Bitcoin “blows the doors off prior bubbles” according to analysts at Bank of America who say stocks are frothy and apparently want investors to go into devaluing dollars.
“Sell the vaccine: frothy prices, greedy positioning, inflationary and desperate policymakers, peaky China and consumer all ultimately (a) toxic brew in 2021,” said BofA’s chief investment strategist Michael Hartnett.
Some $10 billion went into stocks last week according to BofA while cash attracted $29 billion, $1.5 billion for gold.
It’s not clear how much went into bitcoin with GrayScale alone attracting about half a billion a week at the end of December.
Investors have been taking money out of gold and into bitcoin as the currency has responded more quickly to the mass money printing.
In addition it is being adopted as a portfolio diversifier after numerous studies concluded it increases risk adjusted returns.
This however might look like a bubble because it is for the first time that we are witnessing the launch and the mainstreaming of an asset that was not subject to accredited investors laws.
Startups like the then Facebook or Google are closed to the public in the early stages by the force of the Securities Act 1933.
At that stage when there is fast growth and fast value appreciation, the company is not publicly traded and therefore does not have a price we can all see moving.
It does however have a private price accessible only to the rich and banks. If that price was accounted as well, all these companies would look like a huge massive bubble.
Therefore, it’s not that bitcoin is a bubble. It is more that for the first time we are witnessing the true open public pricing of an asset from the very begining.
An asset that is growing in adoption and therefore is fast growing in price because the bankers did not first buy up all the shares or coins to sell them to the public at the high price in an Initial Public Offering (IPO) as they did for Facebook, Google and all other stock traded companies.
Showing a disconnect between the rich first and then the rest, to all first based on merit.
That difference explains why bubble is shouted everytime bitcoin rises because if bankers had launched it after taking 90% of the value, then it would have been a bubble.
Bitcoin however publicly launched at the price of zero and at a market cap of zero, unlike any asset prior to it perhaps in history. Thus, if bitcoin is a bubble, the fast increase in the valuation of any growing startup is a bubble too, something that would make everything a bubble, and thus none.