One of the amusing differences between natural gas and BTC …

One of the amusing differences between natural gas and BTC is that natural gas eventually has the bad manners to become natural gas.
At the end of the month, somebody has to deliver it. Somebody has to burn it. Somebody has to heat a house with it. Somebody has to run a factory with it. The contract eventually collides with reality, and reality is notoriously difficult to manipulate for long.
The same is true of oil, copper, wheat, electricity, and every other commodity that people actually use. There may be derivatives piled on top of derivatives. There may be speculation, leverage, hedging, arbitrage, and enough financial engineering to make an accountant weep into his spreadsheet. Yet beneath all of that sits something stubbornly real. A refinery needs oil. A utility needs gas. A manufacturer needs copper. At some point the paper promises must reconcile with the physical world.
BTC enthusiasts never seem to grasp this distinction.
They point to a trillion-dollar market capitalisation as though it means a trillion dollars of value exists. It does not. It means a tiny fraction of units traded at a particular price and then that price was multiplied across the entire supply. The valuation exists largely because of marginal trades. The liquidity beneath it is another question entirely.
That is why commodity markets behave differently. Natural gas does not spend its life trying to convince people that it is valuable. It demonstrates it every winter.
BTC, by contrast, spends an extraordinary amount of effort explaining why it should eventually become useful.
The truly comic part is that many of the same people who spent years denouncing fractional reserve banking have accidentally recreated something even stranger. Layers of claims on claims, derivatives on derivatives, wrappers around wrappers, all resting upon an asset whose primary function has become speculation about future speculation.
At least the old bankers had gold in the basement once upon a time.
Now the basement is empty, the promises are multiplying, and everyone is congratulating themselves for reinventing finance without noticing they have rebuilt its worst habits and discarded most of its constraints.
And then came the ETFs.
The faithful welcomed them as though a royal family had arrived to bless the village.
What they failed to notice is that institutions do not enter markets to become disciples. They enter markets to make money.
When the price rises, they make money.
When the price falls, they can make money.
When volatility explodes, they can make money.
When liquidity disappears, they can make money.
When retail investors are forced to panic, they can make money.
The villagers thought they had invited wealthy guests to dinner.
What they actually did was open the gates and invite professional predators into a field full of very confident sheep.
One suspects the lesson will be educational.
For the sheep.