What an absolutely insane few weeks in crypto it’s been. All the Elon Musk drama, the Tether reserve breakdown and now there are further signs of government regulation.
Today I’m going to look at the regulatory developments and what they mean for crypto markets.
One of my favorite crypto people — Avanti founder Caitlin Long — recently summed it up in an epic tweetstorm.
Her summary of the U.S. government’s position is worth noting: “pay taxes, comply w/ laws & don’t take shortcuts, & we’ll enable the innovation.” Caitlin goes on to list all the different federal agencies we’ve heard from so far.
It’s a brilliant thread. I recommend reading the whole thing and following Caitlin if you don’t already.
So what does this all mean for the crypto market? To me, it’s a further sign of crypto going mainstream. It’s getting big enough that the government has to pay closer attention. Yes, there will be negatives from these developments. But it was inevitable for some regulation to happen.
However, that doesn’t mean we have to sit back and watch regulation happen passively. A recent study estimated that 21.2 million Americans now own crypto. That’s 14% of the country already. And the study predicted that ownership would double in 2021. The crypto community has the potential to become a powerful force for change — if we can start working together more. We should make it clear to politicians that this is an important issue to us and that we’ll be weighing it heavily in our voting decisions.
Fundamentals Never Stronger
I believe the overall crypto market follows bitcoin’s lead. I don’t think it’s a coincidence that every “alt season” is catalyzed by a bitcoin (BTC) bull market. So in order for altcoins to do well, I think BTC has to take the lead.
From a fundamental view, the bullish case for bitcoin has never been stronger. Inflation is suddenly a huge concern. Deficits are jumping to unimaginable levels. Interest rates are at zero indefinitely. The money supply is exploding higher. There’s never been a more bullish macro environment for this unique asset. This is truly the world that bitcoin was created for.
I don’t pretend to know where the price of bitcoin will be in three, six or even 12 months from now. But given the direction of our financial and political systems, I’m confident it’s still a great bet over the mid-to-long term. And if you’re looking to start building a position, now seems like a good time to start dollar-cost-averaging in. BTC’s price may go lower, of course, but if you spread out your buys and hold for the long term, the risk/reward remains attractive. Bitcoin remains a hedge that I think everyone should own a bit of.