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Bitcoin and the Hero's Journey


What do Homer's poem and the children's animation "The Lion King" have in common? In both stories, the narrative structure follows the pattern known as the hero's journey. In it, the protagonist faces a great trial, which leads him down a path filled with dangers and adversities. Throughout this journey, he undergoes a process of evolution and maturation, essential for him to emerge victorious.

Bitcoin does not belong to the world of fiction. Despite being intangible, it is absolutely real. Nonetheless, its recent history brings together the necessary elements to place it alongside Odysseus, Simba, and many others in the roster of heroic saga protagonists.

The years 2020 and 2021 were golden for the original crypto asset. Despite some bad news, such as the ban in China, positive headlines like the trading of crypto assets on PayPal and the listing of futures ETFs in the US had a much greater impact, resulting in a strong appreciation during those two years. In the terminology of the hero's journey, this would be the so-called "ordinary world."

Then, starting at the end of 2021, came the challenges and trials. On the geopolitical front, the war between Ukraine and Russia erupted. In macroeconomics, inflation soared in developed economies and, in response, there was monetary tightening with rising interest rates worldwide. Financial assets, both fixed income and equities, recorded significant losses. Throughout 2022, the S&P 500 and Nasdaq 100 indices fell by 18.4% and 32.2%, respectively.

There were other adversities from within the crypto ecosystem, such as the collapses of a crypto asset (Terra Luna), a hedge fund (3AC), a lending platform (Celsius), and, the icing on the cake, an exchange (FTX).

In this scenario, Bitcoin took a beating worthy of Rocky Balboa (another example of the hero's journey) against Ivan Drago, losing about two-thirds of its value. In a weakened state, it was attacked by perennial detractors like Nobel laureate Paul Krugman.

In March 2023, there was a significant first victory. With the collapse of Silicon Valley Bank (SVB) and the risk of contagion in the US banking system, Bitcoin surged about 40%, showing that it was still seen as a possible store of value.

Then, in June, there was another characteristic event of the hero's journey: the meeting with the mentor. In this case, the mentor role was played by none other than its former detractor, Larry Fink, CEO of the world's largest asset manager, BlackRock. It was he who guided Bitcoin on its recovery path to its most important victory against an old opponent, the SEC, which did not allow the launch of "spot" ETFs in the world's largest market, the US. This victory paved the way for Bitcoin back to the top, to its historical peak.

As in any hero's journey, the protagonist reached the end stronger and more resilient. Having won the favor of big names in traditional markets, such as BlackRock and Fidelity, Bitcoin has consolidated itself as an asset worthy of a place in diversified portfolios. "You can't escape your destiny," said the bird Zazu to the cub Simba. It seems the same applies to Bitcoin.




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