(Bloomberg) — Virtual money, digital gold, inflation hedge, uncorrelated asset, store of value: those are phrases once used by Bitcoin’s fans to describe the cryptocurrency’s virtues. Its new narrative? A Bitcoin is a Bitcoin.
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That’s the expression that’s making its rounds on Twitter in recent days, where users, amid a deep decline in prices, have been posting that 1 BTC = 1 BTC. The idea is that it doesn’t really matter what the coin’s price is. Its supply is fixed and that should, theoretically, act as a buoy for prices in the long run.
“1 BTC = 1 BTC is something Bitcoin maximalists say tongue-in-cheek when looking at the USD price of BTC becomes too painful,” said Joshua Lim, former head of derivatives at Genesis Trading. “The implication is that BTC will eventually become a unit of account so just focus on the absolute number of BTC you own today.”
Anyone paying attention to the crypto market has become familiar with the many cloaks Bitcoin has donned over the years. Fans had, before 2022, utilized a number of narratives for the coin, including that it could at some point replace gold, or that it’s a great inflation hedge. Most of those narratives have fallen by the wayside this year as prices plunged amid monetary policy tightening. Bitcoin has lost roughly 60% this year and has been trading below $19,000 in recent days, down from a near-$69,000 high at the end of 2021.
When the pandemic first broke out, crypto investors ran with the idea that Bitcoin, thanks to that limited supply, could act as a hedge against rising prices. But consumer price pressures have remained sticky this year all the while prices for most cryptocurrencies plunged. Many market-watchers say that investors are now searching for a new narrative for the digital-assets market. Twitter has been flooded with posts proclaiming that all that matters is that 1 BTC equals 1 BTC.
Tagus Capital’s Ilan Solot says that the Bitcoin-as-an-inflation hedge narrative argued by the proponents has been misunderstood. It’s incorrect to think…