Michael Sailor, Fiat discussed on What Bitcoin Did

What Bitcoin Did


Because it's smaller. And so if a Michael sailor comes in, they can potentially move the market. Whereas if you have a handful of hedge funds, fast money decided to sell it because of whatever macro factor they're looking at, that can also move the market. And also because it's known for good returns, there's even though leverage in the space is actually small relative to market cap or other ways of looking at it. There's individual parts of the market that are extremely leveraged. And those easily get liquidated when you have big moves to the upside or downside, which exacerbates volatility. And so it's kind of people are betting on it in a way they don't bet on, say, gold and things like that, or at least not at the scale. And so that adds to volatility. And one way to think about Fiat currencies is they try to optimize for low volatility, but then the sacrifice they make is devaluation. So they kind of have this manual adjustment mechanism where if you get deflation, they want to print a lot more. If they start getting inflation, they try to their best to throttle that back. And they've had mixed success with that. But basically, you know, you never really have a case where developed market currencies like 50% less useful the next year. Whereas that can happen with Bitcoin, even more so. Now, in extreme historical events, even those via currencies, they break down. So they go decades and decades and decades without having a major volatility event. And then you get like a 1933 event where it's just, you know, it's practically cut in half, or you have emerging markets go to this farmer. Egyptian pound had a month or just cut in half about 5 years ago. And so that kind of thing is common throughout the world, unfortunately. But in developed markets from year to year, the volatility is low and that combined with the fact that it's recognized as legal tender makes it a useful form of near term money that you can save it. You know it's going to be worth roughly the same in 6 weeks and you kind of go about your day, whereas and that matters for people that where their incomes and their expenses are very close. So if you're living in a country and you're making $400 a month and you're expenses are $400 a month, you can't have you can't risk holding a lot of your assets or whatever assets you might have in something that can go up 50% or go down 50% during that time. You pretty much have to have a stable amount because you have no margin for error. Whereas, of course, if you have a large pool of capital, you have a better ability to withstand volatility..

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