Stable and unstable currency

One of the reasons attributable to the slow transactional adoption of Bitcoin has been its volatility. An item that may cost 1 BTC this moment may end up costing 0.8 BTC or 1.2 BTC the next, simply as a result of the underlying currency’s volatility. This aspect of the phenomenon has rendered it a speculative mechanism – although the cause and effect are more likely circular – where the analysis is almost purely technical in nature, despite the fundamentals that are argued.

A similar volatility has now taken over in other financial assets, notably public equities…

Howard Marks – March 31, 2020 memo

and the reason for it, in a sense, has similarly been a relative breakdown of fundamentals…

Same source

As with cryptocurrency, this sudden shift in market reality, which is essentially a shift from fundamental underpinnings to technical factors, is having its transactional effects.


The value of non-cash assets in an enterprise is now increasingly difficult to estimate, as is in many ways the value of net liabilities. This is true for both buyers and sellers, rendering the relative equity valuation of each highly speculative, and the potential transaction itself the same.

As with stablecoins that have emerged, coordinated monetary and fiscal interventions are meant to artificially peg the value of the asset to the last known fundamental, as it were. This peg, however, is to an unpredictable and volatile economic measure, based on its own set of fundamental drivers and consequences that are without modern precedent.

We don’t know anything, in other words, nobody does, and so, for now at least, cash and liquidity are at a premium, while all else zigzags with the wind.

Howard Marks – March 31, 2020 memo