'Trader-led expectation of growing interest in the store of value narrative is probably behind more of the recent price move than is actual interest,' says NoelleInMadrid. Opinion.
Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.Markets are noisy, chaotic things that we human beings instinctively try to imbue with order and reason.
newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice. In spite of its short-term price volatility and sharp bear markets, bitcoin is a store of value because it is the only asset traded on liquid exchanges today with a programmatic and verifiable hard cap. With other “hard assets” such as gold, diamonds or real estate, we don’t know the supply cap, nor do we know how much is currently in existence.Plus, with other “hard assets,” the price influences the potential supply.
Finally, bitcoin the asset lives on a decentralized network , which lends this store of value an almost unique degree of seizure resistance. It can be argued that other hard assets can be held “off the grid” , but they are complicated to transport and can be seized. Bitcoin ownership doesn't reside on centralized ledgers unless it is at the holder’s request, an option many choose for convenience.
That’s not to say that the store-of-value narrative hasn't been a key driver of bitcoin investment since the early days. In bull markets and bear, those with a long-term thesis have been steady accumulators – metrics that track the movement of bitcoin on-chain show that almost 30% of bitcoin in circulation hasn't moved in over five years, and even during the painful drawdown of last year, that percentage continued going up and to the right .
So, in the case of bitcoin, the trader-led expectation of growing interest in the store-of-value narrative is probably behind more of the recent price move than is actual interest. Investors may increasingly see bitcoin as a store of value, and growing demand in the face of a fixed supply will obviously push the price up. But the bulk of price moves are from traders betting on this demand rather than actually forming part of it.
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