STA Blog

Bitcoin: digital gold or a speculative growth asset? Charlie Morris’ online STA October monthly meeting

Chief Investment Officer at ByteTree Asset Management, and STA member, Charlie describes himself as ‘’a technician at heart’’ where ‘’portfolios is my real job’’. Pre-pandemonium, when STA members could meet in person, he asked me if I ever covered crypto currencies in my professional work. I said no, and he wanted to know why; ‘’because I don’t understand it’’ – has always been my approach to certain financial markets.

If you’re at my end of the Bitcoin spectrum, this is exactly the presentation for you. Very much in ‘fireside chat’ mode, he lays out the bare bones of the subject in a logical and approachable way, explaining his thoughts in a friendly and most certainly not patronising manner.

He kicks off with some spectacular charts: the dwindling value of FIAT money since 1900; the value of spot gold on a logarithmic scale; Bitcoin’s value ‘’which is linked to network usage’’ where these have a correlation of 0.85. He’s also, rightly, very proud of the gold fair value equation he created, where interest rates and inflation are the basis of its framework.

Before the year 2000 Bitcoin – which today retains financial dominance in this sphere – wasn’t possible because computers didn’t have the necessary technology. Since 2009 one can see that ‘’crypto is not entirely independent from FIAT money’’ and that it ‘’has gained [in value] with a flat or falling US dollar’’.

‘’If you don’t exchange them [Bitcoin], then they’re pointless. Bitcoin goes up [in value] because it’s used. He also points out that crypto ‘’are just digital, electronic assets – not money’’ and that these have clear uses in Argentina, Turkey and Venezuela. When a viewer asks about central banks recently getting in on this game, he splutters something about an Orwellian future and that ‘’if I was a very bad actor…I wouldn’t be into that’’.

He signs off: ‘’Happy Lockdown everyone’’.

 

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The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA. The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. None of the information on the STA’s blog constitutes investment advice.

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