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Top 7 False Narratives Spread by Bitcoin Maximalists, Debunked.

CryptoWhale
CryptoWhale
In seeking truth you have to get both sides of a story.
While I have lots of respect for the crypto community (both bulls and bears), there admittedly lays a small group of extremists who are known as “Bitcoin Maximalists” — They hold the belief that Bitcoin’s network is superior, has no flaws, and will eventually overthrow the entire global financial system.
When I first bought Bitcoin in 2013, the community valued facts, and held realistic beliefs. They weren’t easily swayed by misinformation and false narratives. Sadly, the days of “Don’t Trust, Verify” are long gone.
Many of these new generation Bitcoin maximalists will promote whatever narrative they think will lure in flocks of new investors, in an attempt to pump the prices, even if it is very over-reached.
False Narrative #1: Bitcoin’s Institutional Demand
If you ask anyone who’s heavily invested in Bitcoin why they think it will continue to go up, one of the first things they will bring up is how “all the Big Companies on Wall Street are FOMOing into Bitcoin”
This couldn’t be further from the truth.
Throughout the entirety of Bitcoin’s existence, the combined total of all public and private companies hold a total of only 1.7% of Bitcoin’s supply, whereas retail investors hold the rest.
GrayScale Demand Plunging to New Lows
Since January 2021, Bitcoin’s inflows of institutional demand have plummeted to record lows. Crypto Trusts like Grayscale and their competitors haven’t seen institutional demand in over 6+ months.
I first alerted my followers about this metric back in April, and Bitcoin’s value has already dropped over 50% since. Check out my other article.
Canadian Crypto Funds Dumping their Bitcoin
In a report published by Glassnode, they found massive outflows from two large Canadian BTC funds and a flattened net change in coin balances held on Coinbase, concluding:
“Between observations of the GBTC premium, net outflows from the combined Purpose and QBTC ETFs, and a stagnant Coinbase balance, institutional demand appears to remain somewhat lackluster.”
Men lie, women lie, but numbers don’t lie. Contrary to what the Bitcoin maximalists say on Twitter, the data strongly shows real institutional investors aren’t willing to purchase Bitcoin at these high prices.
MicroStrategy Nearing a Net Loss
As with all my articles, I aim to be unbiased and will point out the outliers as well. In this case, MicroStrategy is the outlier. One of the only institutional investors who is continuously purchasing Bitcoin, even in this downturn.
While Michael Saylor was praised by the Bitcoin community for being one of the first CEOs to fully endorse Bitcoin, and convert a large portion of his cash reserves into Bitcoin, he is no visionary, or saint.
Contrary to popular belief, Michael Saylor was actually a huge Bitcoin critic early on. He adamantly urged his followers that it had no intrinsic value and was a worthless asset. He also claimed its days are numbered, and it would suffer the same fate as online gambling.
Michael Saylor’s big bet into Bitcoin only further shows how unstable this person is. In the 2000’s dot-com bubble, Saylor used Tech-Stocks to hype up his company, which led to a rapid stock price increase.
With Bitcoin, he’s attempting the same manipulative tactic. Using the crypto hype to lure investors into his failing company, all while his investors dump their stock holdings. (Read More About That Here)
Let’s not forget how this guy was ranked the #1 loser of the entire dot-com bubble, was accused of fraud by the SEC, and was caught lying about his company’s financial reporting. He’s not someone to look up to.
Will They Soon Dump Their Bitcoin Holdings?
In MicroStrategy’s First-Quarter 2021 Financial Results, they revealed a drastic shift in tone regarding their Bitcoin Holdings.
In 2020, Michael Saylor said the company will never sell BTC, now they quietly wrote that they “may sell bitcoins and decrease their overall holdings of bitcoin” in the future. I wonder if he will eventually sell when they are at a loss.
Tesla No Longer Accepting Bitcoin.
In May, we learned that Elon Musk had backtracked on accepting Bitcoin.
Elon Musk’s cited reason was that mining bitcoin is too hard on the environment; he said Tesla would not accept it for EV purchases until the production of the coin becomes more environmentally friendly.
In a response to my tweet, Elon Musk also hinted that his company may sell off the remaining of his company’s bitcoin holdings.
When Tesla first bought Bitcoin in February, it was a Bitcoin maximalists dream come true. They posted dozens of threads about how institutional investors are all jumping in, and so should you!
Months later, we’re seeing how poorly that aged…
False Narrative #2: Bitcoin Adoption in Latin America
Latin America is a region that has been long affected by weak, corrupt governments that tend to impose capital controls, currency devaluation, and other hardships on their citizens.
Over these past few weeks, you may have read misleading articles or headlines about how Latin America is rapidly adopting Bitcoin.
With a total of 20 countries in Latin America, only 1 of them has voted on using Bitcoin as a legal tender. Nayib Bukele, El Salvador’s dictator, only accepted Bitcoin under the condition that every citizen used “Strike”.
So technically, they aren’t even using Bitcoin. The people of El-Salvador are using Strike Token. Too poor to ever use real Bitcoin because getting on-chain is too expensive. Hopefully, Strike or the El Salvador government doesn’t decide to confiscate these Strike Tokens from the people in the future.
I don’t know about you, but I wouldn’t feel safe putting my money in the hands of a corrupt authoritarian regime, and some relatively new, and unsecured company. It won’t end well. Trust me.
Lack of Infrastructure to support Bitcoin.
El Salvador is one of the poorest and most unstable countries on earth. With a physical cash economy, it’s said that nearly 70% of folks do not have access to banks.
The term “Legal tender” means it’s required to be accepted by every business & individual. While we will still need to wait around 3 months before it actually becomes the law, it’s safe to assume that this stunt will be very chaotic, because nobody would really be able to use or afford it.
For a country that’s drowning in poverty, and crime, their attempt to escape inflation by wanting to accept Bitcoin, a very overvalued, speculative, and risky asset, is just another reason why they are one of the worst economies in the world.
Paraguay and Mexico aren’t Adopting Bitcoin
Many accounts on Twitter have been pushing the idea that Paraguay and Mexico are also rushing to adopt Bitcoin. Both are completely false.
In Paraguay, the bill was proposed by a party that holds only 2 seats in the government. There’s a 0% chance this bill is approved, and many officials have even admitted this. Yet I’ve seen tons of influencers talk about it, many falsely claiming it’s already been made legal tender.
Also, after rumors of Mexico adopting Bitcoin, Mexico’s Finance Minister shut it down by confirming Bitcoin is in fact banned from their financial system.
False Narrative #3: Bitcoin is Good for the Environment
Immediately after Elon Musk announced Tesla would no longer accept Bitcoin, did you notice a huge shift in Bitcoin maximalists and influencers talking about how good Bitcoin is for the environment?
Yes, the claims are as ridiculous as they sound.
Despite no evidence at all, Bitcoiners are convinced that countries will start using renewable energy sources to power Bitcoin mining.
The climate or bitcoin?
Multiple studies attest to the environmental impact of mining bitcoin. Another study states the average carbon footprint per transaction ranges from 233.4 to 363.5 kg of CO2. For comparison, the average carbon footprint for a VISA transaction equates to 0.4 g of CO2.
The truth is: Bitcoin is rarely used as a medium of exchange, instead, it’s been referred to as a ‘store of value.’ But the volatility of bitcoin suggests otherwise. In reality, bitcoin is pure speculation. People are buying it up, hoping the price continues to go up and up, and they make bank.
For the level of carbon emissions the network has produced, is this something the world will tolerate? In my opinion, It’s only a matter of time before other big countries (such as the USA) ban Bitcoin mining.
False Narrative #4: Tether isn’t a threat to the Crypto-Ecosystem
Despite what many of the paid Tether defenders claim, Tether is the biggest threat to the crypto eco-system ever. Them defending it may have protected it from being exposed earlier on, but there is no stopping its eventual fate.
With the Federal Reserve and large media channels now suspicious, it’s safe to say Tether is a ticking time bomb. When it blows up, Bitcoin’s price will drop like a rock.
Let’s not forget that over 80% of all market volume is transacted with Tether. Tether has more volume than any other crypto in the world, despite it being unaudited and unbacked (confirmed by NYAG investigators).
False Narrative #5: Bitcoin’s Halving is Causing Prices to Rise
Many speculate that the Bitcoin Halving is the main factor in causing the bitcoin bull cycles. A bitcoin halving typically occurs every four years, the most recent Bitcoin halving happened on 11 May 2020.
The price will increase when demand does
None of this is to say that the halving has no consequences. It really does affect the bottom line of Bitcoin miners. But it’s very strange to see this construed as a bullish event or a milestone for cryptocurrency — if anything, the risk of miners pulling their operations for lack of profits might be a threat to Bitcoin’s Proof-of-Work security. Anybody touting “economic” evidence that the halving will see the BTC price explode should be treated with great skepticism.
The halving is nothing more and nothing less than a pre-programmed event to make mining tougher
On the other hand, it’s possible that the sheer volume and hype built up around the halving produces its own impact. All of the feverish anticipation and coverage (including in mainstream news sources, which is rare) might drive a new generation of buyers to shiny cryptocurrency wallets, seeking to be part of the Bitcoin rocket ship before its preordained take-off. These buyers will have been brought in off the back of half-baked theories and dodgy economics, but ultimately any significant increase in the demand of BTC will raise its price.
But while such an increase would undoubtedly be put down to the mathematical magic of the halving and its non-existent supply shock, the real answer is precisely the opposite. Bitcoin’s supply will have stayed the same, and it is increased demand that pushed up the price.
This is the tragically unexciting truth for Bitcoin in general. While so many seek the safety of “inevitable” price increases through a reduction in supply, that does not actually reflect how Bitcoin works or what Satoshi envisaged.
The halving is nothing more and nothing less than a pre-programmed event to make mining tougher and flatten the curve of bitcoin production. If BTC does end up “mooning” after a halving event, it always comes from the surging retail demand of the asset, not the reduction of mining profits.
If Bitcoin’s halving really meant anything, why do altcoins also start surging at similar times in the market cycle when they don’t have halvings? Also, why is Bitcoin always in an uptrend before the halving event?
False Narrative #6: Bitcoin’s Network is Decentralized
You’ve probably heard that Bitcoin is decentralized, right?
What if I told you that wasn’t true, but rather a giant false narrative. The majority of Bitcoin’s mining network is actually controlled by 5 companies in China, and a total of 79% of the network is controlled by 9 companies.
Since China banned Bitcoin mining, the Bitcoin network has seen its largest, and fastest drawdown in recorded history. This is very concerning.
The fact that Bitcoin’s price dropped this much, and its network is faltering so quickly, all from a single country imposing a mining ban, just shows how much control the Chinese government has over the network.
Just recently, Bitcoin’s Hash Rate hit a 2-year low.
It’s only a matter of time before the price catches up again.
New Narrative: Miners rushing to move to the USA.
Since the news of the China ban, Bitcoin maximalists have been pushing a new narrative. That this is actually bullish since all the miners will be moving to the USA, which means America will now have control! Yay.
Wrong. Data shows less than 2–5% of miners are planning to move to the USA. The majority have shut their doors and are permanently closing.
As I mentioned earlier, I truly believe that once the U.S government sees the influx in BTC mining, they will take action to ban it as well. Just wait, and see.
False Narrative #7: Stock-To-Flow Model Invalidated
The stock-to-flow model, popularized by a pseudonymous Dutch institutional investor who operates under the Twitter account “PlanB,” has been widely praised and is the leading valuation model for bitcoin proponents.
Stanford Professor Paul Pleifderer coined the term “chameleons” to describe models that are built upon dubious assumptions and are given more credence than they deserve.
A view at the math behind this model, you’ll quickly realize how fake it is. Not only that, the founder has made many models before, which were invalided.
Here’s a video that goes into the flaws, if you’re interested in watching.
In a non-deterministic market with random variables, it’s impossible to continually predict future performance from past data. The model predicts Bitcoin would be at $80,000 right now, yet it’s not even half of that.
Thanks for Reading!
It takes strength and courage to admit the truth. In a world full of hysterical moon boys, it’s absolutely imperative to stay tethered to reality.
Would love to also hear people’s thoughts below!
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