Fresh Gaps in a Hedge Against Chaos
When looking at how Bitcoin desperately fell in just three days from above $95,000 to form a 15-week bottom at nearly $82,300, so soon after breaking new records around $110,000, it seems to be unbelievable for an inexperienced observer to know that there was no any specific fundamental reasons behind such a strong corrective drop. And yet, this was essentially how it happened. Amid the vast information bias that could really put this downward pressure on the world's most important crypto asset, we can only quote the FBI message about alleged responsibility for a $1.5 billion ByBit hack of the North Korean malicious cyber activity known as "TraderTraitor". Its actors have reportedly converted stolen Ethereum to Bitcoin and other virtual assets dispersed across thousands of addresses on multiple blockchains last Friday. This affected more than 60 million users worldwide.
A sad story, but possible compensation for victims from ByBit is still discussed, and it’s unlikely that the current situation is able to undermine investors' trust for any significant period of time. Enthusiasm of those people who are eager to buy Bitcoin at any reasonable price still looks reasonable. Trump tariff wars have nothing to do with Bitcoin demand, as well as a somewhat slower-than-expected cycle of the U.S. Federal Reserve's rate reduction, which can only delay some people's ultimate decision about the proper time to convert their cash from the Greenback into the crypto world. From early March to late October 2024, a highly visible technical resistance area between $73,500 and $75,000 served as a safe barrier against further climbing to the round hill over $100,000. Now it can be seen by many as a solid foundation for a new era of an expensive-but-temporary-cheaper Bitcoin. At current prices, even purely mathematically, a risk/reward ratio is approximately 1:4, which is very good by the standards of the crypto market, keeping in mind figures like $110,000 and above as still looming targets.
The steady demand for converting fiat Dollars into Bitcoin is also supported by statements of the U.S. Republican leaders headed by Trump. U.S. federal government is going to buy up to 200,000 of Bitcoin per year for 5 years at least, with an intention to accumulate a reserve fund of 1 million Bitcoins. Besides, at least 15 individual U.S. states are in the process of establishing their own Bitcoin reserves as well at each state level. If Trump has set out to turn Washington into the crypto capital of the world, then there is no doubt that the corresponding bills will pass the Congress.
Inflation skyrocketed over the last five years, and it could surge again. The stock market's achievements are great, but recent corrections in techs showed that profit from these equities could be less than in 2024. Economic success doesn't equal to the market gains as well, and the global economy could face growing uncertainties as international relations are changing. Robert Kiyosaki, the "Rich Dad Poor Dad" author, recently called Bitcoin’s latest dip as a unique chance to buy more, feeling that the problem is not Bitcoin, but rather the financial system itself including the banks and the massive debt load. If one talks about the U.S., the actual debt is not "just" the famous $36 trillion but the number of obligations like Medicare and Social Security that may surpass $200 trillion according to some calculations. Again, buying U.S. bonds is not profitable now, even if we forget the assumption that main bondholders like Japan and China can stop propping them up. And now, when even the sitting U.S. President is ready to recognize Bitcoin as real money to make reserves against debt problems, it is hard to imagine that demand will become much weaker soon.
Looking at the bigger picture, Kiyosaki doesn't care about rising volatility in Bitcoin, which is nothing new, but saying that Bitcoin is "a hedge against economic chaos" with dips as buying opportunities. Of course, volatility is also a part of the chaos, but probably its minor detail compared to many others. This approach seems very close to our vision, if we remember that a hedge originally was not a market term but rather an object that protected a house and a garden from invasion. The current gap in this Bitcoin hedge simply means a hole in a fence, and this gap, or this hole, can serve as a source of fresh air. However, people like Kiyosaki and those having thought along similar lines can quickly repair this gap with their money to restore the integrity of this hedge and to earn more money. Like other things temporarily broken, a hedge against world chaos could appear intact again.
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