In the Midst of the Crisis, Bitcoin Shows Its Superiority Over Wall Street

Illustration by In Bitcoin We Trust

Bitcoin is the only true free market in the world.

The week we have just lived will forever be remembered. In a few decades, I bet it will even have a place in the history books. Everyone will remember that it was during this week, which began on March 9, 2020, that the great economic crisis that had been heralded for years finally began.

Fueled by ever lower interest rates and massive injections of liquidity, the artificial growth of the financial markets could not last forever as some traders on Wall Street, and in other financial centers around the world, had hoped.

This utopia came to an end, and in the end it was the coronavirus that acted as the catalyst for the collapse of the financial markets. Initiated by Saudi Arabia, the oil crisis only accelerated the sharp downward movement we have seen.

Against this backdrop, fear and panic gripped a majority of people. During this week, the big challenge for most people is to recover as much liquidity as possible.

Widespread Collapse of Liquid Markets

This liquidity crisis therefore led to the collapse of all liquid markets. Already underway for a month, the fall of the Dow Jones on Wall Street accelerated sharply at the end of the week:

Dow Jones price evolution

A fall of more than 15% occurred between March 10 and March 12.

All investors obviously panicked at such a fall. It must be said that they have long believed in the utopia of infinite growth of the financial markets. The return to reality is therefore extremely hard.

Over the same period, the S&P 500 is undergoing the same correction:

S&P 500 price evolution

Gold has been recognized for centuries as a safe haven in times of crisis and has not been spared. The precious metal is a liquid market. As such, it could not escape this liquidity crisis.

Gold price evolution

During this week, gold lost almost 10% of its value.

Much newer than gold or equities, Bitcoin remains a liquid market par excellence.

Bitcoin has therefore been strongly impacted by the widespread panic related to the spread of the coronavirus and the risk of shutdown of the world’s major economies.

The downfall began on March 8, 2020 for Bitcoin. It then accelerated during the week with a real panic on March 12, 2020 when Bitcoin price dropped from $8K to $3.8K:

Bitcoin price evolution

Within a few hours, Bitcoin lost 50% of its price, before bouncing back to see its price increase by +50%. This very strong rebound in the price of Bitcoin is a great thing for the future, and proof that the confidence around Bitcoin remains intact amongst Bitcoiners.

In the Midst of the Panic, Trading Were Halted on Wall Street

In the midst of the panic, many stock markets around the world decided to halt trading for several minutes. These interruptions were decided several times.

Of course, Wall Street acted in the same way. With Wall Street, the rules are as follows: when the market falls 7% in the same day, trading halt for 15 minutes. If the fall accelerates to -13% after the resumption of trading, a new halt is decided.

Finally, if the fall is 20% during the same day, trading is terminated for the day. These measures have been created to protect investors, according to the powerful at the head of the system.

If you are like me, you have to ask yourself this question:

Is the way Wall Street operates really a free market as described by the doctrines of capitalism?

The answer is clearly no.

Rather, Wall Street acts to protect the interests of the powerful at the head of the system in my view.

Let’s compare it for a moment with Bitcoin. Bitcoin operates 365 days a year, 7 days a week, 24 hours a day. This is already a first major difference with Wall Street and other financial markets.

When Bitcoin price dropped 50% in a few hours on March 12, 2020, trading was never halted.

Bitcoin market participants were free to continue trading their Bitcoins in order to find an equilibrium price. This equilibrium price was finally found to be around $5K after an increase of about 30% in Bitcoin price from its yearly low reached a few hours earlier.

Dan Tapiero is a well-known trader in the traditional financial world and a strong advocate of the benefits of Bitcoin.

Here is one of his tweets in the midst of the Bitcoin market panic:

Dan Tapiero is not mistaken when he says that Bitcoin is the only true free market in the world.

Whatever happens, trading continues to let the market decide the equilibrium price. Bitcoin fully respects the theories of capitalism. This is not the case with Wall Street, some of whose practices would even come close to socialism.

Wall Street Is Calling the Federal Reserve for Bailout

In the midst of this week’s panic, Wall Street traders have been repeatedly calling for Federal Reserve intervention to support a market filled with ultra-fragile assets.

As a reminder, the Federal Reserve had already made a historic decision on March 3, 2020 by lowering interest rates by 50 basis points with a target of 1% to 1.25%.

This cut had been decided unanimously in order to support the U.S. economy in anticipation of the arrival of the coronavirus. In the last 20 years, such a cut had only been decided on two occasions: after 9/11 and after the financial crisis of 2008.

This interest rates cut was intended to encourage a quantitative easing policy on the part of the Federal Reserve with a significant injection of liquidity.

Nevertheless, Wall Street is so used to this type of monetary stimulus that it obviously did not find it sufficient. The financial markets collapsed all the same.

Donald Trump continued to put pressure on the Federal Reserve by calling for a further interest rate cut with a target of zero interest rates. The goal is to bring the interest rates in line with Europe, and its negative interest rates at -0.50%.

At the peak of the financial market downturn on March 12, 2020, the Federal Reserve then announced an injection of $1.5T of liquidity. The markets reacted for some time, before finally continuing their descent.

On Wall Street, many are calling for more liquidity injections from the Federal Reserve.

Wall Street has become so addicted to the stimulus of money creation that it wants more and more. This abuse makes the effects less and less tangible, while devaluing what everyone has.

When I say everyone, I mean first and foremost the least wealthy people, because they are the ones who are most affected by the arbitrary decisions of a few powerful people at the head of a failing system.

The Federal Reserve should therefore continue its work of support through its favorite recipe in the days and weeks to come: lower interest rates, then more and more money creation. The markets will force it to do so.

On March 13, 2020, in the middle of the day, Donald Trump declared a state of national emergency in the United States.

This announcement, coupled with the possible future decisions of the Federal Reserve that Wall Street is calling for, seems to have convinced some investors who regained some optimism at the end of the week.

Slight upturn in the Dow Jones

The situation remains precarious, and next week will also be extremely tense.

Bitcoin Is the Only True Free Market in the World

This economic crisis we are entering is highlighting that Bitcoin is the only true free market in the world. Bitcoin works all the time, and nothing can stop adding new blocks to its Blockchain.

Bitcoin price is very volatile, but that’s only because it allows users in its market to find the true equilibrium price.

Bitcoin’s market capitalization has lost more than $60 billion this week. However, you haven’t seen any Bitcoiner come crying for intervention by any central bank.

Bitcoiners are used to this volatility, and they see this sharp decline in Bitcoin price as an opportunity to buy more Bitcoin for a better future.

Everyone is panicking, but Bitcoiners see this as an opportunity and are greedy at the best of times.

Many of the investors in the traditional financial world, led by Wall Street investors, can’t even manage risk as they should. The stocks they buy on the market are for the most part extremely fragile, but they prefer to believe in a system that promises them infinite growth.

It’s just a utopia.

As with all utopias, the return to reality is difficult. This is exactly what is happening to them.

Contrary to what they think, the extreme volatility of Bitcoin price is a good thing because it is proof that its market is completely free.

The weeks and months to come will highlight this superiority of Bitcoin over Wall Street and other financial markets, I am convinced.

To take advantage of this, however, you will need to have a cool head and be strong in your head, but also to have true confidence in the laws of the market that Bitcoin represents better than anyone else.

It is up to you to find out if you can do that, and to make your decision. We Bitcoiners have already made our decision.

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1 Response

  1. January 9, 2023

    […] In the Midst of the Crisis, Bitcoin Shows Its Superiority Over Wall Street […]

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