2021.20 - Fear
TLDR:
Afraid? Study harder.
However long it lasts, however low it goes, you will look back at this dip in the knowledge that it was the best investment opportunity of your lifetime.
Will you be smiling?
THE STANCE
My personal opinion on where the ball might be heading.
A more immediate and ominous sign of an approaching tsunami is a rapid and unexpected recession of water levels below the expected low tide.
—Early warning signs of a tsunami from the Government of Canada’s “Get Prepared” website.
Is this it?
As the price of bitcoin kept dropping many wondered how low it could go. Just how bad was this pullback, historically?
Frequently heard questions included:
Will price keep dropping? How low could it go? Is alt-season over? What game is Elon playing?
None of this matters.
This past few weeks have seen massive, seemingly coordinated Bitcoin FUD:
In the past, these type of FUD-fests have been precursors to someone(s) taking a LARGE position and eventually resulted in Bitcoin resuming its climb.
I don’t see any real negative developments which should cause you to change your investment thesis for bitcoin.
Lets travel a few years into the future and see if we can paint a picture:
Bitcoin is legal tender virtually everywhere (most central banks hold it as part of their reserves), financial institutions have long integrated it into their services and you have a wide variety of options for interacting with it —depending on your convenience/security and risk/reward preferences. THE most popular loyalty program (offered by all credit cards) is “sats back”. Almost everyone talks about sats —which are used every day. Bitcoin is only mentioned when very large transactions occur.
Money transmission fees have gone the way of long-distance fees, the vast majority of global money transmissions happen over the bitcoin network and are virtually instantaneous and free.
A good portion of your insurance and pension are backed by bitcoin and all large corporations and high-net worth individuals hold a portion of their reserves in bitcoin.
Most internet purchases are paid with Bitcoin, some apps automate the process of replenishing your sats from your fiat accounts after each purchase.
Absorbing most of gold’s monetary premium turned out to be just the beginning for Bitcoin. The real wave came with the great bond unraveling (it was not pretty).
Everyone said it was obvious in hindsight.
But not everyone had the discipline to stack nor the conviction to hodl through the volcanic, price-discovery roller coaster that came from the separation of money and state.
How high did the price go, you ask?
Let’s just say bitcoin added several zeros before this stopped being a relevant question.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Digging Ross
Ross Stevens —the man that billionaires, insurance companies, banks and central banks call when they start to take Bitcoin seriously— sat down for an interview. And it was beautiful.
Racing Bitcoin
I don’t usually follow car racing, but I’ll be watching the Indy 500 with interest this year. When I first heard about the Bitcoin car in passing I thought it was someone’s fun marketing experiment.
Then I heard Ross Stevens pal about it in the interview posted above and read about how the project came together.
I’ve now made my donation and will be rooting for car 21, I feel privileged to contribution, even if modestly to this great project.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
China Ban Bitcoin
It seems that China is banning Bitcoin mining and trading for the umpteenth time…
Some reputable sources say there may be some reality to it this time, but you should be aware that the “China Ban” has become a time-honored tradition in a bitcoin bull-market
Is this bad for Bitcoin?
I don’t think so, certainly not if you are outside of China and have a long-term perspective. Bitcoin’s links with China have long been a rich source of FUD. Nic Carter lists some of the positives that could come from such a ban:
Exiting DeFi
News broke that DeFi 100 had pulled an exit scam —running away with all their investors’ money— and had posted as much on their website:
They later claimed their site had been hacked. Still not sure what the reality of it was and one of the many advantages of focusing on Bitcoin only is that I don’t need to care about DeFi100 and thousands of other “cryptos”.
Among others, they all DeFi (Decentralized Finance) tokens share a fatal flaw: they’re not actually decentralized.
Bitcoiner Mantra:
Play stupid games, win stupid prizes.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
CBDC Dreams
They Fed is seriously considering issuing a memo about commissioning a study about thinking about considering Central Bank Digital Currencies (CBDCs).
I am in NO rush to see CBDCs happen, and you shouldn’t be either. They’ll simply be surveillance enhanced digital fiat, the worst of all worlds. Let them take their time.
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.
Splash
Bitcoin’s price took a dive, falling off the board and plunging straight into the water:
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.
There’s a lot of water before we hit the sand, I personally don’t think we will go under $30k, but the chart shows the next big support level around $14k.
Corrections like this one are not unheard of:
Looking back at the same chart I’ve been posting for over a month now, we can see that (while definitely surprising) this pullback has not been entirely outside of the expected boundaries —with the exception of a few aggressive wicks (probably the result of liquidation cascades).
Liquidation Cascades
If you want to take a peek “under the hood” and see what a liquidation cascade looks like from a trader’s perspective, you’ll enjoy the thread below. You may not understand all of it if you’re not a trader, but I recommend you read it anyway to get a sense of how real, hard-core traders think about things:
Buy, Sell or Hodl?
I obviously don’t know how deep this correction will go, nor how long it will last. But I do know this:
You should not stress too much about “catching the bottom”.
In terms of risk/reward, you probably won’t have a better opportunity to establish a strong Bitcoin position.
To the extent that your conviction allows you to set aside money for the next four years or so, go forth and stack hard.
If you already have a Bitcoin position and don’t have more fiat to put into it just be patient. Regardless of whether your position is in profit or not right now, just hodl tight. We have not seen the top of this cycle yet.
If you are still hesitant about investing in Bitcoin, you should book a call with me ASAP.
Strong hands are best built TOGETHER.
In just a few conversations I can help you develop the knowledge and confidence to invest in Bitcoin safely.
Schedule a call with me to see if there’s a good fit.
