1 BTC = 1 BTC

Virtual money, digital gold, inflation hedge, uncorrelated asset, store of value: those are phrases once used by Bitcoin’s fans to describe the cryptocurrency’s virtues. Its new narrative? A Bitcoin is a Bitcoin.

That’s the expression that’s making its rounds on Twitter in recent days, where users, amid a deep decline in prices, have been posting that 1 BTC = 1 BTC. The idea is that it doesn’t really matter what the coin’s price is. Its supply is fixed and that should, theoretically, act as a buoy for prices in the long run.

“1 BTC = 1 BTC is something Bitcoin maximalists say tongue-in-cheek when looking at the USD price of BTC becomes too painful,” said Joshua Lim, former head of derivatives at Genesis Trading.

“The implication is that BTC will eventually become a unit of account so just focus on the absolute number of BTC you own today.”

Anyone paying attention to the crypto market has become familiar with the many cloaks Bitcoin has donned over the years. Fans had, before 2022, utilized a number of narratives for the coin, including that it could at some point replace gold, or that it’s a great inflation hedge.

Most of those narratives have fallen by the wayside this year as prices plunged amid monetary policy tightening. Bitcoin has lost roughly 60% this year and has been trading below $19,000 in recent days, down from a near-$69,000 high at the end of 2021.

When the pandemic first broke out, crypto investors ran with the idea that Bitcoin, thanks to that limited supply, could act as a hedge against rising prices. But consumer price pressures have remained sticky this year all the while prices for most cryptocurrencies plunged.

Many market-watchers say that investors are now searching for a new narrative for the digital-assets market. Twitter has been flooded with posts proclaiming that all that matters is that 1 BTC equals 1 BTC.

Tagus Capital’s Ilan Solot says that the Bitcoin-as-an-inflation hedge narrative argued by the proponents has been misunderstood. It’s incorrect to think of it as Bitcoin not rising while prices skyrocket. “The narrative was never really Bitcoin is an inflation tracker, it’s not TIPS,” he said. “Bitcoin was a hedge against irresponsible money-printing by the central banks.”

Still, that’s not to say that diehard crypto investors have been deterred. The percentage of Bitcoin that has not been moved for over a year has held steady — at 68%, the metric is currently at its highest level since 2014, according to data compiled by FRNT Financial Inc.

Bitcoin is still caught up in the macro environment and hasn’t broken its correlation with risk assets, said Stephane Ouellette, chief executive of FRNT.

“Narrative tend to follow markets, more often than the other way around,” he said. “When things are correlated, one way of looking at it is that it’s the same kind of traders of strategies that are involved. Ultimately, there is a growing and significant percentage of BTC holders who will never sell their BTC and those that use it for commercial purposes. At a certain point, BTC will start behaving differently than risk assets, but clearly it’s not there yet.”

Yet it’s clear that Bitcoin’s other narratives haven’t borne out, said Peter Mallouk, president of Creative Planning. “We now know that cryptocurrencies are not an inflation hedge, it’s proven that to us now,” he said. “It’s a big, big speculative play for anybody that’s interested in it.”