Topic: The Real Reason for Bitcoin's Rise, Take II - page 2. (Read 590 times)

As long as you have money, you can manage and direct everything. Thus, always big players and rich people will win. They will always have their plans and wishes.

I do agree that the government must be aware and is allowing the price of bitcoin to skyrocket.

I don’t know why it would be in their interest though, they can’t have significantly invested in crypto, maybe they are content to let bitcoin be crypto 1.0 before the government coins take over.

That would be essentially letting bitcoin iron out the problems, then stepping in and making a mature crypto dollar, along with heavily regulating/taxing bitcoin. We will see.

Guys, bitcoin is a currency. As such it has no inherent "rate of return" (unlike say you would expect from a stock of a company or a bond or a CD) . the only reason its going up in value is because demand outstrips supply. Why does demand outstrip supply - is a longer discussion. Does anyone keep track of who are the buyers ?

The chief reason is that they must stabilize their money, which is the most basic support for their power.  

After their peg to gold finally failed in 1971, they have had to use different things to prop up the dollar: the most major support systems were first oil, and then Chinese labor.

These systems have turned out to be a lot of trouble, maybe even more trouble than they're worth over the long haul.  They now have to deal with Mideast instability and a rising China.  Objectively, from their point of view, gold is a much better prop -- it's just that they ran out of gold after centuries of issuing money and debt on the promise of converting them freely to gold.

So my theory is that they would love to go back to gold, but that would be highly embarrassing.  Bitcoin has the properties of gold but is much less embarrassing, so it is a perfect play.

But it probably won't be a 'Bitcoin standard' exactly like the gold one -- they've learned a few lessons.  The new narrative won't be, 'gold is money, state money is debt' but 'Bitcoin floats freely according to supply and demand, and the dollar must maintain a healthy range of exchange rates to be competitive and so help maintain policy control.'  The story will be different (and equally false,) but the end result, in all aspects, will be the same.

The only problem with case B that I see from the point of view of the elites is that if they choose to invest in crypto and this takes off, they are still powerful but there is going to be a big difference, they do not make the rules anymore, they will no longer have the politic power to affect outcomes like the power they wield right now, right now they can print all the money they want and receive all kind of benefits but with bitcoin this is not going to be the case, so I still think case A is their preferred option.

Could be the only reason. After all, they have the capacity to buy these coins en masse. I think it was just last year that we heard news about banks getting in to this but they probably started years ago. These people live and breathe money, always on the look out for the next profitable scheme.

Let us take a different angle this time.

Western governments and central banks would like us to believe the rise of cryptos is due to supply and demand, and that they will not and should not interfere.

But would that make sense from the elites' point of view?  It might make sense to suppress cryptos and eliminate competition against the assets they issue, which are the basis of their power and wealth.  Call this case A.  It might also make sense to use cryptos to support their assets, by buying a lot early so they can (effectively) peg their money against cryptos in future.  Call this case B.  It would *not* make sense to let market forces decide the fate of cryptos.

For centuries, the Western elites have artificially suppressed the value of gold and silver.  (The 'gold standard' was just one of such schemes.)  Markets for money and key financial assets have never been free in modern humanity (with the possible exception of the Italian Renaissance at the start of this period.)  There's no reason to believe that, today, all of a sudden, they are.

Judging by the price movements and official actions recently, case B is looking more likely than case A.

To be a good detective, you have to think like a criminal.  To be a good macro investor, you have to think like the elites.