I'm curious about your opinion on the following. In catching up with the hundreds of posts in this thread, you make a strong case for why bitcoin is not like gold or silver as a hedge.
Makes perfect sense actually from that perspective.
But you also say that bitcoin tracks the stock market. As people are more willing to invest in anything, they are more willing to invest in bitcoin. Perhaps, you might argue, I don't know, that they need to be even MORE willing to invest in general before investing in bitcoin.
Sort of. I'm basically saying that the wealth effect from an increasing stock market makes people more willing and able to invest in risky ventures/investments. In other words, when you feel wealthy, you are probably more willing to buy something compared to if you are less wealthy.
What doesn't make sense to me in this argument, however, is the fact that bitcoin has risen exponentially compared to the stock market. One might say, well bitcoin is like a penny stock that way - it was cheaper and so could rise faster.
Yes, I see bitcoin as more of a early startup (possibly a low cap tech stock) which fluctuates with but far more violently than the overall stock market because its fate is ultimately determined by how strong the economy is or is perceived. In other words, it has a high beta.
But is seems that bitcoin - if not like gold and silver - is also not like the stock market. As it is a technology. A worldwide technology.
So far the primary mining and cultivation of btc has been in the US, and now spread a great deal into China. However, one might argue that btc investment is much more a worldwide opportunity than the US stock market. Also bitcoin seems to be a "personal" technology, meaning that unlike a stock, it has the ability to have a loyal following.
If institutional investors were highly leveraged in btc, then I could see an argument for why it might track the stock market. But, for the most part, institutional investors haven't entered in bitcoin markets.
It seems that it is very plausible that bitcoin rising while the stock market rises is simply coincidence. In fact, corrections in the stock market and bitcoin have not tracked. Of course, the correlation between the two is meant to be over the long term. But still, it seems that there is little emperical evidence to suggest that they are tied to each other, as we have not had a stock market crash since bitcoins invention.
In fact, it seems that there are many reasons to suggest that they are not. With the one caveat being, that if the world economy goes into throes, then all markets may suffer for a time.
Until bitcoin actually becomes a stable commodity and/or currency, its success, as of right now, is based on whether or not people will accept/buy it -- a concept which is not so different than what determines how successful a company/stock is. Now, as I stated above, this willingness to accept/buy a new idea/concept is largely determined by how well off investors feel. During bad times, investors go for the safe investment. During good times, investors go for the risky one.
Absolutely though...this correlation to the stock market could be coincidental, especially because of how young bitcoin is. But, until it actually diverges, one has to assume that they will continue trending together.
I hope that I helped clarify some things. If not, I'm always open to further questions and/or a constructive debate.