{"id":16254,"date":"2022-05-09T11:48:15","date_gmt":"2022-05-09T11:48:15","guid":{"rendered":"http:\/\/egrowonline.com\/?p=16254"},"modified":"2022-05-09T11:48:15","modified_gmt":"2022-05-09T11:48:15","slug":"is-the-current-bitcoin-carnage-milder-than-previous-bearish-episodes","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=16254","title":{"rendered":"Is the Current Bitcoin Carnage Milder Than Previous Bearish Episodes?"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<div class=\"wp-caption aligncenter featured-image\">\n<div class=\"wp-lightbox\"><a target=\"_blank\" href=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001.jpg\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"1480\" height=\"833\" src=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-1480x833.jpg\" class=\"attachment-large-2x size-large-2x wp-post-image\" alt=\"Bitcoin\" srcset=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-1480x833.jpg 1480w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-410x231.jpg 410w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-740x416.jpg 740w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-240x135.jpg 240w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-768x432.jpg 768w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-1536x864.jpg 1536w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-480x270.jpg 480w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-820x461.jpg 820w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001-1030x579.jpg 1030w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001.jpg 1920w\" \/><\/a><\/div>\n<\/div>\n<p>The oracle of Omaha, Warren Buffett, was recently included in the so-called \u201c<a target=\"_blank\" href=\"https:\/\/wccftech.com\/the-billionaire-peter-thiel-rocks-the-financial-world-with-his-prediction-that-the-price-of-bitcoin-btc-will-increase-100x-to-over-4-million\/\" rel=\"noopener\">finance gerontocracy<\/a>\u201d by the co-founder of Paypal and Palantir, Peter Thiel, for maintaining an archaic and overly bearish stance on Bitcoin and other cryptocurrencies.<\/p>\n<p>Well, Buffett has now struck back, recently stating that he would not buy Bitcoin at even a price of $25. Readers can watch the entire clip here:<\/p>\n<p id=\"\" class=\"wccf_related_post\"><a target=\"_blank\" class=\"wccf_related_post\" href=\"https:\/\/wccftech.com\/bitcoin-is-now-primed-for-a-bounce-even-though-the-federal-reserve-induced-equity-market-carnage-continues-to-act-as-a-potent-overhang\/\" rel=\"noopener\"> Bitcoin Is Now Primed for a Bounce Even Though the Federal Reserve-induced Equity Market Carnage Continues To Act as a Potent Overhang<\/a><\/p>\n<div class=\"jeg_video_container jeg_video_content\"><iframe loading=\"lazy\" title=\"If you offered me all the bitcoin in the world for $25, I wouldn\u2019t take it, says Warren Buffett\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/HVm7Pfb0ilY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<p>As the war of words around Bitcoin\u2019s prospects continues, MicroStrategy (<a target=\"_blank\" href=\"https:\/\/www.google.com\/finance?q=NASDAQ:MSTR\" rel=\"nofollow noopener\" class=\"wccf-stock-quote\">NASDAQ:MSTR<\/a>) has now issued a warning that it would face a <a target=\"_blank\" href=\"https:\/\/fortune.com\/2022\/05\/04\/michael-saylor-microstrategy-margin-call-bitcoin\/\" rel=\"noopener\">margin call<\/a> on its sizable Bitcoin stake should the cryptocurrency\u2019s price decline to $21,000. Bear in mind that the company currently owns around 129,218 Bitcoins acquired for $3.97 billion, or $30,700 per coin. Nonetheless, the margin call only relates to the <a target=\"_blank\" href=\"https:\/\/www.microstrategy.com\/en\/investor-relations\/press\/silvergate-bank-issues-205-m-loan-to-macrostrategy-collateralized-by-bitcoin_03-29-2022\" rel=\"noopener\">$205 million Bitcoin-collateralized loan<\/a> that MicroStrategy has taken from Silvergate bank, and in the event of a trigger, the company would simply have to provide additional Bitcoins from its sizable unencumbered stake to maintain appropriate loan collateral.<\/p>\n<p>Of course, we had conducted an extensive <a target=\"_blank\" href=\"https:\/\/wccftech.com\/bitcoin-is-now-primed-for-a-bounce-even-though-the-federal-reserve-induced-equity-market-carnage-continues-to-act-as-a-potent-overhang\/\" rel=\"noopener\">analysis<\/a> on Bitcoin\u2019s prospects over the weekend, noting that the cryptocurrency has now entered a broad area of support that extended all the way to $29,000. Buffeted by a more conducive near-term on-chain metrics setup, we continue to believe that the probability of a breach of major proximal support zones remains slim, setting the stage for a sizable bounce.<\/p>\n<p>However, as we\u2019ve repeatedly flagged over the past few months, Bitcoin\u2019s ever-growing correlation with US stocks in general and high-beta, growth-heavy equities, in particular, is a major cause of concern. Consider the fact that Bitcoin\u2019s 60-day correlation with the S&amp;P 500 index is currently at 0.70 (<a target=\"_blank\" href=\"https:\/\/charts.coinmetrics.io\/correlations\/\" rel=\"noopener\">coinmetrics<\/a>), indicating that around 70 percent of the cryptocurrency\u2019s moves replicate those of the S&amp;P 500 index.<\/p>\n<p>This is a major threat to Bitcoin\u2019s narrative of being a unique asset that does not fall within the realm of traditional finance. Moreover, by failing to hold its head over the proverbial waters amid the current macroeconomic environment characterized by a fierce inflationary impulse, Bitcoin has also demonstrated that it can\u2019t function as a viable inflation hedge, at present at least.<\/p>\n<p id=\"\" class=\"wccf_related_post\"><a target=\"_blank\" class=\"wccf_related_post\" href=\"https:\/\/wccftech.com\/nfts-are-not-dead-apecoin-ape-transforms-into-a-must-have-token-as-the-metaverse-initiative-linked-with-the-bored-ape-yacht-club-bayc-pulls-off-a-historic-debut\/\" rel=\"noopener\"> NFTS Are Not Dead: ApeCoin (Ape) Transforms Into a Must-have Token as the Metaverse Initiative Linked With the Bored Ape Yacht Club (BAYC) Pulls off a Historic Debut<\/a><\/p>\n<p>So, why has this correlation regime been so persistent? Well, institutional adoption is a double-edged sword. On the one hand, as more and more institutions dabble in Bitcoin, the cryptocurrency benefits from increased liquidity, which should dampen its legendary volatility.<\/p>\n<div class=\"wp-caption clearfix alignnone\">\n<div class=\"wp-lightbox\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-1344586\" src=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption.png\" alt=\"\" width=\"2880\" height=\"1611\" srcset=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption.png 2880w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-410x229.png 410w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-740x414.png 740w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-240x135.png 240w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-768x430.png 768w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-1536x859.png 1536w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-2048x1146.png 2048w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-480x270.png 480w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-820x459.png 820w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-1480x828.png 1480w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-1030x576.png 1030w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Institutional-Adoption-1920x1074.png 1920w\" \/><\/div>\n<p>Source: https:\/\/www.vaneck.com\/us\/en\/blogs\/gold-investing\/revisiting-gold-and-bitcoin-as-commodities-rally\/bitcoin-and-gold-friends-or-foes.pdf<\/p>\n<\/div>\n<p>In fact, as per a recent <a target=\"_blank\" href=\"https:\/\/www.vaneck.com\/us\/en\/blogs\/gold-investing\/revisiting-gold-and-bitcoin-as-commodities-rally\/bitcoin-and-gold-friends-or-foes.pdf\" rel=\"noopener\">report<\/a> by VanEck, the institutional adoption of Bitcoin has never been more vibrant than in 2022, when so far this year, nearly 160 separate 13F filings by various hedge funds have referenced their Bitcoin holdings.<\/p>\n<p>This onslaught of new liquidity is having a noticeable impact on Bitcoin\u2019s volatility. For instance, the current Bitcoin price of $33,092.5 corresponds to a peak-to-trough decline of 51.19 percent so far, which is substantially less than the typical bear market drawdown of over 80 percent. Of course, the current bearish cycle is far from over, and it remains to be seen whether Bitcoin can stave off a more typical drawdown in the current cycle on the back of additional liquidity from institutional investors. Even if Bitcoin\u2019s price bottoms at the $21,000 price level, it would still correspond to a peak-to-trough decline of 69 percent, well short of the typical 80-percent-plus drawdowns.<\/p>\n<div class=\"wp-caption clearfix alignnone\">\n<div class=\"wp-lightbox\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-1344587\" src=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility.png\" alt=\"\" width=\"2851\" height=\"1568\" srcset=\"https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility.png 2851w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-410x225.png 410w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-740x407.png 740w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-768x422.png 768w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-1536x845.png 1536w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-2048x1126.png 2048w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-820x451.png 820w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-1480x814.png 1480w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-1030x566.png 1030w, https:\/\/cdn.wccftech.com\/wp-content\/uploads\/2022\/05\/Bitcoin-Relative-Volatility-1920x1056.png 1920w\" \/><\/div>\n<p>Source: https:\/\/www.vaneck.com\/us\/en\/blogs\/gold-investing\/revisiting-gold-and-bitcoin-as-commodities-rally\/bitcoin-and-gold-friends-or-foes.pdf<\/p>\n<\/div>\n<p>The graph above, sourced from the VanEck report, clearly shows how the cryptocurrency&#8217;s relative volatility has fallen in relation to the Nasdaq 100 index (as of the 26th of January 2022).<\/p>\n<p>So, while institutional investors are bringing additional liquidity to the table that is playing an important role in tamping down Bitcoin\u2019s legendary volatility, the downside comes from the elevated correlation of the cryptocurrency with other traditional financial assets, particularly high-beta US stocks.<\/p>\n<p>The rationale here is simple. Institutional investors are currently lumping Bitcoin with other high-risk assets, leading to similar liquidation waves and soaring correlation.<\/p>\n<p>We had noted over the weekend how the Federal Reserve was trying to hammer risk assets in order to curb the wealth effect pervading the US economy, thereby hoping to subdue consumer spending and cool down the current red-hot inflationary impulse. As long as this paradigm continues, US equities will not be able to recover, resulting in waves of institutional selling that would continue to extend to Bitcoin, given their supposedly similar risk profiles.<\/p>\n<p>It is a certainty in finance that trends never last. Consequently, we do believe that the prevailing hellish regime for Bitcoin will eventually end, either as a result of the inflationary impulse dying down or institutional adoption of the cryptocurrency reaching a critical mass that then frees the cryptocurrency from the clutches of the prevailing high correlation regime with US equities.<\/p>\n<p>Warren Buffett thinks Bitcoin is not even worth $25. Peter Thiel, on the other hand, believes it is worth at least <a target=\"_blank\" href=\"https:\/\/wccftech.com\/the-billionaire-peter-thiel-rocks-the-financial-world-with-his-prediction-that-the-price-of-bitcoin-btc-will-increase-100x-to-over-4-million\/\" rel=\"noopener\">$4 million<\/a>. Given Buffett\u2019s historical aversion to anything related to tech \u2013 after all, he only bought Apple back in 2016 after its ascendancy had been proven beyond doubt \u2013 we would take Buffett\u2019s outrageous prediction with a tiny grain of salt.<\/p>\n<\/p><\/div>\n<p>!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod?<br \/>\nn.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;<br \/>\nn.push=n;n.loaded=!0;n.version=&#8217;2.0&#8242;;n.queue=[];t=b.createElement(e);t.async=!0;<br \/>\nt.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window,<br \/>\ndocument,&#8217;script&#8217;,&#8217;https:\/\/connect.facebook.net\/en_US\/fbevents.js&#8217;);<br \/>\nfbq(&#8216;init&#8217;, &#8216;1503230403325633&#8217;);<br \/>\nfbq(&#8216;track&#8217;, &#8216;PageView&#8217;);<\/p>\n<p><br \/>\n<br \/><a href=\"https:\/\/wccftech.com\/finance-gerontocracy-margin-calls-and-growing-institutional-adoption-is-the-current-bitcoin-carnage-milder-than-previous-bearish-episodes\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The oracle of Omaha, Warren Buffett, was recently included in the so-called \u201cfinance gerontocracy\u201d by the co-founder of Paypal and Palantir, Peter Thiel, for maintaining an archaic and overly bearish stance on Bitcoin and other cryptocurrencies. Well, Buffett has now struck back, recently stating that he would not buy Bitcoin at even a price of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":16255,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[37],"tags":[1147,50,7965,2052,7983,7982,7473],"class_list":["post-16254","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin","tag-bearish","tag-bitcoin","tag-carnage","tag-current","tag-episodes","tag-milder","tag-previous"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2022\/05\/what-is-bitcoin-cryptocurrency-001.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/16254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16254"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/16254\/revisions"}],"predecessor-version":[{"id":16256,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/16254\/revisions\/16256"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/16255"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16254"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}