Comments (6)

• 

  bowiebowbo Reply

  TLDR: Bitcoin don’t care and it’s discounted right now.

  Unlinked newyorkfed [report](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1052.pdf) “Is macroeconomic news driving Bitcoin? In this paper, we conduct a systematic analysis of the impact of macroeconomic and monetary policy news on Bitcoin’s price. We model Bitcoin as an asset with no intrinsic value for which its current price depends on the discounted value of its future price. In our empirical analysis, we find that Bitcoin is unresponsive to both monetary and macroeconomic news. In particular, the result that Bitcoin does not react to monetary news is puzzling as it casts some doubts on the role of discount rates in pricing Bitcoin. Given the short sample used in the analysis, however, more evidence is needed to assess the disconnect between Bitcoin and macroeconomic fundamentals.”

  To me the above is just more whiffs of [CEMPS](https://www.sciencedirect.com/science/article/pii/S0022199622000332)

  Loading...

  February 21, 2023 at 3:50 am
• 

  Jmomo17 Reply

  This is incredible. A Fed bank tries to prove Bitcoin as a speculative asset with no intrinsic value with complex formulas and statistical analysis and does the opposite. Bullish!

  Loading...

  February 21, 2023 at 3:50 am
• 

  wattzson Reply

  “This disconnect is puzzling as unexpected changes in discount rates should, in principle, affect the price of Bitcoin even when interpreting Bitcoin as a purely speculative asset.”

  It’s not puzzling at all. Bitcoin isn’t like any other asset in the world. It’s completely unique and the only scarce asset in the universe.

  There is plenty of habitable land, energy and precious metals all over the universe.

  Loading...

  February 21, 2023 at 3:50 am
• 

  Rajang7 Reply

  – *”Bitcoin has no intrinsic value”*

  Fair enough. As any other currency, FIATs, that serves only as a medium of exchange and not as a security. Intrinsic value is something that pertains to stocks, that are units of measure of the value of a company. Bitcoin is not a company. So I think we all should be ok with this.

  – *”we interpret Bitcoin as a speculative asset […] in which its value depends on the appreciation of the asset itself”*

  Well, again I think we can all agree in the measure that Bitcoin is an asset, people speculate on it and that its value depends on its appreciation over time, that is what we all non-traders want from a store of value.

  *”If bt is positive then the expected value of the speculative asset is a function of the current and future probabilities associated with the value of the asset being different than ε. The anticipation that the price of the asset will be positive in the future sustains indeed its current value.”*

  I mean… Obviously we hold Bitcoin because its value is not 0 and we have expectations that it won’t fall to 0 in the future. And this, again, is because we’re using it as a store of value. Also Bitcoin fuels the mining industry, this means that until there will be miners on one side and people interested in the technology/investors on the other, issued BTCs will be sold to cover mining costs, and this will be the main price driver until 2140.

  *”The sensitivity of the probability of the bubble bursting is stronger for current as opposed to future interest rates”*

  Wat bubble? That said this shows that even them consider BTC as a consolidating reality, with odds of failing decreasing over time.

  *”The elasticity of the speculative asset to future changes in the interest rates is higher than current changes.”*

  January pump in prices is a demonstration of this, with investors positive about the fact that FED will decrease interest rates hikes until a pivot.

  *”Given the way we have characterized Bitcoin as an asset with no intrinsic value, from a macroeconomic point of view the only direct determinants of Bitcoin are present and future interest rates.”*

  Pretty much yes, as any other currency (FIAT).

  *”In our empirical analysis, we find that Bitcoin is unresponsive to both monetary and macroeconomic news. In particular, the result that Bitcoin does not react to monetary news is puzzling as* ***it casts some doubts on the role of discount rates in pricing Bitcoin****. Given the short sample used in the analysis, however, more evidence is needed to assess the disconnect between Bitcoin and macroeconomic fundamentals.”*

  Huge BIAS in considering Bitcoin something different from a currency OR a subtle way to suggest that BTC should be considered as a currency already. Discount rates are not the proper way for pricing Bitcoin. Bitcoin price is only determined by supply and demand dynamics. There are no expectations of gains due to increased future revenues of some fictional “Bitcoin company”, but rather the expectation that it will become in some way a mass adopted medium of exchange/store of value. It’s interesting to note that the paper quote the following statement in the beginning:

  *”“Crypto assets are highly volatile (…) They’re more of an asset for speculation, so they’re not particularly in use as a means of payment. It’s more of a speculative asset. It’s essentially a substitute for gold rather than for the dollar” Jerome Powell Federal Reserve chair (March 23, 2021)”*

  Except that BTC it’s not used as a means of payments because of the institutional FUD and uncertanty that it would involve to adopt it for commercial purpouses (we need to start pricing things in Bitcoin without any relation to it’s conversion rate in FIAT) this quote clearly represent the perspective of this research. The assumptions are of a gold 2.0, which is true, until the industry won’t find a definitive scaling solution.

  That said it’s quite evident that in periods of macroeconomic tension the correlation between news and BTC price tends to be stronger. We can all see the effects of FOMC on the price actions. But this is arguably caused by the correation of BTC to S&P500 and Nasdaq, which is very strong, in alternating phases.

  Btw, giving the current state of the art of this technology, considering BTC as a substitute for Gold is something actually positive. That’s the step one, the thing that will enhance mass adoption for everyday transaction, together with an efficent protocol for small payments.

  Loading...

  February 21, 2023 at 3:50 am
• 

  Umpire_State_Bldg Reply

  “Trading” is just gambling.

  Gambling with any expectation of coming out ahead is foolish, even if you use big words.

  Loading...

  February 21, 2023 at 3:50 am
• 

  bobbyv137 Reply

  I don’t like him but ‘Coin Bureau’ did a video breakdown of this report.

  Loading...

  February 21, 2023 at 3:50 am