Soon the whole world will realize the wonders of BTC

Source: Liu Jiaolian

After a few days of surging, BTC finally successfully retraced to the 5-day moving average, getting rid of those who set stop losses along the 5-day line and getting out of positions, currently at around 88k. This is very good, it pours cold water on the overheated market and cools it down. Every time BTC brings up the market heat, all kinds of meme coins pop up overnight, either making A8 or making A9. If you make A7, you feel embarrassed to show it. Exchanges also ignore their principles, following whatever is hot, even fueling the fire. They create dreams of getting rich by riding on the news hotspots, attracting suckers to abandon BTC and speculate on meme coins, and then capturing them all in one fell swoop.

Some people say categorically that this big pump, which broke through the previous high, is due to the quiet purchase of BTC by several countries. They are about to announce the establishment of a national reserve of BTC. The intention is also very clear, which is to rush ahead and raise funds to Build a Position before the United States establishes a national reserve of BTC.

MicroStrategy founder and super diamond hand Michael Saylor said the United States should establish a BTC national reserve and, following the Trump maximization principle, should hoard at least 4 million BTC.

Jiao Chain was shocked to hear this and quickly looked up the current global BTC reserve data of encryption exchanges. It turned out to be far less than 4 million! Can you guess how much? Only 2.6 million BTC!

Goodness. If the old diamond hands are not willing to dump, the United States cannot gather 4 million BTC even if they empty all the BTC in all the encryption exchanges in the world at present.

This is simply a game of open cards.

Guess if I know more that someone wants to buy, and there is not so much goods in the market, am I more willing to sell to him, or less willing to sell to him?

Definitely a reluctant sale.

This is a seller's market, wait for the price. Let's see how high a price you can offer. Anyway, I am not in a hurry to sell.

Soon the whole world will realize the wonders of BTC.

The chain uses 'wonders' rather than 'benefits'. Benefits are subjective judgments. And wonders are objective features.

After having a deeper understanding of BTC, you will realize that BTC is not a typical normal commodity or ordinary commodity that is priced to meet supply and demand.

Regular goods that follow basic economic laws: increasing supply leads to a decrease in price; decreasing supply leads to a rise in price. Increasing demand leads to a rise in price; decreasing demand leads to a decrease in price.

Conversely, price decreases will suppress supply and increase demand; price rise will stimulate supply and suppress demand.

In the final analysis, the use value of these goods remains unchanged. The satisfaction of hunger that a loaf of bread can provide does not change whether its price is 1 dollar or 10 dollars.

However, some commodities do not follow this pattern, but exhibit so-called reflexive or self-referential phenomena. That is, the higher the price, the greater the demand, which will further push up the price, thus forming a positive feedback loop; when the price collapses, a cycle of lower price, lower demand, and further price collapse will also occur.

The prices of houses and stocks, although constrained by supply and demand at the fundamental level of providing rent and Dividend, are driven mostly by the reflexive effects of market speculation due to their financial nature most of the time, rather than being a reflection of supply and demand.

If we abstract the fundamentals, then we get the purest commodity driven solely by market speculation and reflexive effects of price fluctuations - memecoin.

More insidious than memecoin is the stock of a listed company that pretends to have fundamentals but has actually been hollowed out by major shareholders. Memecoin is just a game of willing to gamble, while junk stocks are carefully packaged scams.

Why is it that in this round of the cycle, leeks would rather speculate on meme coins than touch those AltCoin and VC coins that are heavily held by project parties and VC (venture capital)? Because VC coins are the junk stocks of the crypto world - project party and VC have a large number of Holdings, that is, the sickle held high by the bright, "black hand hangs the whip of the hegemon".

No matter how foolish the suckers are, they were played for suckers in 2017-2018, and again in 2021-2022. It's the third time, shouldn't they be smarter by now? Are they going to be played for suckers by the project party and VC again in 2025-2026? So, the suckers should either honestly hold BTC, or they would rather pvp in meme coins (people playing people), and are unwilling to flatter the stinky feet of the project party and VC.

But BTC is different from all the above-mentioned commodities. It is actually quite unique. (Teaching Chain Note: There are also some unique categories of goods in economics, such as Giffen goods, Veblen goods (ostentatious goods), etc. The length of this article is limited, so it will not be further discussed.)

First, BTC cannot be directly used to satisfy people's physiological or production needs, that is, it lacks practicality. It can neither be eaten as food, nor used as a house to live in, nor does it have some industrial uses like gold and other precious metals.

Many economists consider this to be the biggest drawback of BTC.

Jiaolian said that this is the advantage of BTC. The lack of practicality allows BTC to break away from the law of market prices of ordinary commodities being constrained by supply and demand.

Secondly, BTC is not an interest-bearing asset and cannot meet people's financial needs, that is to say, it lacks the so-called productivity. Productivity, especially the productivity of financial products, is also exploitative, which means getting something for nothing, also known as lying down and earning.

True financial capitalists like Buffett understand this, so this is the main criticism of BTC.

However, JiaoChain believes that the so-called fundamentals and valuation models of productive financial assets are actually a double-edged sword. Fundamentals provide support for asset prices, but also limit the fluctuation of asset prices - prices will always return to the so-called value given by the valuation model.

Housing prices cannot escape the constraint of the rent-to-price ratio. Stock prices cannot escape the constraint of the P/E ratio. The lack of fundamentals allows BTC to break free from the constraints of valuation models that affect the market prices of other financial assets.

Finally, BTC is not a purely reflexive asset either. For a purely reflexive asset such as Memecoin, the law of price movement is a simple Ponzi spiral. But the price movement of BTC is not a simple Ponzi spiral, but a process of value discovery. This is the fundamental reason why memecoin will drop to zero, while BTC will always be able to "crash again" at a higher level.

A large number of retail investors cannot distinguish between memecoin and BTC. They fantasize that memecoin will last as long as BTC. This fantasy is definitely going to be shattered.

JoysChain said that the higher the price of BTC, the greater its value as a store of value and value transfer tool, and the greater the value of use, the higher the support for BTC's price. This is a positive feedback loop.

Why?

Because of the positive feedback loop of BTC, it is not simply a reflexive 'price-price' cycle, but a 'price-value-price' cycle. Fundamentally, it is about Proof of Work (PoW), about Computing Power.

Higher prices drive more deployment of Computing Power; more Computing Power brings higher security; higher security enhances the value of BTC as a secure storage and transmission of value; higher value supports higher prices for BTC.

This is a process of dual spiral rise in value construction and value discovery.

Soon the whole world will realize the wonders of BTC.

The "world" mentioned by Chain's teaching refers not only to retail investor, enterprises, but also to various sovereign states.

As we all know, in 1944, on the eve of the end of World War II, the United States pumped the countries around the world to plan the post-war order and established the Bretton Woods System based on the US dollar as the global currency foundation.

The United States has pledged to peg the price of gold at $35 per ounce. Countries no longer need to transport gold back and forth, which is slow and costly. Instead, they store their gold in the United States and exchange it for US dollars. Doing business with US dollars is convenient and practical.

However, the United States defaulted. It could not resist the temptation to secretly overissue the US dollar, printing far more dollars than gold. In particular, by the 1960s, the United States was deeply mired in the Vietnam War quagmire, and the fiscal deficit soared. It was already difficult for the US dollar to remain linked to gold.

Former French President Charles de Gaulle was very unhappy with the US's secret overissuance of US dollars. In 1965, de Gaulle instructed that France's forex reserves should no longer be held in US dollars, but directly exchanged for gold from the US. De Gaulle sent warships to transport the gold stored in New York back to France.

On August 15, 1971, the 37th President of the United States, Richard Nixon, unilaterally announced the suspension of the convertibility of the US dollar into gold, known as the 'Nixon Shock' - Episode 42 of 'Bitcoin Stories'

However, not all countries have the status and strength of France as one of the five permanent members of the United Nations, nor do all countries' presidents have the skill and ability of De Gaulle.

In 2012, Argentina's economy was unstable, exacerbating the problems of Inflation and the shortage of forex reserves. In order to enhance national financial sovereignty and reduce dependence on Western financial systems, the Argentine government decided to repatriate the gold reserves held abroad.

Most of Argentina's gold reserves are stored in the vaults in London, UK. However, due to the tense relationship between Argentina and the UK (especially regarding the Falkland Islands dispute), Argentina faced complex international pressure and resistance when it requested to repatriate the gold back to the country.

To make matters worse, transporting large quantities of gold requires complex logistics and security measures, involving high costs, transportation safety, and arrangements for international insurance.

In the end, despite Argentina's insistence on repatriating gold, the plan was unable to be implemented smoothly due to various obstacles, and the majority of the gold reserves continue to be stored in the UK.

Imagine, if Argentina's national reserves were not gold but BTC, would it still need to put its testicles in the hands of others to be manipulated and humiliated?

For powerful countries with strategic nuclear missiles, there is no need to worry about using any assets as national reserves, because wielding the truth (military force) can always persuade people.

But for the several hundred countries beyond the five permanent members, how can they achieve financial autonomy and defend national dignity?

Soon they will realize the wonders of BTC as a national reserve.