2021.17 - Distraction
TLDR:
What I hate about alt-season —and we are in alt-season— is not that others are getting rich off shitcoins, it’s that my clients get distracted by the eye-popping fiat returns. Measure your wealth in sats not fiat.
THE STANCE
My personal opinion on where the ball might be heading.
“I wonder if I should buy some Dogecoin in anticipation of Elon Musk’s appearance on Saturday Night Live…”
Seems a reasonable thought. Elon is likely to make some stupid joke that will make Doge pump during his upcoming SNL appearance.
But then everyone knows that, so it’s probably priced in, and the price really hasn’t come down after that insane pump, has it?
I mean if it were at $0.008 or even $0.05 that’d be one thing, even $0.257 could be interesting but at $0.403?
See how easy it is?
I just wasted your time making you think about whether you should “invest” in Dogecoin.
DOGECOIN. The one coin in the space that’s honest about its claim to fame (and badge of honor): it’s a joke.
Now add to that dynamic fantastic claims about how “Shitcoin-X® is going to disrupt the breathing industry” and you quickly find yourself in the quicksands of shitcoinery.
Welcome to Alt-Season, where the pumps are real and rug-pulls happen to other (dumber) people.
You may be hearing about how Ethereum is at all time highs and will “flippen” Bitcoin and other such nonsense. I’ll try to make this brief and make my case using only two charts.
The first is Ethereum’s price making all-time highs:
The second chart shows Ethereum priced in Bitcoin instead of USD. As we can see it would have to slightly more than double its price to just to reach its previous All-Time-High.
The moral of the story is simple, but not easy:
Measure your wealth in Bitcoin, not fiat.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Bending the Knee
I don’t think all financial institutions coming into Bitcoin deserve the “Bend the Knee” treatment, for example Handelsbanken deserves a warm welcome. In contrast to many other Swedish banks, they have a history of being supportive of Bitcoin.
I wholeheartedly applaud Handelsbanken forward-thinking attitude.
But some banks certainly deserve some ridicule. Particularly those who have been vocal Bitcoin critics in the recent past.
Like JPMorgan and U.S. Bank, the largest, and 5th largest banks in the USA respectively.
Ouch! JP Morgan CEO, Jamie Dimon on Bitcoin
Welcome to Bitcoin guys, we know you didn’t really have a choice.
Dave Portnoy: Bitcoiner
After a false start —prompted by a horrible Bitcoin pitch by the Winklevii twins— Dave Portnoy has finally re-joined the Bitcoin ranks.
From all appearances, Dave still doesn’t understand Bitcoin at all, but it seems he at least realizes this, and understands he shouldn’t sell without good reason.
I like Dave, he has a sense of humor and did an amazing job raising funds to support restaurants during the lockdowns, I hope he takes the time to learn more about what he just got into.
Nexon Next
Following in the footsteps of Microstrategy and Tesla, video game publisher Nexxon announced it had purchased $100M in Bitcoin as a hedge against inflation:
While the position is modest ((less than 2% of their cash position) it suggests that it will become increasingly common for companies to take some position in Bitcoin as they realize that having zero Bitcoin is too risky.
Houses Not Coffee
Bitcoin may not be the best solution to pay for your Starbucks, but I expect it to leave a sizable footprint in the real-estate market. The size and timing requirements of home-purchase payments make it ideally suited for Bitcoin. The process is barely starting, but I expect this to grow more commonplace.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Nevercoiners
Bitcoin is not for everyone. I sometimes lament certain people not getting Bitcoin. Authors James Gleick and William Gibson come to mind, as does trader Sven Hendrich.
Then there are famous, “successful”people —mostly revered by because of the fortunes they have amassed— that I hope never get into Bitcoin (Bill Gates, Mark Cuban come immediately to mind).
Few are more emblematic of this than Warren Buffett and Charlie Munger, who recently called Bitcoin: “disgusting and contrary to the interests of civilisation.”
I have nothing against wealthy people or amassing fortunes in general, far from it. I’m just saying if you made a good chunk of your fortune from government bailouts and from backing one of the largest global drivers of obesity and diabetes, maybe don’t pretend to take the moral high-ground?
At 90+ years of age, Buffet and Munger have a long history of not understanding technology and while their track record as investors may be impressive I’d suggest they follow their own advice:
I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.”
— Charlie Munger
I would be remiss if I didn’t give an honorary mention to comedian Bill Maher, who aired an impressive Bitcoin segment this week which managed to squeeze all the BS mass media Bitcoin-FUD talking points in only a few minutes:
This video will become an assignment for my clients. You should study Bitcoin until you are able to pinpoint how and why this multi-pronged critique is mistaken.
If the Bill Maher clip or Munger’s comments are making you second-guess your Bitcoin position you need to put in a lot more study into your Bitcoin investment thesis and I recommend you call me ASAP.
CryptoTurkey
After the meltdown of Turkish exchange Thodex last week, the government is considering offering Bitcoin custody for its citizens
Giving the government custody of your Bitcoin is pretty much the opposite of self-sovereignty, so this is not exactly an exciting development but it’s still a significant move in the global process of governments figuring out what kind of a relationship they’ll want to have with Bitcoin.
We will keep watching Turkey with interest.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
TurboTax
It seems the Biden administration is set on raising taxes as much as possible, which is curious when they can just print money at the touch of a button.
PRICE DISCOVERY
This is the section where I talk about price with an updated weekly price chart. If this is your first time here, there’s a “how to interpret” guide below the chart.
Red Candle
As suspected, Bitcoin managed —not without some struggle, look at those wicks!— to print a red monthly candle after six consecutive greens:
Close: $57,630
I don’t generally like making price predictions but I believe that we’ll close the month below $58,800
— Me, 2 weeks ago
Obviously, no one knows the future. But Bitcoin has only printed six monthly green candles in a row twice before, in both instances the following six months were explosive (+1,015% and +786%).
All of this is a long way of saying:
Eyes on the Prize.
Looks like while everyone was busy watching whether Bitcoin would manage to stay on the board (it did), the stratosphere level just surpassed $100k for the first time ever. Water level has been rising rapidly too.
How to interpret the Bitcoin Surfing chart:
Think of Bitcoin's price-action as a kite-surfer:
Bitcoin uses its board to stay above water and wants to catch some air.
When it catches air, it tends to keep rising but if it rises too fast (it's feet no longer touch the board) it can stumble.
If it falls off the board, it tends to keep falling until it regains its footing (may need to touch water or sand for that).
Water and sand arrest the fall and help it push itself back up.
If it goes up so much that it gets close to (or into) the Stratosphere, it will probably crash down all the way into the sand and may need to tap the bedrock level before pushing up again.
Translation: BULLISH.
Never invest in something you don’t understand.
I help individuals, families and businesses understand the why and how of investing in Bitcoin in a language they can understand.
Schedule a free 30-minute call with me if you’d like to find out more.
