Only 5% of People Trust Meta As Bitcoin Overtakes its Market Cap, Survey Reveals
Two notable global market events transpired in the last 7 days. Bitcoin began to rally from the downturn trend which started last November. Meanwhile, social media giant Meta (the company behind Facebook, Instagram, and Whatsapp) experienced the largest market loss in history, losing over $251 billion in value.
As one of the results of these moves, Bitcoin’s market cap shot upwards and it became one of the top 10 largest market cap assets. At $828.9 billion, it stands just behind Tesla.
When looking at the most recent survey on market sentiment about different asset classes, this shift is not that surprising.
Less than 5% of All Age Groups Trust Meta
Sean Farrell, the Head of Digital Asset Strategy at Fundstrat Global Advisors, conducted a revealing survey of the current state of digital assets. Some of the findings are not new, such as Bitcoin’s growing correlation with the stock market. Specifically, with growth tech indices like Nasdaq and Nasdaq 100.
This aligns with Fundstrat’s survey that most investors still view Bitcoin as a risky, high-growth tech asset. It is then no surprise that the Fed’s tapering resulted in Bitcoin behaving as such.
What is new however is how little trust Meta harbors when compared to Bitcoin. Furthermore, the survey also shows that Bitcoin is more trusted than international banks like Goldman Sachs and even the US Government.
As our adoption survey noted at the beginning of 2021, once again we see that trust in new asset classes decreases as the age group increases. Inversely, over-55-years old trust the banking sector and the government the most. This is why across-the-board distrust in Meta (Facebook) is so revealing, with both younger and older respondents dismissing Meta as trustworthy at only 2%.
Trust in Bitcoin Grows as More Lose Faith in Centralized Institutions
Although currently in the throes of macroeconomic forces, Bitcoin’s volatility is its path to profits. Even in this bearish cycle, we have seen small-holder addresses and whales alike accumulating Bitcoin. While others exited the market, more disciplined traders followed Warren Buffet’s maxim that smart investors should be greedy when others are fearful.
Fundstrat further bolsters this trend by noting the record-high BTC accumulation even when the BTC price was falling. Consequently, over 75% of Bitcoin supply is now illiquid. This foreshadows further price rise as less Bitcoin becomes available on exchanges, commonly called supply shock.
As far as Bitcoin overtaking Goldman Sachs and the US government in the trust department, a possible explanation could be the public’s growing distrust in centralized power; history has often shown how intertwined the financial sector is with the government. The current SEC Chair, Gary Gensler, is a former Goldman Sachs banker, a prime example of a well-documented phenomenon dubbed regulatory capture or revolving door.
Case in point, one study by Harvard Business School and the University of Chicago detailed the relationship between patents and regulatory agencies.
“Many regulatory agency employees are hired by the firms they regulate, creating a “revolving door” between government and the private sector.”
In the case of Gary Gensler, it is notable how he has been insistent to not approve a single spot-traded Bitcoin ETF. Instead, we had a slew of futures-based BTC ETFs, which had a suppressive effect on BTC price due to leveraging wipeouts. Last October, we forecasted a crash as a growing possibility stemming from such ETFs.
On the legislative side of things, we have also seen bank-funded senators putting a wrench in digital asset laws. Notably, Sen. Richard Shelby (R-AL) was the sole culprit for the failure to pass a compromise amendment which would have narrowed the broker definition to a more reasonable scope. Out of nowhere, he introduced a $50 million military pork barrel to sabotage the revised amendment.
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What Could Be in Store for Bitcoin’s Price in 2022
Based on noted trends such as accumulation and illiquid supply increase, Fundstrat is rather optimistic about where BTC price will go next. First, it makes less sense to base forecasts on the previous bull and market cycles for a simple reason. Bitcoin’s realized capitalization is significantly less reliant on having events, but more on inflows.
It’s likely that both the Fed’s announced interest rate hike (tapering) and futures-traded ETFs have had a draining effect on inflows, hence the bearish momentum for the last few months. This could have led to Bitcoin’s oversold state. On-chain data also suggests a steep decline in market-value-to-realized-value (MVRV), not seen since April 2020 when Bitcoin was trading under $10k.
MVRV is considered a useful indicator for detecting market tops and bottoms. Presently, it appears that we are closer to the bottom. MVRV between 0 – 1 means undervalued, translating to most holders suffering losses if they decide to sell. In other words, this would be a buy zone.
Negative MVRV zones are the most dangerous because short-term holders tend to sell. As it stands now, we are in the opportunity zone, according to Bitcoin’s past MVRV, above 1 threshold.
Therefore, based on Bitcoin’s historical median MVRV ratio of 3.2x, Fundstrat forecasts a $138k – $222k in H2 2022. The real test will depend on the Fed’s follow-through on interest rate hikes and how the market will respond to it. In turn, how Bitcoin investors will react to the stock market’s reaction.
Thus far, financial institutions give different estimates on how many interest rate hikes there will be:
- JP Morgan – 5
- Goldman Sachs – 5
- Bank of America – 7
- BNP Paribas – 6
In the end, it will come down to adoption inflow and how much of the Fed FUD is already priced in. In the meantime, both the Lightning Network and SegWit/Taproot upgrades have already made Bitcoin’s network more affordable and appealing than ever.
Do you think the Fed’s tapering will become less important as the year unfolds? Let us know in the comments below.