war can induce people to withdraw their money from the good and in the money, this could also drive people away from weak european currencies, and in the harshest.
Due to Bitcoin’s limited supply of 21 million coins, some view the cryptocurrency as the hardest currency on Earth, capable of replacing the dollar. Its production difficulty mimics that of gold, earning it the moniker “digital gold”.
Given this context, sbf explains the recent decline in Bitcoin as being driven by "algorithm enthusiasts" rather than "fundamental investors". He argued that the dynamic push-pull between these groups made Bitcoin drop by exactly 8% during the day.
Follow MicroStrategy, told Ju.
That's where CryptoQuant's CEO came in. He confirmed that there had been "no significant activity on the chain" in response to the war, suggesting that the sbf's thesis on fundamental investors was correct.
"Institutions that purchased $btc via txns chain seem [to have] not yet sold their holdings," said ju." Institutions that run algorithmic trading robots believe that btc is a technological stock. '
The CEO concluded that he would prefer to stay exposed to bitcoin until Michael saylor – CEO of microstrategy – sells one of his own. "The digital gold story is still valid as long as these institutions own bitcoins," he said.
Saylor’s company is one of the largest individual holders of Bitcoin, reportedly owning over 125,000 coins as of February. The CEO has repeatedly referred to the asset as “digital gold,” and recently told Bloomberg that he’d never sell his holdings.
