This Is The Biggest Driver Of The Bitcoin Price

This Factor Provides The Best Clues To Future Price DirectionIt has long been our contention that all markets are interconnected. The popularity of Bitcoin and other cryptocurrencies, and their extreme volatility, therefore, deserve the attention of all investors for their potential to influence other markets.I must confess to struggling with cryptos, whether by virtue of my age (well over 21) and/or my experience. The concept of a currency not backed by any government, whose value depends on the ability to find a buyer willing to pay an arbitrary price, reminds me more of the 17th tulip bulb mania than anything else. There is literally zero underlying economic value for any of the cryptocurrencies, which means their prices depend purely on buyer sentiment, which can be fickle.That is not to say that Bitcoin et al. will plummet to zero anytime soon. Some very intelligent people espouse that the current price of Bitcoin is but a fraction of what it will be in a couple of years and that cryptocurrencies are destined to sweep away the existing system of currencies.That may be true, but I strongly doubt it. The weight of evidence seems to argue against the bullish case for the long term. I remind readers that very bright people can be very wrong. A famous example is Isaac Newton (inventor of physics, calculus, and general bright light), who lost most of his wealth late in life investing in the South Sea bubble.The chart above suggests that while the recent decline in the Bitcoin price has been steep, it has not represented unprecedented price action over the past five years.Where does the price go from here? The lack of intrinsic value means the price is 100% a function of investor sentiment.The challenges to maintaining sufficient investor optimism to support prices are mounting.To…