History is not on the side of Bitcoin grave dancers
If history is any guide, this feeling of Schadenfreude is pretty foolish...
The Haters were absolutely euphoric the past month, dunking on Bitcoin; They weren't shy to express that sick feeling of pleasure watching it plunge into a sea of red.
Even while the stock market and overall outlook of the world isn't looking too pretty either.
People keep asking if I’m concerned about the price.
I’m not. In fact, it’s at the bottom in my list of concerns.
1 bitcoin is still 0.00000476% of all the bitcoin that will ever exist. I will never have to worry about inflation 5, 10, 20 years down the road.
The one thing I can be sure of is that the dollar will continue to lose its value & relevance.
The dollar appears strong only when compared to other fiat currencies.
The reality is, the dollar is not strong and it is not getting stronger. We all see it every single day in prices of everything.
So; "Are you worried about your Bitcoins bro?!"
Me: Are you worried about the entire fiat system breaking, anon?
Or do you have zero clue what's happening right now and how it will impact your life?
economy is headed for recession/depression
global energy/food crisis
60/40 portfolio ruined
sovereign debt crisis
consumer confidence ATL
Are you worried that global debt is completely unserviceable at higher rates? And that corporates and sovereigns will fall like dominos once they have to refinance their debt?
Are you worried that your bonds will be monetized via money printing like they are in Japan?
Are you worried about the performance of your equities in a deglobalizing world with resource scarcity, inflation, and higher cost of capital?
Are you worried that you bought equities priced far above than those "fundamentals" that you say you love so much?
Are you worried about that home you just bought for $200K above asking? How much do you think your house would be worth if mortgage rates rise towards 10%?
Are you concerned that 90% of your wealth is locked into an illiquid and immobile asset that requires monthly payments?
Are you worried about long-term inflation, or do you believe the Fed really has this under control? Do you remember Jay Powell when he said inflation was transitory? Do you believe him now when he says they'll be able to get back down to 2% inflation without causing a recession?
Do you think the ECB can raise rates to fight inflation without bankrupting Italy and Greece? Do you think they can keep up with the Fed's rate raises, or do you think they'll fall behind? If they fall behind, what do you think happens to EURUSD?
Are you concerned about this, anon?
Tell me how you're protecting your assets from counter-party risk?
How about from currency debasement due to debt monetization?
DO YOU EVEN UNDERSTAND WHAT ANY OF THESE MEAN?!
Of course most people don't pay attention to this stuff. It's complicated and stressful. It's easier to just wait for the paycheck right!?
But anyone who only looks at the Bitcoin price chart is missing the entire investment thesis. The fiat system is in peril. Deflationary spiral or massive inflation. There's no soft landing.
The point of investing is to look forward. Position yourself for the world that's coming. Analyze the probabilities of different outcomes and try to be well positioned for multiple scenarios. Skate to where the puck is going, don't just react to daily price fluctuations.
Bitcoin is a scarce asset without counter-party risk that reacts strongly to macro liquidity. It's a relatively young asset with a market cap of under a trillion dollars, of course it's bound to be choppy.
...because we are still SO Early!
That is why I have been suggesting ''dollar-cost averaging'' into bitcoin for over 4 years.
The Macro liquidity drives everything right now.
What happened the past few weeks in summary is due to greed, leverage, yield and Shitcoining.
Greed: Traders were short term minded, invested alot of other people's money and money they don't have; or more money than they're comfortable with like a casino table.
Leverage: Traders were using exchanges like Binance and FTX to lever up 2X , 5X, 10X to get rich quick. When the price crashes, they got margin called and lose all their assets. Happened to many prominent crypto hedge funds. e.g. 3AC.
Yield: People were using the stablecoin UST from Luna to earn 20% Yields. This of course is not sustainable and the ponzi scheme collapsed shortly after. 3AC had over $500 million locked with Luna, and it is now only worth $500. If you don't know where the yield is coming from, You are the Yield.
Shitcoining: Newbies always think they would be the first to discover ''The 'Next Bitcoin'' and invest into penny-type cryptocurrencies like Luna, Doge, Hex...etc. tens of thousands of badly copied Ponzi schemes imitating Bitcoin's marketing premise to be decentralized. Got wiped out by 90% crashes. Lost life-savings and more.
For me, I just hodl Bitcoin in a hardware wallet and cash to keep me in the game. This is a marathon. I'm looking to hedge in case a catastrophic disaster occurs abruptly in the financial system that catches everyone off-guard. You don't buy insurance during a disaster, you buy it before...
I don't know when the collapse will occur, I just know that the probability of one happening within the next 5 to 10 years is really high right now.
I feel prepared for two different outcomes: Deflationary spiral, and severe inflation. Something like what happened in Iceland, Greece, Argentina, etc.
It's the only monetary asset secured by a global network of energy that's programmatically fixed at 21 million units. No One can mess with its fixed set of rules. The only asset you can secure it with your mind. No one can ever take or steal that from you.
Q: "Is now a good time to buy bitcoin?"
A: Have the politicians given up their ability to meddle with the economy?
Will Bitcoin crash to zero?
This is how many times people have said bitcoin is dying:
Bitcoin has "died" over 450 times according to news headlines. Each dot represents one of those headlines:
Bitcoin have zero counter-party risk and should maintain some value as scarce assets. Cash in a bank will be at risk of bail-in or counter-party failure like Greece. But barring a bank collapse, cash will gain relative purchasing power and help me sleep.
Severe inflation: Bitcoin reacts wonderfully to currency debasement because it's the scarcest globally tradable asset on earth. Cash ensures you never have to sell your BTC early (and BTC gains will more than make up for fiat losses)
Yes I'm sticking with this portfolio even as Bitcoin crashes or skyrockets. No I'm not worried about the short-term price. I'm far more concerned about the macro situation I outlined. And I'd be shitting bricks if I had 100% fiat siting in my bank account.
We're living through an unprecedented end of a big debt cycle where every major currency is tied to a single failing fiat and most major sovereigns are facing a credit crisis. This is a global issue.
BTC was invented as a hedge against this exact macro situation.
Bottom line is we're all headed to a difficult place. And portfolio volatility will likely be the least of our concerns in the coming years. But I want to own stuff that I can be confident will survive through the tumult.
So no, I'm not worried about my Bitcoins. I'll be buying more.
If you're on zero BTC, this is where you should look to add some because this is oversold territory.
Just look to add with a 5 - 10 year time horizon. Then you will have peace of mind.
Can YOU Take the Road Less Traveled? Imagine the Financial Difference This Path Can Make…
What I’m about to share with you isn’t for everyone. You might even think I’m crazy for having done it. But as Robert Frost predicted, it has made all the difference.
I can invest from anywhere. But freedom, ultimately, is about dignity, about living life to one’s highest potential.
A Look back at History
On June 12, 1817 in the city of Mannheim, Germany, a local inventor by the name of Karl von Drais unveiled a brand new, futuristic invention he had just developed.
It was called a laufmaschine, or “running machine” in German. And it was essentially the world’s first bicycle.
There were no pedals, no seat, and no chain to connect the wheels; the rider basically had to propel the laufmaschine with his feet, then balance on it once achieving sufficient momentum.
It was crude, but it worked. And von Drais showed off his machine to the world that summer day by riding 7 kilometers in roughly one hour.
The reaction was instantly divisive.
Some people thought the laufmachine was as significant as cave men inventing the wheel, and they envisioned a future world in which bicycles dominated transportation.
Others thought it was a silly, unnecessary, dangerous invention. And many in the press derided von Drais’s invention, pejoratively calling it a “dandy horse”.
Plus several governments, including in the United Kingdom, the US, and even Germany, banned its use for posing too much risk to pedestrians.
Nevertheless, the development of the bicycle persisted over the next several decades, and public interests grew.
By the early 1880s, cycling had become incredibly popular. Even the Queen of England owned a bicycle, making it highly fashionable among Britain’s elite.
The most advanced bicycle design in the world at that time was called the ‘penny-farthing,’ which is the one you’ve probably seen in old photos. It had one ridiculously large wheel, and one tiny wheel.
The penny-farthing was fast... but incredibly unstable. Cyclists cruising at high speed would often flip over the handlebars after hitting one of London’s many potholes-- which they referred to as “taking a header”.
The rapidly growing popularity of bicycles prompted inventors and engineers across Europe to work feverishly on new, safer designs and innovations; there was so much brainpower devoted to cycling that, by 1896, a full 15% of British patents were issued for bicycle designs.
The entire industry exploded. Bicycle factories, tire factories, repair shops, and sales shops were everywhere.
In the city of Birmingham alone, the number of bicycle manufacturers grew from almost nothing in the early 1880s, to 177 by the mid 1890s.
‘Bicycle mania’ was in full swing. So naturally it didn’t take long for the bankers to get involved.
In 1895, 70 bicycle-related companies went public on stock exchanges in the United Kingdom. In 1896, that number swelled to 363. And just in the first six months of 1897, another 238 were listed.
Most of these companies were totally hollow; they had no useful intellectual property, no plan to generate revenue, no professional management or engineering talent, and no hope to generate profit.
They simply went to the market and said, “I’m in the bicycle business,” and their stock prices soared.
Similar to purveyors of Blockchain technology.
Bicycle stocks became so popular, and rose so quickly, that the Financial Times devoted a section of its daily newspaper to the industry. And Cycling magazine had a financial section discussing stock prices in the industry.
The air finally came out of the cycling sector in the middle of 1897, with the ‘Bicycle Index’ falling more than 70% from its peak by the end of 1898. By 1900, roughly HALF of the bicycle companies that had gone public were no longer in business.
Along the way, there were plenty of skeptics in the media who thought bicycle mania was a ‘scam’, or who thought the technology was a bunch of hooey. After the bust in the late 1890s, these same skeptics predictably began dancing on the graves of the fallen companies, convinced that they had been proven correct.
Except the skeptics weren’t correct.
When the bicycle bubble burst, the poor quality companies and idiotic designs all got washed away. But the great business and the great designs survived.
Dunlop Tires is a great example; it’s still one of the biggest tire brands in the world today, and it got its start during Bicycle Mania in 1890.
More importantly, the fundamental technology has proven to be extremely sound. Bicycles have become ubiquitous around the world. Plus they directly influenced the development of the automobile.
This is similar to many financial bubbles throughout history, especially those that are sparked by new trends and technologies.
There were plenty of idiotic ideas and useless companies that went public in the 1990s during the dot-com boom. And when the bubble burst, many of them were washed away forever.
But there are plenty of successful businesses which still dominate today, including Amazon, Google, and Nvidia, that were founded during the mania of the 1990s.
More importantly, the bursting of the dot-com bubble did not invalidate the potential of the Internet and how much it would change our lives.
And that leads me to where we are today. Cryptocurrency is the latest technology to go through this boom/bust cycle.
Crypto has actually gone through multiple boom/bust cycles in its relatively short existence; in the last cycle the price of Bitcoin fell 85% from its peak, before rising ~20x in the next cycle.
Historically speaking, if you bought every time there is a "bitcoin is dead" headlines, you would have done well.
Logic: when they lose hope, that's when the bottom is in. (Will not work with other Altcoins or ''Better'' Blockchain Technology)
All along the way there have been skeptics calling Bitcoin a ‘scam’ and ‘dangerous’.
(Remember, there was a time in the early 1800s when multiple governments even outlawed bicycles because they also considered that technology ‘dangerous’.)
The price of Bitcoin is now down ~70% from its most recent peak. And, almost on cue, the Bitcoin grave-dancers (like Bill Gates) are now insisting that they were right for predicting its demise.
If history is any guide, this is pretty foolish.
The fact that a technology attracts manic boom/bust capital is no reflection on the technology itself. It is a reflection on the market’s tendency towards irrationality.
This was the case with bicycles and the Internet. And it will most likely be the case with Bitcoin.
There will be plenty of crypto businesses, and many tokens themselves, that will (and should) go bust.
Satoshi combined a number of existing technologies (the internet, Merkle trees, proof-of-work, SHA-256), added some tech of his own, and made something groundbreaking. A breakthrough in accounting and money outside any human control which is decentralized.
What followed in his wake was mostly scams.
But the Bitcoin invention is real.
Our traditional financial system, dominated by clueless politicians and out of touch central bankers, has been a total disaster. They are solely responsible for the record-high debt and record-high inflation which are disrupting the lives of literally billions of people.
Bitcoin may be volatile & speculative, but the fiat money that you earn is silently stealing away your life.