Bitcoin is part of the Everything Bubble. It is not a form of money in most cases. It is a speculative asset, although even the term “asset” is a stretch.
When the Israeli government attacked Iran, it sent stocks down. Bitcoin was also down. Gold was up. This means that people still view gold as the ultimate safe haven.
After Iranian officials announced they were still open to negotiation, this was taken by many to mean that the conflict may be contained and that it wasn’t likely to expand into a massive war. Stocks were up on Monday, largely because of this sentiment. Bitcoin was also up.
Not Digital Gold
The point here is that Bitcoin is not digital gold. It is not a form of money except in very rare circumstances. It certainly isn’t a widely used form of money. Things aren’t priced in Bitcoin. They are priced in dollars. Bitcoin is also priced in dollars.
Sure, the same thing can be said for gold because the government has effectively banned it as a common form of money. But gold has a long history as a form of money, and it is still used as a store of value. It also has other uses.
Bitcoin is a good store of value as long as the dollar price is going up. But Bitcoin is heavily tied to the Nasdaq and tech in general. If the tech bubble portion of the Everything Bubble pops, it is likely that Bitcoin will follow.
In fact, it is possible that Bitcoin could get hammered even more than the Nasdaq. At least companies like Apple and Nvidia still have assets and earnings. What does Bitcoin have? It really has no uses at all other than faith by quasi-libertarian tech nerds who claim it can change the world and that it fixes all of our problems if we would just let it.
Bitcoin probably won’t go to zero because there will always be a small group of people who will die on the hill of Bitcoin. They will always be there to buy, sell, and hold Bitcoin. They will trade it between each other just to make sure it has some kind of monetary value.
You can certainly make money (in dollars) by speculating in Bitcoin, but it would be a mistake to think of this as an investment. If the tech bubble collapses, Bitcoin could easily lose 90% or more of its value in terms of dollars.