Gravity defying price action is not uncommon in the world of digital assets and makes any assessments in relation to the position of the aforementioned pendulum particularly challenging. In addition to that, market participants’ preferred narrative when it comes Bitcoin is also changing just as fast. What started off as a non-correlated asset, has morphed into something that is akin to a risk asset, while others, Deutsche Bank in this case, point out Bitcoin’s increasing demand to use Bitcoin where gold was used to hedge dollar risk, inflation and other things.

Back to Marks’ letter for a moment. He further opined that “the midpoint of its arc best describes the location of the pendulum ‘on average,’ it actually spends very little of its time there. Instead, it is almost always swinging toward or away from the extremes of its arc. But whenever the pendulum is near either extreme, it is inevitable that it will move back toward the midpoint sooner or later. In fact, it is the movement toward the extreme itself that supplies the energy for the swing back … This oscillation is one of the most dependable features of the investment world, and investor psychology seems to spend much more time at the extremes than it does at the ‘happy medium.’”

However, it is also normal for narratives to change and to evolve, especially for something like Bitcoin and the rest of the digital assets ecosystem which is undergoing a rapid institutionalisation process. Nowhere is this more evident than by looking at the emerging use of stablecoin-margined futures products over Bitcoin-margined products, and add that to the growth of the open interest (OI) on the CME and the market looks rather healthy; in spite of the recent relentless surge higher.