Bitcoin No Longer the Ultimate Hedge King

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Three months ago, in the post Bitcoin Will Eventually Become Obsolete I noted:

As the market cap increases we will witness a steady drop of BTC dominance and a rather crazy investment into altcoins that will overshadow May of 2016. It will be slow bleeding that will last over a year. I don't believe Bitcoin will serve any purpose in the future other than an antique for Bitcoin evangelists. Holding Bitcoin will be similar to keeping your wealth in a precious rare rock that weighs a ton. It will be cool to look at but hard to secure or transact with.

I am not a fun of speculation but I am an avid student of anthropology and human nature. Here is why this Bitcoin Reality unfolds.

Ask any Bitcoin oldtimer and they will assure you that the reason alt coins exist is to accumulate more Bitcoins. Thing is, this rhyme of thought implies that Bitcoin is the only legit game in town. The overall blockchain development through other projects is an elaborate scam that aims to fool new investors into funding the ones that got earlier.

The irony lies in the fact that opposers of Bitcoin think exactly the same as the maximalists do. The truth is much grayer and it implies economic realities neither side is ready to accept. Bitcoin is a novel, digital medium of exchange that offers more freedom and decentralisation when compared to traditional Fiat forms. It is not, not it can be the ultimate store of value.

The other hard truth is that the Blockchain and Blockchain-like technologies are here to stay. If you are a Bitcoin maximalist then you are betting against the inevitable future of internet 2.0. It is like being a fax-machine maximalist in the 1990's. It is the old story of "us" vs "them" that gets short sighted time after time.

A human being first and foremost seeks a medium of exchange that is fast, secure and private. Bitcoin used to be the case but this is no more true. Projects like Zcash and the upcoming BTCP do this much better than Bitcoin. What Bitcoin came to be is a store of value that it can now be manipulated through the FIAT market of Futures. Other coins will soon follow. Big hedge funds short a given coin, buy cheaper in exchanges, sell the custom top, short again, rinse, repeat. Child's game.

We are nearing 1 trillion market cap and things seem to be taking their own way. Centralised projects like Ripple are killing it since Banks have the ultimate hedge in this market while the masses buy the "cheap" coin (or whatever the big boys tell them). They can realistically bring the whole thing down if they wanted. With alts being so low in the market cap they can dethrone Bitcoin overnight. All they have to do, is use manipulation through the futures market and hedge like crazy into alternative currencies — which is exactly what is happening right now with institutional money.

Projects like X8 Currency can do hedging much better than anything else we have seen before. Backed by Gold, Fiat and the ingenuity of an A.I, one can use the token to be completely hedged against any market volatility. Think of it like DAI.

Bitcoin cannot be used as Hedge or store of value in a market where Fiat and Crypto come together in such an explosive way. Being deflationary and having a network effect becomes an old tale for newcomers. Most people want a cheap, fast way to transact that can have a potential uptrend. This is why we hear most newcomers hoping for a $3 ripple to be worth 3000 one day. Most people people have no idea what market cap is yet, since they are economically illiterate, they will still choose a coin with high velocity.

In the coming months we will see the market shake like never before. Bitcoin will most likely slow bleed while those penny coins that went parabolic over the last month will crash hard. I believe we will not see a total market collapse for at least another 6 months. What will most likely experience crash from these new rallying coins while value will continue to accumulate to the legit projects. Bitcoin will continue to be manipulated up until institutional money fill their bags. Then the real game begins.