Are Bitcoin and ETH too volatile? Netflix shows off its ‘FAANGS’ and makes them look friendly

(Article contributed by Josh Vazz, cryptocurrency investor and enthusiast in Botswana)

In all my years of HODLing $BTC and $ETH, I’ve had my fair share of volatility.

However, I have never experienced such a dark day as Netflix shareholders have been subjected to recently. The stock price of Netflix ($NFLX) has dropped more than 35% in just one trading session as the company said it lost hundreds of thousands of subscribers in the first quarter of 2022.

Netflix has been a WallStreet favorite for years and is included in the acronym FAANG, which is short for the technology stock group, including:

  • Meta ($FB) (formerly Facebook)
  • Amazon ($AMZN)
  • Apple ($AAPL)
  • Netflix ($NFLX)
  • Alphabet ($GOOG)

These stocks couldn’t go wrong during the last bullish cycle in the US stock market, which was one of the longest in history.

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SEE TOO: EXPLANATOR: 5 Key Differences Between Cryptocurrency Trading and Stock Trading

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As investors begin to take a ‘risk-off’ approach to their portfolios due to current macroeconomic conditions, tech stocks and other assets deemed ‘risk-on’ are being meticulously scrutinized and quickly discarded at the slightest notion of future income or growth at risk.

That’s exactly what happened to Netflix, which wiped out $54 billion in market value in a matter of hours.

Netflix stock market crash in April 2022

This leads Netflix to an almost 70% loss over the ATH it experienced in November 2021, when it hit $700. Stock price drops like these remind me that BTC and ETH aren’t so volatile after all. , with Bitcoin dropping around 40% from ATH.

As a HODLer, I take comfort in knowing that one attribute that BTC and ETH holders have that more traditional shareholders do not is an ethos of loyalty and idealism.

In a nutshell, the ethos of Bitcoin, which is the forerunner of all cryptocurrencies, has been rooted in the cypherpunk philosophy since they were the first adopters of BTC. This philosophy is deeply concerned with privacy in a world where privacy is a rapidly disappearing luxury.

Cypherpunks are also deeply suspicious of current powers that include big tech, government, financial institutions… In the extreme, it promotes cryptographic anarchy that most Bitcoin holders do not subscribe to in today’s world. In the current spectrum of BTC holders, Cypherpunks are now a small minority, but their influence and rebellious tone have been ingrained in the spirit of cryptocurrency holders, albeit to a much lesser degree.

The average Bitcoin holder today is unhappy with the current system but does not want to eliminate it completely. They aspire to help and reform current powers to make them more transparent and fair to all. If some legacy institutions need to be completely overhauled, that’s fine too. They believe that blockchain technology can provide profound improvements in many areas of our societies and our daily lives, if allowed, without having to sacrifice privacy.

In this sense, holding Bitcoin is a peaceful way to protest against abuses of financial and economic power, while pointing current powers to better solutions in other areas as well that leverage the enormous computing power we currently have at our disposal using the flexibility offered by smart contracts, as seen with use cases in ETH growing exponentially in the areas of Decentralized Finance (DeFi), DAOs, NFTs, etc.

These deeply rooted ideals are not found among Netflix shareholders, for example.

When it comes to most equities, big institutional investors run their analysis and make their calls. If the stock isn’t performing according to your metrics, there are plenty of other stocks to own and they will sell that stock quickly without the slightest feeling of attachment.

In fact, clinging to a stock is a silly dip that can cost a lot of money in the eyes of big institutional investors.

In 2021, we experience an increase in institutional investors in the cryptosphere, but they still represent less than 10% of total holders by most estimates.

Institutions generally treat BTC and ETH like any other risky asset, and as their presence grows in the crypto space, the high correlation with tech stocks may persist. On the other hand, the HODLing ideology of retail investors and the rallying cry of BTC and ETH maximalists, enthusiasts and HOLDers put a hard floor on BTC and ETH when their prices drop.

When prices drop drastically, true HODLers see an opportunity to buy more cryptocurrencies at a discount and know that the price will eventually go up again. So far, we know that cryptocurrency is unstoppable and continues to strengthen its fundamentals. We now also have exceptions on the institutional side with companies like Microstrategy and Tesla that have proven to adopt the HODLing ethos of BTC on their balance sheets.

A recent article published on Glassnode on April 19, 2022, separates the entire BTC cohort into 2 distinct groups:

  • Short-Term Holder (STH)
  • Long-Term Holders (LTH)

According to Glassnode, long-term Bitcoin holders are those who have held BTC for a period longer than 5 months. A market analysis by Genesis, published in February 2022, shows that 80% of BTC holders are in fact LTH.

Here’s what Glassnode said about LTH behavior:

“These investors have weathered significant volatility but continue to hold. This supports the notion that these investors are a relatively price-insensitive group and remain the least likely to exert sell-side pressure.”

– Glassnode

The biggest long-term holder of all time is, of course, the elusive Satoshi Nakamoto with an estimated stockpile of around 1.1 million BTC that has never moved since it was originally mined at the start of BTC.

Since then, the price of BTC has suffered extreme drops of up to 90% of ATHs. Many stocks that go through this harsh climate will never come back to set a new ATH, but BTC and ETH have done so multiple times in a relatively short period of time.

But how?

One reason can be traced to the HODL mindset, as long-term ideals and vision are disappearing in other parts of the investing world.

Stocks live for the next quarter. Bitcoin and Ethereum don’t care as much about the next quarter as they do about the next decade and beyond because the vision is so much broader.

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References:

https://insights.glassnode.com/the-week-onchain-week-16-2022/

https://www.coindesk.com/tech/2020/11/24/cypherpunk-crypto-anarchy-and-how-bitcoin-lost-the-narrative/

https://cryptoslate.com/global-economic-outlook-tanks-in-february-as-bitcoin-decouples-from-traditional-market/

https://info.genesistrading.com/hubfs/monthly-reviews/2022/February-2022-monthly.pdf

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RECOMMENDED READING: An Introductory Guide to Quantitative / Algorithmic Trading in Cryptography

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