By: Eliza Bennet
Bitcoin has seen a surge past the $37,500 mark amid speculations from experts that the cryptocurrency will not fall below the $35,000 threshold again. A key personality behind this claim is PlanB, the creator of the controversial Stock-to-Flow (S2F) model. He cited Bitcoin's intrinsic hash rate and the cost of electricity used in mining as the factors backing his prediction.
PlanB's argument derives from the arbitrage opportunity between Bitcoin miners, who heavily invest in electricity to mine the digital asset, and users, who typically purchase Bitcoin using fiat currency on exchanges. This dynamic relationship could further accentuate with the potential launch of a spot Bitcoin Exchange-Traded Fund (ETF) in the US. More seasoned traders, such as miners, might begin to demand a premium when selling Bitcoin due to their specialized knowledge about the market and the cost of producing Bitcoin.
Meanwhile, Charlie Munger's investment wisdom continues to offer guidance to crypto traders even post his demise. Though never a fan of Bitcoin, referring to it as 'rat poison' and 'rat poison squared', his insights from over 60 years of investment experience can still provide valuable lessons to crypto traders. Some of his advocated approaches include investing only in what one knows and the importance of temperament over IQ for successful investing. Bitcoin's rise is certainly a testament to Munger's teachings about the significance of building conviction and the ability to weather volatility for long-term investment success.
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