Bitcoin trading shows great divide
Things are cheap in crypto right now. Bitcoin is back to around $20,000 – the all-time high of the previous bull-run – while gas fees on the Ethereum network are at record lows. Are retail investors taking advantage of this, though? No, no they are not. Discouraged by recent price falls and the relentlessly negative rhetoric and draconian rules coming from global regulators, they are staying away, CEO of Laguna, Stefan Rust, says.
You know who isn’t, though: institutional investors. Over the past week, over 80% of bitcoin’s trading volume has been taken up by institutions that are queuing up to short the world’s biggest cryptocurrency.
According to CoinShares’ weekly, over $51 million of inflows went into BTC short funds between June 27 and July 1, with institutions betting big against what was envisioned as, and truly should be, the people’s currency. Meanwhile, in sharp contrast, we see a bitcoin event in the UK aimed at educating families and young people on digital currency that includes goat petting and bitcoin basketball.
This, in a nutshell, is the current cryptocurrency environment. What was a grassroots movement designed to be a challenge to the power of corrupt institutions has been taken over by those institutions that are profiting at the expense of retail investors.
It is a heartbreaking situation for those of us that have watched and rooted for cryptocurrency from its early days, and when we consider the current global environment.
Inflation is now truly running rampant globally. A quick google of “inflation” will show that there is almost no country in the entire world that is not facing record-high inflation right now.
Switzerland is facing inflation not seen for 29 years, while Turkey and South Korea are facing inflation at 24-year highs. And in the US, we have warnings that already recording-breaking price spikes are set to get much worse over the coming months.
Since its founding, Bitcoin has been touted as an inflation hedge. For those that bought at 2021 price levels, this is far from playing out. For others that bought at different times, it has proven true. As we know, in the fast-changing environment of cryptocurrency, this situation can turn on a dime.
Cryptocurrency remains, however, the only place where average savers and investors have any chance of preserving and growing their wealth. While decentralized finance is not offering the yields it used to, using stablecoins in this ecosystem continues to deliver returns far in excess of those available in comparable products in traditional finance.
Indeed, while cryptocurrency and blockchain find themselves somewhat maligned right now, they remain the only spaces that are innovating and seeking solutions to structural financial challenges. Meanwhile, regulators and institutions continue to back and perpetuate a broken monetary system that benefits only them.