Why would Covid drive up the price of Bitcoin? Sure, the pandemic is being used for attempted government power grasps, but those won't go away with Covid.
Halfway the same thing that's driving the prices of stocks and pokemon cards: people with extra cash from stimulus checks, spare time, and fomo. "Crypto being the future of finance" is a story people tell themselves to justify the price of bitcoin, and while some flavor of blockchain tech could someday back parts of finance, it won't be bitcoin. Buying bitcoin is a bet that more people will buy bitcoin.
Ok I forgot about the money printing, which may or may not stop after Covid. But I think people buy BTC as an alternativ to gold, not because of some banking narrative. The question is still what would be actually good investments. Maybe everything will crash when the money printing stops, but then some things will crash harder than others. Gold will probably remain gold.
That's a reasonable premise, but the price of gold is flat YoY. Gold actually peaked in Aug. 2020. You'd think that at least some of the bitcoin interest would have gone to gold, but it hasn't. Maybe people are selling gold to buy bitcoin, but again, they don't act similarly. Bitcoin is a speculative asset that has so far gone to the moon. Gold has maintained its value for centuries. You buy them for different reasons.
> The question is still what would be actually good investments
Not bitcoin. It's a speculative asset. It might still 10x, but it has no fundamentals; it's entirely a bet on what other people will do with bitcoin. You could say buying AAPL is the same, but it makes $90B per year. If bitcoin goes to zero, you're out of luck. If AAPL goes to 0 for no apparent reason, you just found an asset that makes you $90B per year.
> Gold actually peaked in Aug. 2020. You'd think that at least some of the bitcoin interest would have gone to gold, but it hasn't. Maybe people are selling gold to buy bitcoin, but again, they don't act similarly.
To add to this discussion, gold traded range bound for 20 years from 1980 to 2000, across many different economic realities, across several different Federal Reserve money supply increasing policies, in slow bleeding downtrends for half a decade or more, over and over again.
Gold as a perma-bull meme mostly culminates with a Gold ETF being approved. Which took a long time for the SEC to approve as well. The SEC just doesn't like commodity trusts split into shares, and they still don't like digital commodity trusts.
Gold perma-bull's latch on to that as price correction and returning to an arbitrary correlation, and that's what they will say 20 years from now too, even though the point wasn't to live your entire life not making any money. Pick your battles wisely. Are you part of the market that just wants exposure to the price of something to preserve your generational wealth, are you part of the market that wants something that's harder to seize, or are you part of the market that really is here to wait around for gold to rally to $5,000 two decades after your favorite youtuber said it was supposed to while its price ignored every macroeconomic reality that was supposed to be relevant.
Personally, I would consider gold as an insurance. The current price does not matter that much. What matters that in case of a catastrophe (financial crash, system crash, socialist takeover, whatever), it would be valuable. I would assume that in case of a system crash, gold would be more likely to retain some value than most other assets. Like think socialist takeover - all other assets (real estate, company stock) would be devaluated over night.
I think you are right, the "small fish" are buying Bitcoin hoping for speculative gains, but also big fish are buying it to hedge against inflation. I don't think Tesla bought Bitcoin speculating on big price rises, for example.
It also seems true that hedging against inflation (and socialism and so on) would also be expected to rise the price of gold - but a peak in August 2020 seems consistent with the hedging theory. Also, Bitcoin is easier to smuggle across borders than gold. Maybe it really is taking over. Or maybe the big fish already have so much gold that they want to diversify a bit.
AAPL actually produces stuff, but it probably isn't completely risk free, either? People could become too poor to afford their asking prices, and while it may not crash to zero, it could crash enough to hurt (given that it probably is also quite expensive atm).
I have to read up on Musk, didn't get any of those references :-) Anyway, just because he does some investment, doesn't mean it is a good one. It just shows that people do use BTC as a hedge.