The illustrious Crypto Bear Market, the “crash,” the plunge, the collapse of an empire, the end of the largest ponzi scheme in history. I think that everyone with realistic expectations of the future of crypto markets understands that a huge correction is coming. This article is not a bear market pitch, and should not be construed in any way as Financial Advice; but rather a “what-if” scenario. Smart investors always hedge themselves just in case the markets take a turn. In this article, I am going to explain why I think Bitcoin SV, also known as BSV is likely a better hedge than any other asset in the “Crypto” market.
Many critics of BSV love to point out the fact that it has under-performed the rest of the market in the 2021 Bull-run. Contrary to this perspective, I believe it only further proves the stability of the asset. It is widely accepted that volatility in crypto is the largest risk factor. The BSV ecosystem is filled with functional products that have everyday users such as Twetch, Relica, CryptoFights, RelayX, Bitping, and many more. Due to the economic impact of such an ecosystem, distribution (active wallets) and network traffic have reached all-time highs in 2021 while the price remains relatively stable around $140–170. Furthermore, much like the BTC community, BSV has a lot of “Maximalists” who are very stubborn and share a vision that it is the only chain that will succeed long-term. These people are likely accumulating coins rather than selling them. There is a meme or a joke that often circulates in the BSV community that Bitcoin SV is a stable coin pegged to $170 USD. There are some compelling theories that suggest this could be due to price manipulation/suppression from major exchanges like Huobi and Bitfinex. I will save that subject for a later time.
Furthermore, investigating exchange data we can see that Open Interest (will refer to this as OI) comes in at only $43.1 million, ~25% of the total market volume for BSV. In contrast, BTC OI, at the time of writing this article, is as high as $19.1 Billion, a whopping ~65% of the total market volume for BTC.
Taking into account the price action of and Long/Short ratios in the BSV market, this suggests is that the CVD (Cumulative Volume Delta) for the BSV spot market is significantly higher than Perp/Futures markets. Which leads me to believe that there is buying pressure in the spot market and selling pressure in the Perp/Futures market. This is likely due to LONG TERM short positions pushing the spot price down while demand continues to increase. There is a huge lack of useable BSV data in the industry due to propaganda attacks against the chain. Unfortunately, there has been very little effort from developers to build tools for BSV that analyze and catalog data. The final point here is that historically we have seen BSV hold support levels for months on end in spite of wider market volatility for other coins.
Relatively High Price Floor
What if I told you that Bitcoin SV is only a -30% move away from its price floor? Looking back at our analysis for CVD, we can infer that if OI disappears, the price is very likely to rise. I have done a quick analysis of the price floor for BSV on Twitter which you can check out in the link above. As discussed previously, Bitcoin SV has a few extremely strong levels of support. The lowest range of those levels is around $110–120. That is around a -30% difference from the current price at the time of writing this article ($159). In my humble opinion, this dynamic makes the BSV market very unique. It is one of the very few assets in the “Crypto” market in which leverage is being used to suppress or bet against the price rather than “pump” it up. If the market as a whole begins to move in a BEARISH trend, BSV might only drop 30% while the rest of the market tumbles into oblivion.
Increased adoption and network usage = Increased demand. As more and more products and tools are being built on Bitcoin SV, demand to purchase tokens so users can utilize the network via those products. This is the exact economic model that Satoshi originally predicted for Bitcoin as it grew in adoption. He never mentioned anything about speculation, only that as the network became more desirable to use, people would be willing to pay more per “sat” to push their transactions through the chain, creating a competitive mining economy.
Tether, Your Worst Enemy In a Market Crash
Many people in the industry are becoming aware of the great risk that Tether could pose for Cryptocurrency investors. Some even speculate that Tether has manipulated prices of major assets like Bitcoin and Ethereum. Check out Bitfinex’ed on Twitter to learn more about this theory. Regardless of that possibility, one thing is certain: most crypto markets rely heavily on the trust of Tether to redeem USDT for actual US dollars. If they default on that promise, assets like BTC which largely rely on the 1 to 1 Tether peg will lose liquidity which would result in massive losses for investors. On the contrary, the BSV market has a much smaller exposure to Perp/Futures markets (as previously mentioned) which is mostly traded in Tether, suggesting BSV poses a much smaller risk to investors in this aspect.
As increasing news of StableCoin regulation in the US and in other major industrialized countries, there is no doubt that governments around the world are concerned about the legitimacy and the risks of StableCoin liquidity controlled by a centralized entity.
Market History/Price Discovery
It is hard to predict the future but it is much easier to analyze the past and adjust your exposure to risk accordingly. Looking back at historical price data, we can see that the price of other major Crypto assets have increased up to 20x times the amount of BSV. This leaves investors with major downside risk for assets such as Ethereum as previously discussed. The interesting part here is that Bitcoin SV has yet to enter a parabolic price discovery phase. This suggests that there is still major upside potential for BSV, in great contrast to other assets.
Possibly the most exciting and definitely the most controversial and disputed chart is the BSV/BTC comparative. Many critics point out that BSV is at an ALL-TIME-LOW when priced in BTC. I argue that this is purely because the price of BTC has been inflated by large amounts of liquidity from derivatives markets and BSV has not. Exchanges acting as arbiters for the two assets is what drives this comparative price down, not selling or swapping.
After countless months of doing research, I believe that at current prices ($160), Bitcoin SV is a great hedge against the possibility of a BEAR MARKET. In this article, I have construed multiple reasons why this may be true regardless of how you feel about the prospects of Bitcoin SV adoption. I believe that the data speaks for itself. There are a lot of doubters and propagandists who attack and criticize BSV but all of the stats that matter long-term have seen an accelerated increase. As developers begin to discover all of the amazing things Bitcoin SV is capable of, more real world problems are being solved every day. If you have a pre-determined biased towards BSV, I suggest that you do more research and reconsider the utility that it offers. Or at the very least, you might want to hedge yourself, you know, JUST IN CASE.