연준의 정책 승리가 비트코인의 월스트리트 이야기에 해를 끼칠 수 있다

Economic data and other indicators, including a more upbeat mood in financial markets, point to a real possibility that the U.S. Federal Reserve will defy earlier expectations and successfully engineer a soft landing in the world’s biggest economy.

If so, that could yet again force bitcoin-favoring investment advisers to return to the drawing board on how to frame this hard-to-categorize asset as something newcomers can understand and hold in their portfolios. My advice to them: Don’t bother, not because I think bitcoin is worthless, but because all efforts to explain it within the language and logical framework of traditional financial markets will continue to fail when the real explanation for its value lies elsewhere – such as in the streets of Lagos.

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Consider the various buy-bitcoin narratives that have been hoisted upon Wall Street.

• There was the once-common description of it as an inflation hedge. That pitch died with bitcoin’s market collapse last year right when consumer prices were surging – the opposite of what you’d want a hedge to do.
• Then there was the related but more nuanced digital gold story, where bitcoin is thought of as a scarce digital asset that provides a long-term store of value in the face of political and economic uncertainty. It also hasn’t played out so well. Most of the post-2021 wave of late-adopting institutional and individual newcomers have suffered wealth destruction.
• Finally, there’s the long-game idea that you should own bitcoin as a warrant or option on a future collapse in the dollar-centric international monetary system, a bet that  confidence in the central bank stewards of that system might eventually evaporate. This too is being challenged, at least for now, by recent economic evidence.

The dollar collapse narrative

Let’s break that third narrative down.

Some saw the economic situation in late winter 2022 as a perfect storm to bring to an end the age of the U.S. economic and monetary hegemony, and thus as a test of the theory of bitcoin as an option on monetary collapse.

A nuclear-armed Russia was at war with Ukraine, supply chains were choking due to COVID-19 and war disruptions, and inflation was at its highest level in 40 years. The concern was that the Fed, which had embarked on an aggressive set of rate hikes, would not only fail to break the back of entrenched inflation but its actions would create such severe hardship that it would be forced under overwhelming political pressure to backtrack. That failure, some believed, would ultimately lead to a loss of confidence in the world’s most powerful central bank and, by extension, in the dollar. By contrast, bitcoin would shine as a reliable math-driven alternative, immune to such human failings.

Come 2023, that gloomy prediction really hasn’t transpired, not in the broadest sense. Even with hundreds of thousands of layoffs in the tech and financial sectors, unemployment is stunningly low – the 3.4% rate registered Friday for January was the lowest in 53 years – and the latest payroll expansion of 513,000 for the same month smashed forecasts for a mere 187,000 gain.

Meanwhile, inflation, though still high, is easing. The U.S. consumer price index showed an annualized advance of 6.5% in January, down from 7.1% in February. And while the institute for Supply Management’s January survey of purchasing managers showed a deeper contraction for the U.S. manufacturing sector than in December, suggesting a recession is in the cards, forward-looking projections are starting to look more optimistic.

This week, the International Monetary Fund upped its 2023 forecast for the world economy to 2.9%, up 0.2% from its October forecast. Also, a rapidly rebounding stock and bond market seems increasingly convinced that a best-of-both-worlds scenario is emerging, with inflation cooling and the economy simply slowing to a manageable rate of growth without a harsh economic collapse. That view was strengthened by Fed Chairman Jerome Powell’s relatively sanguine take on the outlook for inflation and interest rates during a Wednesday press conference following the Fed’s widely expected quarter-point rate increase decision.

If those projections prove correct, then Powell and his fellow voters on the Federal Open Markets Committee will have earned back some of the respect they lost in 2021, when they were criticized for waiting too long to realize that rising consumer prices weren’t just a “transitory” COVID-related problem. The Fed will still have its many critics, of course, but it would be a huge stretch to argue that there was a fundamental loss of confidence in the central bank or in the currency it manages.

In other words, it seems increasingly unlikely that anyone will get to exercise their bitcoin option on the dollar’s collapse, at least this time around. And, as such, that particular justification for buying doesn’t appear to be standing up.

Bitcoin’s bigger value proposition

What to make, then, of bitcoin, which briefly topped $24,000 this week and has had its best month in a year?

Well, the simple answer is that investors everywhere are recovering their risk appetites and that as financial conditions ease,  money is flowing into risky assets everywhere, of which bitcoin is considered one.

But that’s a rather unsatisfying answer. We’ve just gone through an exercise showing how a variety of arguments for investing in bitcoin have failed. Why does bitcoin have any value at all? Just because people have money to spend shouldn’t mean they’ll spend it on something worthless. What, then, is the fundamental value proposition that continues to drive people to buy bitcoin?

I think it lies far, far away from Wall Street.

Right now, bitcoin is proving it has value in developing economies where financial freedom is under attack, such as:

• Nigeria, where the government has taken draconian steps to ban cash to force adoption of its digital currency, people have reportedly flocked to bitcoin to protect their wealth. One measure of that demand: a huge premium for bitcoin in Nigeria over the price in dollars in the U.S. – almost double.
• Lebanon, whose banking system has all but collapsed. There, I’m told, wholesale wine prices are often quoted in bitcoin. Also, people like the guy featured in this CNBC piece have figured out how to make living with makeshift mining farms spread around the country.
• Vietnam, which last year again topped Chainalysis rankings for cryptocurrency adoption. One reason for that: with only slightly more than 30% of all adult Vietnamese having a bank account, the country has one of the world’s lowest rates of financial inclusion.
• All the other countries on Chainalysis’s top 10 crypto adoption index. Other than the United States, which sits at number five, the list is made up entirely of emerging market countries: the Philippines, Ukraine, India Pakistan, Brazil, Thailand, Russia and China.

So, if you’re now feeling like financial conditions are restoring your appetite to invest, and are looking to justify adding bitcoin to your portfolio, don’t try to map it against the standard risks and opportunities in a traditional Western financial market. Instead, look to the many places in the world where the local financial system is deficient due to politics, insecurity or a general failure of institutional infrastructure.

In those places, bitcoin is proving it has utility. And if it’s useful there, it has to be valuable.

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