Let
me
take
you
back
to
a
simpler
time.
On
this
day
two
years
ago,
Nov.
9,
2021,
bitcoin
maxis
were
sporting
red
laser
eyes,
FTX
had
just
closed
a
$420
million
funding
round
and
rumor
had
it
that
dogecoin’s
(DOGE)
biggest
fan,
Elon
Musk,
may
host
an
upcoming
episode
of
“S
and
L.”
On
this
day,
just
two
short
years
ago,
bitcoin
(BTC)
set
its
highest
price
ever.
This
post
is
part
of
Consensus
Magazine’s
Trading
Week,
sponsored
by
CME.
This
is
column
first
published
in
The
Node
newsletter.
Bitcoin’s
“all-time
high”
is
a
matter
of
debate.
Depending
on
where
you
look,
the
high
water
mark
will
be
different.
Coinbase
calls
the
top
at
$68,569
(Nov.
8,
2021
at
7:00
p.m.),
CoinMarketCap
says
it’s
$66,953
and
your
most
trusted
and
trustworthy
news
and
data
provider,
CoinDesk,
notches
it
a
little
above
$67,000.
I,
like
many,
tend
to
call
the
pico
top
at
$69,000
–
because
it’s
okay
to
round
up
to
the
meme
number,
and
because
consensus
in
such
a
fragmented
and
illiquid
market
is
really
a
subjective
matter
(involving
where
to
draw
the
line
about
which
exchanges
to
follow
and
data
sources
to
watch.)
See
also:
Bitcoin
Tops
$37K
The
price
itself,
in
retrospect,
hardly
matters.
What
was
important
at
the
time
was
that
bitcoin
was
trading
up.
It
was
rallying,
on
an
upswing
fostered
by
a
collective
belief.
Many
truly
thought
that
bitcoin
wouldn’t
stop,
that
$100,000
was
soon
on
the
way
if
we
all
just
believed
hard
enough.
Hence
the
laser
eyes.
It’s
now
commonly
understood
that
this
most
historic
of
rallies
was
fueled
by
COVID-era
stimulus,
boredom
and
historically
low
interest
rates.
That
crypto
could
be
impacted
by
macroeconomic
fluctuations
was
a
bitter
pill
to
swallow.
Thought
to
be
an
inflation
hedge,
BTC
instead
traded
like
many
other
assets
on
the
far-end
of
the
risk
curve.
The
months
leading
up
to
November
2021’s
ATH
were
a
period
of
“irrational
exuberance,”
to
steal
a
phrase
from
Nobel
laureate
Robert
Shiller.
Heads
of
state
at
the
time
were
seriously
concerned
about
the
risks
crypto
posed
to
the
wider
financial
system.
Jon
Cunliffe,
then
(like
now)
Bank
of
England’s
deputy
governor,
likened
the
multi-trillion
dollar
crypto
market
to
the
subprime
mortgage
industry
in
2008.
There
were
few
actual
use
cases
for
crypto,
yet
a
ton
of
leverage
in
the
system.
Crypto,
for
better
or
worse,
is
primarily
a
market
built
for
speculators.
The
chief
innovations
that
have
come
from
over
a
decade
of
technical
research,
billions
in
venture
financing
and
tens
of
thousands
of
startups
have
been
financial
products
like
“perpetual
swaps”
and
novel
indexes
(not
to
discount
pioneering
ZK
tech).
Cunliffe
was
correctly
worried
about
the
credit
risks
that
had
built
up
in
crypto.
It’s
telling
that
the
first
wave
of
bankruptcies
after
the
market
crashed
were
the
centralized
lending
firms
like
Celsius
and
BlockFi.
And
that
FTX’s
chief
undoing
was
stacking
billions
in
loans
on
illiquid
collateral.
But
he
was
wrong
about
the
potential
knock
on
effects
of
crypto
cratering.
Although
pension
funds,
hedge
funds
and
millions
of
Americans
were
invested
in
crypto,
the
market
itself
remained
insular.
Today,
crypto
appears
to
have
decoupled
somewhat
from
the
wider
economy.
While
bitcoin
hit
its
all-time
high
during
the
same
period
that
the
benchmark
equity
index
S&P
500
was
cresting
on
a
decade-long
bull
run,
it
started
trading
up
at
a
time
when
some
said
“Tech
was
in
a
Recession.”
Bitcoin
is
up
well
over
100%
year-to-date,
and
altcoins
are
rallying
right
alongside
it.
Much
of
the
excitement
about
bitcoin
is
being
driven
by
the
“narrative”
of
growing
institutional
interest.
This
isn’t
entirely
a
false
story:
a
number
of
significant
Wall
St.
firms
like
BlackRock,
VanEck
and
Fidelity
are
poised
to
launch
crypto-based
exchange-traded
funds.
Banks
are
building
on
blockchains,
and
“tokenization”
has
become
a
finance
bro
buzzword.
Few
people
are
still
talking
about
crypto’s
“banking
problems,”
and
the
industry
successfully
collaborated
to
dispel
a
dangerous
political
movement
trying
to
link
Hamas
funding
to
crypto.
Ask
any
white-collar
commuter
in
Grand
Central
what
they
think
about
crypto
and
it’ll
likely
be
“well,
it’s
not
going
away.”
See
also:
How
Policy
Shaped
Crypto’s
Banking
Prospects
|
Opinion
It
likely
remains
the
case
that
in
the
long
term,
crypto
prices
are
still
driven
by
macroeconomic
forces.
Bitcoin
hit
a
low
and
traded
sideways
while
Fed
Chair
Jerome
Powell
was
raising
rates,
and
it’s
still
an
open
question
how
the
asset,
launched
as
a
reaction
the
greed
and
macroeconomic
policies
that
kickstarted
Great
Financial
Crisis,
will
fare
in
an
official
recession,
which
could
come
next
year.
In
other
words,
despite
signs
of
a
thaw,
crypto
winter
may
not
be
over.
There’s
hope
that
the
months-long
deep
freeze
drove
out
the
riff-raff,
while
the
brightest
minds
continued
to
build.
And
while
a
“killer
app”
hasn’t
been
found,
it’s
clear
enough
the
industry
has
a
committed
user
base.
But
along
with
the
institutional
capital,
supposedly
waiting
on
the
sidelines
to
be
deployed
after
a
BTC
ETF
goes
live,
are
likely
another
wave
of
speculators
and
scammers.
I
don’t
know
if
crypto’s
increasing
institutionalization
will
finally
prove
Cunliffe
right
about
the
risks
crypto
poses
to
the
wider
economy.
If
prices
continue
to
rip
without
an
actual
cause,
like
an
actual
use
case,
it
can
only
be
explained
by
speculation
—
another
round
of
the
“greater
fool”
fearing
FOMO.
But
I
can
say
if
bitcoin
hits
$100,000
because
of
an
ETF,
it
might
cost
its
soul.