The crypto ecosystem is quite complex to understand - even if you’re just trying to buy some assets and sit on them for a while. I frequently have conversations with people in real life about crypto and they always ask me what they should buy. Obviously I give them the boring answer of “well, I buy and hold ETH for the long-term but if you’re looking to get rich overnight, that’s not going to happen with ETH or really any other asset”. Of course, they are disappointed in this news, but I think this speaks to something bigger - non-crypto people have wildly inflated expectations of what crypto can give to them.

Hunter Horsley @HHorsley

I am increasingly starting to feel that "digital gold", while an accessible analogy that has built bridges, has really sold Bitcoin and crypto short and created a pretty limited mental model for many

May 19th 2022

3 Retweets92 Likes

Let’s face it - Hunter’s tweet above is very accurate even if it makes us uncomfortable to admit it. I mean, how many people really care about “digital gold” and how many people would actually get any use out of it? Most don’t even care about physical gold (except maybe to wear it as jewellery). On top of this, because Bitcoiners also keep spreading the narrative that BTC should be used for payments, many people outside of crypto still think that everything is a “currency” when in reality 99.99% of the assets in crypto look much more like equities.

I think this narrative of crypto being used as an inflation hedge has also really set us back because BTC really hasn’t performed well in inflationary times. What’s even worse is that the U.S is currently experiencing the worst inflation since the 1970’s and BTC has basically been down only since November 2021. So both of Bitcoin’s top narratives - that it is digital gold and therefore is an inflation hedge - have failed spectacularly - so what now for Bitcoin then?

If we take a look at Ethereum, obviously it has many use-cases and hasn’t been meme’d into being digital gold or anything like that. Rather, ETH as an asset has very real value accrual properties that can be directly tied to its utility (fees, staking, DeFi collateral etc) but even Ethereum suffers from these Bitcoin-related narratives because people just bucket it in with the rest of crypto. I’m sure if I was to ask even the average crypto investor what the fundamental differences between BTC and ETH were they wouldn’t be able to answer.

Anyway, I really do think the time’s are a-changin’ and BTC is going to keep losing dominance and keep losing the narrative battle now that it has proven that it is not an inflation hedge and thus not akin to a “digital gold”. Where does that leave ETH and other assets? Well you all know that I believe the flippening will happen and you all know how bullish I am on ETH generally, but it’s still unclear how much BTC’s headwinds will be of benefit to ETH or if those headwinds will continue to be a detriment to this entire ecosystem.

Have a great weekend everyone,
Anthony Sassano

Enjoyed today’s piece? I send out a fresh one every week day - be sure to subscribe to receive it in your inbox!

Join the Daily Gwei Ecosystem

• Twitter

• YouTube

• Discord

All information presented above is for educational purposes only and should not be taken as investment advice.