Thread by @gladstein

1/ It is fascinating to see establishment financial “experts” try to dunk on Bitcoin and claim that the recent crash shows that BTC is “not an inflation hedge”

The reality is that BTC has been a superb inflation hedge since it was created and released in the wake of the GFC 🧵

2/ Since BTC’s 2009 invention we have seen dramatic dollar price rises or expansionary behavior across many sectors, assets, and measures.

For example:

-Real Estate 📈
-Stocks 📈
-National Debt 📈
-Bank Lending 📈
-M2 📈
-CPI 📈
-Healthcare 📈
-Education 📈
-Interest rates 📉

3/ Curiously, gold—which had been a great inflation hedge for centuries—did *very* well for a few years after the GFC, but has been pretty much flat for the last decade:

4/ To “hedge” against inflation you’d want a money or asset that makes things less expensive over time.

Most everything has gotten more expensive in dollar terms since the creation of BTC…

But most everything has over time gotten cheaper in BTC terms:

pricedinbitcoin21.com/landing

5/ And no, Bitcoin isn’t “just like the NASDAQ”

The NASDAQ is up ~8x in the past decade.

BTC is up (today, during this crash) ~3,500x

These are not the same.

6/ But critics now say:

BTC *is* behaving like a macro asset, loosely tracking stocks.

Yes! This makes sense.

At this point in its life cycle, BTC will do well in inflationary or easy money times, and won’t do as well when the Fed threatens to end those times (you are here)

7/ There will likely come a point where US monetary policy is mostly irrelevant to Bitcoin’s price, but we are far from such an era.

For now, Bitcoin will react strongly to monetary policy…

Just as its very creation was a reaction to central bank inflationary activity:

8/ Moving forward, just ask yourself:

Do you think the Fed will use tight monetary policy for the next decade?

Or will it be forced into loose policy?

Will it continue—as it has since the 90s—to create/sustain asset bubbles?

Or will it suddenly stop?

amazon.com/Lords-Easy-Mon…

9/ If the US government all of a sudden stops inflating and propping up the stock market and bailing out the financial sector…

Then yes, it would be fair to question Bitcoin’s short to medium term value against the dollar.

10/ But what are the chances of *that* happening?

Last time the USG tried to raise rates and then taper asset purchases, the banking system broke and the Fed was forced back into easy policy.

What makes you think they can tighten+taper successfully now?

bloomberg.com/news/audio/201…

11/ For the “Bitcoin is not an inflation hedge” critics to be right, we’d have to have a sustained period of inflationary behavior, where prices are rising across the board — and where Bitcoin doesn’t do well.

I don’t see that happening.

12/ But I do look forward to observing what happens over the next decade (not over the next 3-6 months) and changing my mind based on new evidence.

See you in the 2030s ✌️