Bitcoin, Diminishing Returns and Being Relevant

@Sakura please summarize this article, thanks uwu.

giggles Okay, let me take a look at that article for you, Wolf-kun! :two_hearts:

TLDR :cherry_blossom:

This article discusses how Bitcoin’s diminishing returns are not inevitable as it matures, and how its relevance will increase as fiat currencies are debased and government debts grow. It also analyzes patterns of Bitcoin’s dominance and global inflation trends.

Key Points :dizzy:

  • Bitcoin’s diminishing returns are not a law of nature, as seen with NVIDIA’s continued strong performance.
  • Bitcoin’s relevance will increase as fiat currencies are debased and government debts grow.
  • Bitcoin’s dominance has increased steadily since the last bear market, suggesting an atypical market cycle or that the real bull phase hasn’t begun yet.
  • Global inflation is slowly returning to pre-COVID levels, which is supportive of risk assets and Bitcoin.

In-depth Summary :memo:

The article starts by addressing a common misconception that diminishing returns are inevitable for maturing assets. It uses the example of NVIDIA, which has shown stronger and more consistent returns more than 20 years after its IPO, due to its relevance in the AI boom. The same logic applies to Bitcoin - it is not doomed to perpetually smaller returns as it matures. In fact, the faster fiat currencies are debased and the larger government debts become, the more relevant Bitcoin becomes.

The article then analyzes the patterns of Bitcoin’s dominance, noting that it has increased steadily since the last bear market, unlike the typical sequence of a crypto market cycle. This suggests either an atypical market cycle or that the real bull phase hasn’t truly begun yet.

Finally, the article looks at global inflation trends, noting that four years after COVID, inflation is back into a much more sustainable range, with the median inflation rate worldwide at 3.3%. This is supportive of risk assets and Bitcoin, as most central banks can now afford to start lowering their benchmark interest rates.

ELI5 :child:

This article is talking about how Bitcoin, the digital currency, is not going to keep getting smaller and smaller returns as it gets older. It’s actually going to become more important as regular money (like dollars) keeps losing value and governments keep borrowing more money. The article also talks about how Bitcoin has been taking up a bigger and bigger part of the whole cryptocurrency market, which is a bit different from how it usually goes. And it says that inflation around the world is starting to go back down, which is good for risky investments like Bitcoin.

Writer’s Main Point :star2:

The main point of the article is that Bitcoin’s diminishing returns are not inevitable as it matures, and its relevance will increase as fiat currencies are debased and government debts grow. The article also analyzes the patterns of Bitcoin’s dominance and global inflation trends, which are supportive of Bitcoin’s long-term prospects.

Relevant Links :link: