The price of Bitcoin has experienced the first major pullback in over 40 days, but some people believe this should be a good thing. In a Twitter thread from Conner Brown, who is also a Bitcoiner and Stanford Law student, he explains that “volatility is good.”
“It shakes out weak hands and makes sure Bitcoins go to the strongest of [holders].”
“It’s free Bitcoin advertising. Volatility makes headlines.”
“It’s a direct function of Bitcoin’s unparalleled absolute scarcity. Supply is static so price is volatile.”
His first theory is that only the weak will back down, so bitcoin will remain in the hands of the strongest of holders.
The fact that volatility makes headlines is still a publicity – and we all know that no publicity is bad publicity. While the media might make headlines with Bitcoin price dropping, it does also shoes how much it has risen in time – remember that three months ago, the Bitcoin was around $4K and now it is a little under $12K.
Bitcoin to become the “most stable and predictable monetary” we’ve ever had
Finally, Bitcoin’s scarcity is what makes it volatile, as the global market demand changes.
“Volatility is literally required for something to suddenly go from nothing to a global reserve asset.”
“It allows you to test your time preference and ignore short term shenanigans.”
He adds that money evolve and new money will not show up perfectly stable. While for now we cannot price things in Bitcoin, it will come a time when this will surely happen. As bitcoin grows and the store of value phase is over, pricing will come “at the very end,” he added.
Finally, his thread concludes that: “Bitcoin’s truly finite supply will form the most stable and predictable monetary base humans have had,” adding that we should be patient in the short term during BTC volatility, and if so, it “will build an economy where truly terrifying volatility (i.e. artificial bubbles) are no more.”
Unfortunately, for now, we have to face these dramatic pull-backs.