In a video released yesterday, crypto analyst Joe Burnett addresses the significant price drop of Bitcoin, highlighting its fall from $49,000 to below $39,000 following the approval of an ETF. Burnett raises the question of Bitcoin’s volatility in light of this drastic price change.

He argues that contrary to its price behavior, Bitcoin itself is inherently stable. According to Burnett, Bitcoin lacks the typical attributes that contribute to volatility, such as a CEO, management team, or direct competitors, making it one of the least internally volatile assets.

Burnett further explains that Bitcoin’s stability is akin to that of a physical bearer asset like gold, possessing no counterparty risk. He emphasizes that Bitcoin’s production of blocks is consistent, occurring every 10 minutes, irrespective of its dollar price or the number of miners on the network. Burnett points out that Bitcoin retains its key characteristics – portability, durability, divisibility, fungibility, and immutable scarcity – regardless of external market conditions.

Delving into the reasons behind Bitcoin’s price volatility, Burnett attributes it to human behavior rather than the asset itself. He notes that the majority of the world’s capital is still grappling with how to value Bitcoin accurately. Burnett observes that as more people recognize Bitcoin as a superior form of money and invest in it, its value relative to dollars increases, contributing to its volatility.

Discussing Bitcoin’s growth rate, Burnett highlights its compound annual growth rate of 141% over the past 13 years, which he describes as exceptionally high. He theorizes that if Bitcoin were to grow at a steady rate of 141% annually, it would lead to an unsustainable bull market, followed by a significant bear market. According to Burnett, this cycle of rapid growth and correction is the primary cause of Bitcoin’s intense volatility.

In his conclusion, Burnett asserts that despite its volatility, Bitcoin’s long-term trend is significantly upward, owing to its inherent qualities as a superior form of money. He suggests that the current volatility is a result of the market’s gradual recognition of Bitcoin’s value and the emotional responses of investors to the market’s fluctuations.

At the time of writing, Bitcoin is trading at around $39,906, up 0.23% in the past 24-hour period.

On January 17, Joe Burnett and others engaged in a lively discussion on social media about the January 11th debut of eleven SEC-sanctioned spot Bitcoin ETFs, including a prominent one from BlackRock. The exchange of ideas was marked by a blend of wit and critical analysis, reflecting the nuanced interplay between conventional financial systems and the emerging cryptocurrency sector.

Initiating the conversation, Burnett used a witty metaphor, comparing owning a spot Bitcoin ETF to having a girlfriend who lives in BlackRock’s building. However, in this scenario, BlackRock only sends you her picture every three months, illustrating the indirect connection inherent in ETF ownership. This analogy humorously points out that while investors have a stake in Bitcoin through spot ETFs, they do not have direct control over it.

Burnett further elaborated on his metaphor by mentioning that BlackRock imposes a fee for looking after this metaphorical girlfriend. This comment highlights the management fees typical of spot ETFs, contrasting with the generally lower costs of owning cryptocurrency directly.

Alex Thorn from Galaxy Digital then offered a clarification, suggesting that investors actually receive a metaphorical “photo” from the previous evening each morning.

BitMEX Research added a critical perspective to the discussion. They described the scenario as receiving a nightly photo around 3 AM, with uncertainty about whether it was taken a day or two before. They also pointed out the expense of a terminal needed to get these updates before others, alluding to the costly Bloomberg terminals prevalent in traditional finance.

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