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In yesterday’s newsletter we stated that Bitcoin was the beneficiary of what happened to Archegos Capital Management’s hedge fund.
BTC
There has been a margin call of tens of billions of dollars in open positions in the fund. And we are talking about a fund run by a man previously convicted of insider trading. And this man was being lent tens of billions of dollars by the world’s leading investment banks. And not only did they lend, but their personal bank risk management departments didn’t actually do their direct job.
Looking at all this makes investors very sad. They immediately remember the events of 2000 (the dot-com crash) and 2008 (the mortgage crisis). Both of these events were accompanied by a huge amount of bank fraud and false accounting. Risk management departments slept through huge losses. And the regulators, who are supposed to look after the interests of investors, also slept through it all.
After every crisis like this, everyone beats their chests and says it won’t happen again. Laws will be changed, stricter reporting and auditing requirements will be imposed, etc. etc. However, in fact, we see that absolutely nothing changes.
And what are the big investors to do with all this?
It’s simple! Go out and buy bitcoin. Can its reporting be falsified? No, it can’t. Everyone can personally verify how many BTC are in the system and how many are in each particular wallet. Is it possible to increase Bitcoin issuance? No, you can’t, a strict algorithm shows exactly when the remaining 2.5 million BTCs will be created. Can Bitcoin be banned, confiscated, account frozen (conducting an investigation)? No you can’t. If an investor has a seed phrase, then only he owns BTC. And so on and so forth.
Every week and month, this reaches more and more traders, speculators, investors. And it is this that is the powerful fuel that drives up the price of the first cryptocurrency.
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