The Bitcoin Review was the previous incarnation of my newsletter.
2021.25 - In Memoriam
First National Airdrop || Azteca Pushing for Bitcoin || The Talk || Exodus || 50 shades of Rug Pulls || Tether Heating Up || Cantillionaires
TLDR:
Whatever else this year has brought, one almost universal experience for most has been loss. Whether it was money, health, freedom, friends or enemies, there has been reason for mourning.
Stack Patiently.
THE STANCE
My personal opinion on where the ball might be heading.
1,000,000 Bitcoin
It’s been reported Mircea Popescu recently drowned in the sea in Costa Rica.
I’m not one to eulogize Popescu. He belonged to a different Bitcoin era than me and I only learned of his existence a few months ago. Despite my curiosity around how he came to own a million Bitcoin, I never really managed to dive into his blog or learn much about the man.
He does seem to have left deep marks on the early Bitcoin community, not all of them good.
40-Year old Popescu would have been worth a staggering 30 Billion or more today. News of his death made me grateful to have a little more time.
RIP MCafee
John McAfee allegedly committed suicide after learning his extradition to the US from his Spain had been approved. His wife denies he was suicidal. John claimed to have a trove of incriminating documents that would be release if he met an untimely fate
An Ethereum wallet that is believed to be McAfee’s executed some transactions after his death was announced… Whatever else one could say of John, he was never boring. May he rest in peace.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
El Salvador
First National Airdrop
The people of El Salvador will receive US $30 to their wallets, marking the first time in history that a government will “airdrop” (give away) Bitcoin to its citizens.
President Bukele delivered a widely praised address (original in Spanish below) in which he detailed the spirit and specifics of the recent Bitcoin law, addressing some of the many concerns his citizens have been voicing after the recent law was passed in a rapid manner.
Billionaire Thangs
Azteca Pushing for Bitcoin
After a recent interview in which he demonstrated a solid understanding of the basic investment thesis for Bitcoin, Ricardo Salinas Pliego —Mexico’s third richest man who had previously disclosed he has 10% of his liquid assets in Bitcoin — dropped some surprising news in a casual conversation with Michael Saylor:
“Bitcoin should be part of every investor’s portfolio”
—Ricardo Salinas Pliego
The Talk
Jack Dorsey announced “The B Word” an event to help institutions embrace Bitcoin. After the announcement some friendly-if-childish banter led to Elon Musk accepting Jack’s invitation to come and discuss all things Bitcoin.
I’m not holding my breath about Elon’s role regarding Bitcoin becoming a net positive, but if he could be convinced to not add further damage that would be great.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Exodus
Hash rate continued to drop as Chinese miners prepare to migrate, however transaction fees not been impacted.
It’s hard to know what China is really planning at any given moment. Speculation abounds about whether they are really committing a huge blunder or playing some version of 4D-chess. The narrative being pushed is that China is trying to limit access to risky financial speculation:
There have also been questions about the extent to which this miner migration is affecting the price of Bitcoin
50 shades of Rug Pulls
The best way to understand the concept of a “rug-pull” —a fairly common occurrence in “crypto” (aka shitcoinery) and one of the reasons I advocate a Bitcoin-only portfolio— is through an example or two, (or three). While the basic dynamics are the same, they can come in various flavors:
Cuban Rug
Let’s assume you are a fictitious billionaire named Mark with a large Twitter following, you tell your followers you are investing in an asset which has been rising rapidly. As your followers decide to get in on the trade you and your insider friends sell your entire positions for a hefty profit, cratering the price of the asset:
In order to be able to do it again you must claim to be one of the victims. Bonus Points if you add insult to injury by brazenly calling for regulations to stop this kind of thing from happening.
Pal Rug
This method takes a lot of work, you need to build a platform to which people come for advice / learning. Obviously you have to provide some value in order to attract an audience, but in between your nuggets of wisdom you lend credence to scammy projects by giving them airtime and acting impressed at their potential Bonus points if you charged the scammers for appearing and/or the marks the audience for accessing the content)
In order to be able to do this more than once you need to feign ignorance about the technical workings of blockchains and focus exclusively on the marketing narrative.
Love Rug
This one is rare because it makes the least sense. It starts with you genuinely loving Bitcoin and working really hard to promote it in earnest.
But the lure of free money beckons. Except this money isn’t free. It comes at the potential cost of your reputation.
You see, a team recently created a run-of-the-mill altcoin with a twist: it’s value goes up and down along with your “reputation” and if you want to claim your money you have to do so publicly on Twitter, hereby marketing the product however reluctantly.
You can read his verbose description of the “ordeal”
Here’s how I interpreted it in real-time:
Robert tries to unlock his Bitclout profile to dump the coins, but bungles the link and the profile remains unclaimed:
Facing backlash, he assumes a defensive stance
He “tries to warn” his upcoming victims in an an oblique manner:
By one account, Robert Breedlove decided to do just that. He claimed his profile, received his tokens and sold them for Bitcoin. Personally, I don’t have much of an issue with that. BUT the devil is in the details.
The problem —for me— was that instead of doing it brazenly he “asked permission” first, when confronted with the implications of what he was about to do he tried to cloak the whole thing under a disingenuous guise of free intellectual inquiry, villified the community (including former friends) for trying —in their own admittedly toxic and overboard way— to prevent him from committing reputational seppuku, pulled the rug (for a little over $30k to be donated to Bitcoin developers) and came out of the ordeal claiming both victimhood and moral victory in a looooong essay.
The whole thing was sad to witness.
While I agree that Bitcoiners can go overboard in their race to be most toxic and I support the need to remain inquisitive, Bitclout was fairly obviously not a deserving hill to die on. We should not pretend otherwise.
I hope Breedlove is able to return to the Bitcoiner community one day, but the latest interactions I’ve seen leave me with little hope of this happening.
Finally, the denouncement of toxicity is a requisite of all rug-pullers. I will one day see toxicity blamed for interfering with honest inquiry, this was not that day.
Tether Heating Up
With increasing talk of regulation coming to the crypto markets in general and stablecoins in particular, Tether seems to be firmly in the crosshairs
Tether is like the main killer in a slasher movie. Every time you think you’ve dealt with it, it pops back up. Where do we stand?
It’s hard to summarize Tether. It’s supposed to be a fully backed stable-coin (with one dollar in reserves for every Tether issued). The question of whether or not they are fully reserved has been definitively settled: They are not, not by a long shot.
Just how solid their reserves are remains the subject of speculation as the reserve information they disclosed was rather opaque.
This leaves us with the question of how serious of a problem this is.
Opinions here range from “not serious at all” to “they will bring down the entire market”. My personal suspicion is that the truth is somewhere in the middle.
I’ll leave some interesting threads below, my current perception of Tether is:
It’s trying to be “The Fed” of Crypto with all the good and bad that entails
It’s withstood pretty savage swings without breaking so far
Regulators will come after it with gusto
Fully-backed competitors are on the horizon, but their buttoned-down nature may not allow them to serve some of Tether’s key markets.
A good part of the Tether risk has been assimilated into current prices. No sophisticated participant today will be able to claim to be surprised that Tether was not fully-backed.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Cantillionaires
It’s good to be close to the money printer.
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.
Price holding its range despite the Chinese ban and regulatory FUD. Stack patiently
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.
Dip Fishing
No news here, smart money still accumulating. Weak hands capitulating
Strong hands are best built TOGETHER.
I work with families, groups and individuals, helping them develop the knowledge and confidence to invest in Bitcoin safely.
All it takes is a few conversations.
Schedule a call to see if one of my plans is a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.24 - Inverted
A Billion Reasons || Tale of Two Banks || BBVBTC || China Fumbles || Goldman Enters Chat || Ironic || Bass Ackwards || Repo Man || More Weird Noises
TLDR:
The world according to Bitcoin seems upside down right now. The case for Bitcoin has never looked stronger but you wouldn’t know it from looking at the price or the behavior of some players.
THE STANCE
My personal opinion on where the ball might be heading.
If you’ve learned everything you know about Bitcoin from the mainstream media, you may think Bitcoin is mined by boiling polar bears in China.
The reality is less grim and a lot more nuanced.
By encouraging Bitcoin miners to leave, the Chinese government may have made the decisive geopolitical blunder of the century.
If Bitcoin doesn’t fail, it will become a new source of power analogous to having abundant natural resources, a powerful military or intellectual capital.
To voluntary relinquish the global lead in mining seems a colossal mistake for them and a huge win for Bitcoin. The resiliency of the network will increase as mining becomes more distributed and one of the preferred sources of Bitcoin FUD (China mining bad) will be gone.
Energy usage is a complex topic and if you are concerned about Bitcoin’s energy footprint, there’s a lot of material that you can wade through including this excellent article: Bitcoin Mining and the Case for More Energy.
TLDR: Channeling energy is synonymous with human flourishing and Bitcoin —through the introduction of new economic dynamics into the production and consumption of energy— may trigger a new era of prosperity.
Why?
While no one knows for sure, the purported reasons seems to be a combination of tamping down on corruption and a desire to impose their surveillance coin CBDC on the Chinese population, but it seems uncanny that they would be so short sighted. Other motives may well be lurking beneath the surface, we will have to wait and watch to find out.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
A Billion Reasons
On the heels of announcing it would buy an additional $500M in Bitcoin through the emission of a bond, Microstrategy decided to give itself the option of issuing up to a Billion dollars’ worth of new shares in the future.
@Macroscope offers an interesting perspective on what this could mean:
Tale of Two Banks
Two supranational banks had very different reaction to El Salvador’s plans to incorporate Bitcoin as legal tender
BCIE Plays Ball
The Banco Centroamericano de Integración Económica —whose charter is to promote the economic development and integration of its fifteen members— signaled its support for El Salvdor’s decision to adopt Bitcoin
World Bank Clutches Pearls
The World Bank —an ill-functioning and opaque organism suspected of being complicit in all manner of global problems— claims they are too holy for Bitcoin.
It seems the joke may be on the World Bank however, as their charter may mandate them to comply with the request.
BBVBTC
In another bit of mixed news, BBVA is starting to roll out Bitcoin for some private banking clients in Switzerland. This is, in general terms, positive news but as Caitlin Long hints at below, traditional banks are used to working with fractional reserves and rehypothecation (loaning out more than they hold in reserve).
One hopes they are clear that it would be suicidal to do this with Bitcoin, if they are not, things could get ugly for them.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
China Fumbles
Without a doubt, one biggest news items this week was the exodus of Bitcoin miners out of China after the government vowed to impose much stricter regulations on several aspects of the cryptocurrency.
While these actions may prove a minor inconvenience (slower blocks, higher fees) over the next few weeks, this is such a gift for Bitcoin in the long term that it’s hard to comprehend
Goldman Enters Chat
Goldman has once again changed its mind on Bitcoin and decided that it is an asset class after all and will begin trading Bitcoin futures (Galaxy Digital to provide liquidity).
Apparently two commonly held belief are :
Where Goldman goes, the rest of the financial markets follow
Goldman entering an asset class is rarely good news for the asset
So, we’ll have to wait to see where this one lands.
Ironic
This one was just too apt not to share
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Bass Ackwards
Seems Jamie Dimon has a sense of humor, and the punchline is that people actually listen to him.
If you are new to the concept of inflation, the central point is this:
Your money is worth less as time passes.
In an inflationary scenario you want to trade your cash for assets —which usually appreciate in price— because your cash will be worth-less tomorrow. So Jamie is basically telling you something like: “you should buy fidget spinners because they’re going out of style”.
It. makes. no. sense.
Repo Man
The repo markets are acting up again (they started in 2019)
Look, I’m not going to try to explain the Repo markets here. And I’m definitely not going to try to explain the reverse repo markets (if you are very curious this article describes the situation a little).
What you need to know is that this is part of the financial plumbing and it’s making weird noises. We all know that when plumbing is working it is invisible and out of sight. It doesn’t take a rocket scientist to imagine what’s about to shoot out from the wrong end of a pipe if something goes wrong.
More Weird Noises
Rating agency Fitch says all is well in Canada.
The markets beg to differ.
Greg Foss should be on your radar. Doubly so if you are learning about Bitcoin. He does a great job explaining how the bond markets and Credit Default Swaps (CDS’) in particular can give us a new perspective on the state of the economy. TLDR: The “risk free rate” is not risk free and if sovereigns start defaulting —which they can and do— the potential domino effect would be huge. Bitcoin is the best insurance against this scenario.
happy?
It seems Bloomberg is beating the WEF drum trying to sell you on serfdom.
To the extent you’d rather pass on serfdom, you should be stacking sats.
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.
Price was swimming for the surface but got pulled down again last week. The board is now slightly below the surface of the water. We’ll see if price manages to hop back on.
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.
Dip Fishing
The dip fishing chart shows nothing new. We’ve been trawling the “Surprising” levels for over a month:
Could we go under $30k? Sure, the next “hard stop” is at $14.5k
Do I think that’s going to happen? I really don’t but I could be wrong.
Should I wait for a bigger dip to get fully allocated? I wouldn’t.
But what about the “Death Cross”? Previous history clearly indicates price will go up, down or sideways after the cross (if you’ve never heard about the “Death Cross” keep it that way).
Who?
So WHY is the price not rising?
I don’t know and (really) neither does anyone else.
The tweet below, however offers an interesting perspective though. It turns out You can buy Bitcoin “at a discount” right now by buying shares of Bitcoin’s Grayscale trust.
I won’t dive into the details of Grayscale (it’s like a buying a complicated Bitcoin IOU) but the point is that Grayscale owns a ton of Bitcoin, they are one of the few vehicle available for some institutions, and they are currently selling BTC at discount for reasons beyond the scope.
Don’t Chase Price
It seems we will be hanging below $60k for a while, you know what would be a great thing to do while we are here?
Stack Hard, Study harder
If you study Bitcoin hard, you may get to switch from thinking in fiat to thinking in Bitcoin.
Instead of measuring your wealth by calculating the fiat value of your holdings you measure it by how much you own of the new monetary network.
More sats = wealthier, price just takes time to catch up sometimes.
Strong hands are best built TOGETHER.
I work with families, groups and individuals, helping them develop the knowledge and confidence to invest in Bitcoin safely.
All it takes is a few conversations.
Schedule a call to see if one of my plans is a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.23 - Money
Wat Mean || Volcano Money || Locked Taproot || Fiebre de Bitcoin || Nigerian Princes || Tonga Enters Chat || India Nods || Based Union || Texas: Custodian Banks || Oversubscribed || Warren About Bitcoin || BTC VS IMF || Dutch Ban? || China Ban || Binance On The Spot || Wily WEF || Inside Pennsylvania || Surely Temporary
TLDR:
Insane week:
- El Salvador adopted Bitcoin as legal tender
- Taproot was activated.
Bitcoin just acquired new powers while crashing to a new level in the Geopolitical stage, buckle up.
Salvadoreñ@s, platiquemos de Bitcoin!
THE STANCE
My personal opinion on where the ball might be heading.
Bitcoin Is Now Money
Whatever else can be said of him, El Salvador’s president Nayib Bukele proved to be a man of action. He managed to go from announcement to fact in less than a week:
Bitcoin is now an official currency in El Salvador.
Bukele’s amazing speed of implementation suggests he knew that he would either pass this quickly or not at all and, predictably, the IMF immediately made concerned noises
The stage of “Nations adopting and holding Bitcoin” has officially begun, much sooner than most of us expected. Bitcoin has left the harbor and is has entered the open seas. Recent price action has been a taste of the level of conviction it takes to withstand Bitcoin’s G-forces. If you are still here, welcome aboard mate.
There be dragons here for sure, but there’s no place else I’d rather be. And if Taproot’s activation showed anything it’s that while we may bicker, spar and even make our heroes walk the plank every now and then (let’s hope Breedlove doesn’t join that list), we keep moving forward, arms locked and laser eyed.
Nowhere is it written that we will win this battle but this is a battle worth fighting if we are to leave this place better than we found it.
PS. I’ve been called upon to do my part and I’ll be honored to add my grain of sand. Huge gratitude to Miles Suter for the invitation.
Herman@s de El Salvador
Bitcoin no es fácil de entender al principio pero con cinco conversaciones van entender las bases y con un poco de trabajo y paciencia les va a quedar clarísimo. Estoy a sus órdenes.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Wat Mean?
If you are curious about the impact and implications of El Salvador’s adoption of Bitcoin as money, this well written article is well worth 16 minutes:
Volcano Money
By happenstance, the historic vote that made Bitcoin currency in El Salvador was covered live by wunderkind and fan-favorite Nic Carter. What sterted as a Twitterspace to stave off boredom while cooking dinner quickly became a who’s-who in Bitcoin and culminated with president Bukele and his brother chatting live with the Bitcoiners as the bill was debated and passed. Bitcoin aside, it was a low-key ground breaking moment in media coverage.
During their unscripted conversation the question of mining came up and Bukele replied that he had not given much thought to it, but noted they have a lot of geothermal energy from volcanoes, giving instantaneous birth to the wonderful idea of VOLCANO MINING
Not only does Volcano mining make for some awesome memes I’ve ever seen in Bitcoin, it will deal a strong blow to energy FUDsters who have been coming at Bitcoin from all sides lately.
Locking Taproot
It won’t activate until November, but Taproot is now almost a done deal. The majority of miners have signaled that they are ready, willing and able to mine Taproot transactions starting November. They need to keep their word and we —the people who run full Bitcoin nodes— need to upgrade our version of the Bitcoin software so that our nodes will recognize these transactions and blocks as valid.
If you are running a Bitcoin node please upgrade it right away.
The upgrade is quite a big deal from a couple of different perspectives:
The functionality that it will enable will expand Bitcoin’s use cases significantly and give birth to Bitcoin-based DeFi and better privacy
The upgrade “lock-in” process itself went smoothly, and happened relatively quicky without significant contention —this in sharp contrast to the previous (USAF) soft fork.
Both of the above send a clear signal that Bitcoin —despite the slower pace of change— has a vibrant development, an engaged user base and mostly supportive miners, all of which are able to work together to execute effective governance.
Ben Carman gives a good summary in the article below:
Fiebre de Bitcoin
Several politicians of various rankings in Latin America eagerly jumped on the train of demonstrating support for Bitcoin. It’s far to early to tell if they have any real conviction about it but it was encouraging to see.
No solo Latin America…
Nigerian Princes
In some ways, Nigeria’s case is the antithesis of El Salvador. A few months ago, the government of Nigeria decided to ban Bitcoin. The youth of the country decided to use it anyway and built a parallel financial system using Bitcoin, resisting the governments vigorous attempt to stop them, at significant personal risk. Remittances were a visible example of their success.
NFL player turned Bitcoin advocate Russel O’Kung (of Nigerian descent) penned a powerful letter to the president, encouraging him to take decisive action around adopting a Bitcoin Standard
All that is required is a vision for a new future and an allocation of its own national resources to pursue a Bitcoin standard.
—Russel O’Kung
The youth of Nigeria has adopted Bitcoin as their currency, let’s hope their government respects their decision.
Tonga Enters The Chat
As all of this was going down, Lord Fusitua of Tonga started engaging prominent Bitcoiners and it seems they have genuine interest in moving forward
Just like Michael Saylor’s Microstrategy, Our country Tonga is also sitting on a $700 million melting ice cube and #Bitcoin fixes this.
— Lord Fusitua
It’s hard to overstate how big it would be if a second nation were to adopt Bitcoin quickly, especially if that nation were not hostile towards the USA.
Once El Salvador’s move becomes a movement, the momentum will be hard to stop.
India Nods
It seems the recent India FUD might have been overblown after all…
Based Union
A recent proposal for a 3-year ban on Bitcoin mining in the state of NY was shut down by the International Brotherhood of Electrical Workers
Texas: Custodian Banks
The Texas Department of Banking has determined that its affiliate banks may now offer Bitcoin custody services to their customers.
Oversubscribed
Microstrategy planned to raise an additional $400M to buy more Bitcoin, after getting bids for $1.6 Billion, they settled on $500M
They should start buying early this week. If we go by past experience, the price of Bitcoin should not be significantly affected by these purchases, but I’d still front-run them if I could.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Warren About Bitcoin
One of the latest videos to make the rounds was this awfully misleading piece by Elizabeth Warren in which she misrepresents the reality of Bitcoin’s energy consumption while praising the privacy-killing, chinese-inspired CBDCs (Central Bank Digital Currencies)
And if you’re not yet up to speed on the reality of Bitcoin’s energy usage, there’s a lot of great material out there and here’s a chart for you to consider:
BTC VS IMF
Seems the IMF was not amused by El Salvador’s mad dash at monetary freedom and said it created “risks”. Max Keiser put forth a proposal to create “Volcano Bonds” which would allow Bitcoiners to support El Salvador if the IMF threatens them. This is going to get very interesting…
Dutch Ban?
A high-level Dutch bureaucrat dislikes crypto and —making the common, beginner mistake of conflating Bitcoin with “crypto”— proposed an ill-informed total ban on all cryptoassets. I suspect this will be a nothingburger.
China Ban
It’s kind of finally happening. China is not banning mining outright, but some regions have and others are imposing strict guidelines with compliance inspections coming by the end of this month.
Hashrate Drop
All of this is causing many miners to migrate out of the region, the impact on hashrate was visible, dropping aprox 20%
The crackdown on miners in China is a stress test for Bitcoin that will ultimately yield sweet fruits. Mining will become more geographically dispersed which is good. Miners will be moving out of a region where coal-generated power is cheap because of subsidies. I fully expect Bitcoin to come out of this stronger.
Binance On The Spot
This past month has been rough for Binance, one of the world’s largest crypto exhanges. This may be a taste of what’s to come with the new US crypto regulations.
One of its Indian subsidiaries is also in the crosshairs:
If you have any coins on Binance (or any exchange really) this would be a good time to move the to your own wallet. Why expose yourself to counterparty risk?
Wily WEF
I was initially flabbergasted. Out of all possible entities, the WEF —of Great Reset infamy— published a glowing article on cryptocurrencies.
I thought I was taking crazy pills, until the other shoe dropped. Of course they weren’t talking about Bitcoin, rather they wanted to direct your attention to these other fascinating projects…
Here’s a hot tip for you, if the same organization that is pushing the slogan “You’ll own nothing and you’ll be happy” recommends a shitcoin, altcoin maybe don’t buy it.
Inside Pennsylvania
Bitcoin is in the Whitehouse. It was revealed that at least one of Biden’s top advisor is a Bitcoin Hodler.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Surely Temporary
US inflation numbers came out lower than what most americans experienced but higher than talking heads expected
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.
Swimming Towards Air
Price seems to be slowly making its way to the surface. With all the bullish news it should get back on the board again soon.
But these are not normal times.
Lockdowns are coming to an end, summer is now ON and people are away from their keyboards and rediscovering other humans. So who knows how long this sideways action may last.
But I’ll make one forecast: These are the days you’ll look back at ten years from now, and whisper to yourself “I should have bought more”.
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.
Dip Fishing
I don’t want to jinx it, but it seems we’ve trawled the bottom on this one. Whatever your “full allocation” plan is for Bitcoin, it should be in place by now.
Another good one from BTC Charts (PS. means HODL or BUY)
Strong hands are best built TOGETHER.
I work with families, groups and individuals, helping them develop the knowledge and confidence to invest in Bitcoin safely.
All it takes is a few conversations.
Schedule a call to see if one of my plans is a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.22 - Inflection
|| Next Level || Young King || Solar Test ||Dorsey Doubles Down || True DeFi || Schnorr Tapping || Beyond Redemption || Russia Out
TLDR:
The price chart doesn’t show it yet
The news hardly mentions it yet
It’s not really visible yet
But Bitcoin’s next chapter started June 5th, 2021
THE STANCE
My personal opinion on where Bitcoin seems to be heading.
Next Level
On June 5th 2021, Nayib Bukele, President of El Salvador — the first head of state ever to speak at a Bitcoin conference— declared he would push a bill to make Bitcoin legal tender in his country.
I have not yet cultivated a personal opinion on Bukele or El Salvador, I’ve read good and bad things, which seems par for the course. But this is not about him.
A country —even a small one— attempting to make Bitcoin legal tender pushes Bitcoin into the next dimension of geopolitics. It just does.
Bukele’s proposal still needs to be approved but those closer to the ground think he has a good chance of pulling it off as far as local opposition is concerned.
However —as Caitlin Long describes in a solid thread below— his opposition is unlikely to remain local for long. You see, if Bitcoin becomes a country’s currency it could be redefined as money under US Commercial Law, which would endow it with different legal status and accounting requirements than it currently has.
It seems Bukele is aware of the potential pushback and decided to go for it anyway.
Taking a page from Miami Mayor Francis Suarez’ playbook, Bukele openly courted the community:
Some privileged idiots were prompt to point out that El Salvador is too small to make a material difference to the price of Bitcoin, proving that they missed the point of Bitcoin in its entirety.
Bitcoin’s NGU (“Number Go Up”) Technology is a great meme and a powerful magnet that helps attract new waves of the crypto-curious.
But those that get into bitcoin only for the NGU are the ones selling right now; their lack of conviction makes them unable to weather the volatility.
A few, like Ruffer, are exiting at a handsome profit after meeting their targets. They are traders and have no particular attachment to their positions.
They are not hodlers and take a technician’s perspective to assets.
A lot of selling, however, seem to be coming from relative newcomers who are selling at a loss.
It’s a shame they did not take the time to build up their conviction by understanding what they were getting into.
I’m sure the people of El Salvador will be grateful they can buy cheap sats from these low-conviction speculators.
It would be wonderful to see what sound money does for El Salvador but regardless of what happens, this was the “starting shot” that marked a new stage of the race: Nations openly adopting and accumulating Bitcoin.
Many will ignore it, but a few will be following how this plays out very closely. Hints starting to drop already:
The first countries to realize and act upon the fact that they need to accumulate Bitcoin will gain a decisive advantage over the laggards, like Microstrategy did in the corporate world.
Here is the announcement:
Young King
It’s entirely fair to say that this may not have precipitated now had it not been for the grit, heart and genius of one particular Bitcoiner: Jack Mallers. He is an inspiration and gives me enormous faith in the younger generations.
This moving photo of him embracing his family moments after the announcement warms my heart.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Miami Edition
Over 10,000 Bitcoiners descended on Miami this week, as the world’s biggest Bitcoin event to date kicked off.
Solar Test
Square is investing $5M in an experimental Bitcoin mining facility that will rely exclusively on solar. They will use it as a case study on renewable energy for Bitcoin mining promising to make all its economic information public. Blockstream has partnered with Square to manage the facility
I’ll be interested in the results, although I’m clear that nothing about this will appease the ESG virtue-signalers, the experiment will be a valuable contribution whatever the result turns out to be. I’ll be pleasantly surprised if it turns out to be economically competitive.
Dorsey Doubles Down
Speaking of Square, CEO Jack Dorsey doubled down on his personal commitment to Bitcoin and said Square might build a hardware wallet
“If I were not at Square or Twitter I'd be working on bitcoin. If it needed more help than Square and Twitter, I would leave them for bitcoin. But I think both companies have a role to play.” —Jack Dorsey, CEO Twitter, Square
True DeFi
In this two minute video, Blockstream boardmember Alyse Killeen succinctly explains the problem with DeFi: It’s not really “De” (decentralized)
“A protocol governed by rulers is inherently broken from the start.” — Blockstream Boardmember Alyse Killeen
Take the 2 minutes to watch the clip, I was not aware of Alyse but I’ll definitely be following her more closely from now on.
And speaking of a truly decentralized DeFi:
Schnorr Tapping
It seems the Taproot —the latest upgrade to Bitcoin— is gathering enough support to lock in activation soon.
If you are new to Taproot, I’d summarize it like this:
By allowing different cryptographic math (Schnorr signatures) Taproot will make it much easier to implement smart contracts using Bitcoin.
It has the added advantages of having a very light footprint on the blockchain, a privacy-enhancing architecture and clever, trust-minimizing ways of incorporating “oracles” —sources of information external to the Bitcoin blockchain.
Most of the public is sleeping on Schnorr and the technologies it will enable (like Discreet Log Contracts) because they are not easy to understand, but a few companies like Atomic Finance and Suredbits are on the case.
Bitcoin-based DeFi is coming. You can bank on it.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Beyond Redemption
Not content with spreading Bitcoin FUD and pumping Dogecoin, Elon Musk continued to amuse himself by preying on the unthinking, this time leading them to invest in…Cumrocket. The resulting pump and dump was swift and merciless.
Those clueless enough to let the fate of their savings be dictated by the volatile amusement of man-child Emperor Elon will get thoroughly —and deservedly— REKT.
DYOT —Do Your Own Thinking
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Russia Out
Surprising no one, Russia announced it was exiting its USD positions (currently estimated at USD$41.5B) in its Sovereign Fund.
The announcement was more about posturing ahead of a summit , they’ve been reducing their USD holdings for years amid sanctions and has complained in the past about the “weaponization” of the USD and warned that the policy may have unintended consequences. Some speculate that China —who has also been reducing their USD positions and hoarding Gold— will be next to make the announcement.
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.
After taking the plunge 3 weeks ago, Bitcoin has been spending most of its time chilling in the $34k to $36k range
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.
Dip Fishing
Revisiting our old Dip Fishing chart reveals nothing new, we’ve been ranging in the “Surprising” range since May 19th.
Each candle on this chart represents one day
It may not look it, but I think this is the moment to “back up the truck”. Most of however much you’ve decided to allocate to Bitcoin should be deployed by now.
Crystal Ball
My power-level does grant me access to a crystal ball yet and Bitcoin has a knack for making fools out of anyone who predicts prices but having said that, I think price-predicting models can be useful for orienting ourselves in terms of price discovery.
Below we have two different models. The “Power Law Corridor” model and “Stock to Flow”
Remember: All models are wrong, some models are useful.
Both models show broad “corridors” that could accommodate Bitcoin’s price being anywhere between $10,000 and $100,000 without breaking.
Some criticize the models for providing ranges so broad as to be meaningless, I disagree.
For me the important takeaway is that current price is well within the boundaries of expected volatility if Bitcoin continues its march upward.
These models will probably break one day, but they have remained valid longer than many would have expected; if you are not prepared to accept the volatility reflected in them as the price of the upward slope you need to reflect on why you are invested in this asset, or better yet, give me a call.
Strong hands are best built TOGETHER.
I work with families, groups and individuals, helping them build the knowledge and conviction to invest in Bitcoin safely.
All it takes is a few conversations.
Schedule a call to see if one of my plans is a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.21 - Hungover
Indy 500 || MOAR Energy || Apple Enters the Chat || Billionaires Switching Sides || Van Eck ETFs || Saylor Under Fire || Money With Feet || Cryptogenocide || Breaking Taleb || RIP M1 / M2
TLDR:
Bitcoin’s fire-sale is being ignored by men nursing alt-season hangovers. Their lack of conviction will cause many to miss Bitcoin’s next big jump.
Don’t be one of them.
THE STANCE
My personal opinion on where the ball might be heading.
Perspective
Now that alt-season has come to its predictable end I see people who got swept by the mania licking their wounds.
A few were able to take some profits from their alts before the crash, many did not. Some risked more than they should and a few took serious losses.
Looking back, which of the two coins below would you rather have invested in?
As you may have suspected, they’re both actually Bitcoin —the only difference between them is that one shows price in a linear scale and the other in a log scale.
If your mindset is still based on the left chart you’re probably cursing the day you heard of Bitcoin.
If your mindset is based on the right chart you’re probably doing your best to buy the hell out of this pullback.
The case for Bitcoin is crystal clear once you can see it:
It’s obvious that not everyone can see it yet.
Your ability to understand what Bitcoin is, the problems it solves, the severity of said problems, the risks of owning it and particularly the risks of not owning it, will define whether you miss or make the most of the greatest transfer of wealth the world has ever seen.
If money is a topic of interest for you, there is no better investment you could make right now than putting in the work —and make no mistake, it takes work— to wrap your head around Bitcoin
The “formula” for investing in Bitcoin successfully has been neither complex nor secret: Buy and hodl BTC for at least 4 years.
BUT, the catch is that investing in Bitcoin requires serious conviction. You can be certain that there will be times —like these past few weeks— where the strength of your conviction will be put to the test.
This is not unique to Bitcoin by the way, as investing legend Stan Druckenmiller points out:
The second act of this bull market will begin when we least expect it and it’s likely to be spectacular as a participant and heartbreaking as a spectator.
If I were you I’d make sure to size my position to match my conviction and get in. Oh, and I’d stay away from alts this time. But that’s just me.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Indy 500
The Bitcoin car placed 8th in yesterday’s race. A solid beginning to what I hope will be an ongoing story.
MOAR Energy
There has been much discussion around Bitcoin’s energy consumption recently and there is a point that should never be lost: Bitcoin’s energy consumption is amply justified and a good thing.
The tweet above is a great bite-sized summary of why Bitcoin’s energy usage is good and justified, for a more nuanced understanding of the matter I’d point you to this excellent (20 min or so) Medium article
In Bitcoin, we have — for the first time in human history — a technology that directly financially incentivizes the discovery of cheaper ways to harness energy, one which cares not about geographic location, consumer demand, or other historical hindrances to energy generation.
— Bitcoin Mining and the Case for More Energy, Hodl’n Caulfield & Selene Lindstrom
Apple Enters the Chat
Apple incorporating Bitcoin into Apple pay would be a sensible “first date” for Bitcoin and Apple. There have been no announcements yet, but there is reason to believe it’s not just wishful thinking:
Billionaires Switching Sides
Over the past year a stream of legendary investors have started to publicly change their minds about Bitcoin. Some of these “conversions” have been expected for a while and are warmly welcomed
While Dalio has expressed misgivings in the past about governments banning Bitcoin, those who have studied his extensive work on debt have long expected him to eventually come around to Bitcoin. The wait is over.
Others billionaires have been received with less enthusiasm as their hot takes on Bitcoin and/or POW mining and “crypto” in general are, more often than not, uninformed.
One of the golden rules in Bitcoin is, if you’re going to complain about some aspect of Bitcoin, do your homework before. Those who don’t quickly find themselves on the receiving end of a swarm of cyber hornets.
Van Eck ETFs
It seems Van Eck will be going live this week with it’s Europe-based Bitcoin and Ethereum ETFs. Should be huge.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Saylor Under Fire
Michael Saylor brokered a meeting between some miners and Elon Musk and —not entirely without reason— Bitcoin Twitter lost its collective mind.
Let me make my position clear: Any incarnation of a “Ministry of Mining” would be bad.
Not because transparency of information around energy consumption is bad, but rather because it could put Bitcoin on a slippery slope that needlessly threatens its fungibility and censorship resistance “we only accept Green Bitcoins here”.
This would posit a threat to Bitcoin’s independence on par with regulatory capture and should be firmly, emphatically and vocally opposed.
I have no problem believing that Saylor was just trying to get ahead of the narrative in good faith. His advocacy has been tireless and his understanding of the nuances of Bitcoin is beyond dispute.
I’d much rather have a financial and intellectual heavyweight like Saylor act as diplomatic matador in the bullring of ESG virtue-signalers than having a mob of angry plebs screaming in cacophony.
Still, we must remain alert. Hostile interests will continue to try to capture Bitcoin and it’s up to each of us to not permit this to happen.
Money With Feet
Jurisdictional arbitrage is going to be huge in Bitcoin. We already see the different battle lines being drawn as different states adopt postures around Bitcoin, attracting or repelling investments in the process.
Having said that, you can be certain about one thing. Federal regulation IS coming to Bitcoin:
I hope that the current cohort of Bitcoin-savvy regulators will produce regulation that fuels rather than hinders Bitcoin’s progress.
Cryptogenocide
This as perhaps the funniest thing I saw all week.
Pack it up guys, it turns out Bitcoin is a weapon of mass destruction.
Breaking Taleb
After a rather public fallout with prominent Bitcoiner Saifedean Ammous, Taleb has been showing frequent episodes of fragility, culminating in the announcement that he’ll be a speaker at a Bitcoin SV conference. There’s no coming back from this.
If you are lucky enough to not know what Bitcoin SV is, I’ll summarize by saying it’s one of the worst forks of Bitcoin and is backed by Craig Wright aka “Faketoshi” a lawsuit-happy clown who is financially backed by a gambling magnate and apparent low-life Calvin Ayre.
The fact that Taleb is willing to share a stage with these people speaks to a monumental lack of judgement.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
RIP M1 / M2
The FED will no longer update their M1 and M2 charts. I wonder why? Perhaps we should have one last look at those charts:
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.
Underwater
Bitcoin is still trying to come up for air. We’ll see how long it takes it to find its way to the surface.
We’ve been in “surprising” territory for over two weeks now. I hope you’ve been making the most of it.
Strong hands are best built TOGETHER.
I work with families, groups and individuals, helping them develop the knowledge and confidence to invest in Bitcoin safely.
All it takes is a few conversations.
Schedule a call to see if one of my plans is a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.20 - Fear
Is This it? || Digging Ross || Racing Bitcoin || China Ban Bitcoin || Exiting DeFi || CBDC Dreams || Splash || Liquidation Cascades || Buy, Sell or HODL?
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.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.19 -Drama
Elongated || Bitcoingram || Fundamentals || Joining the Club? || Tether Woes || Surprised? || The Setting Sun || Falling off the Board
TLDR:
Fuck Elon. We have bigger fish to fry. Oh, and fuck Tether too.
THE STANCE
My personal opinion on where the ball might be heading.
The difference between a trader and a truly prescient investor is having the courage to let your winners run until you reach the logical conclusion of the investing thesis that prompted the initial investment. That requires not just tactical trading acumen, but a macro belief in a theme or regime that powers the asset’s long-term returns.
—Arthur Hayes, Grow Up or Blow Up
Elongated
I’m not sure what prompted Elon to get into Bitcoin in the first place but his brief affair started skidding on Wednesday, hit the wall hard and by Sunday had turned into a blazing fireball that would have put a malfunctioning Tesla to shame.
There’s no coming back from this one for Elon.
The first important thing to understand is not just that Elon’s take is wrong but that he knows it’s BS.
Like Andrew Tate points out, it would be ridiculous for Elon —as an electric car maker— to say “electricity for car good, electricity for money bad”
This was obviously not a concern when he prompted Tesla to invest $1B and since the “miners boiling the oceans” FUD has been around forever. There’s no way he /his team didn’t look closely at the claims while their due diligence for Tesla’s investment —it’s worth noting that he clarified Tesla was not selling their Bitcoin.
If he had really been concerned about Bitcoin’s energy usage, wouldn’t he have asked Michael Saylor?
Here’s an 8-min video with what Saylor would have responded:
The second important thing to consider is that Tesla relies heavily on government subsidies to stay afloat, and recently signaled an interest in entering the renewable credit market:
The third thing to understand is that this could have been a calculated move to make Bitcoin’s price dump before its next leg up.
The final straw came when Elon tweeted that he was working with Dogecoin developers (lol, there’s basically no such thing) and then posted a completely asinine take on how Dogecoin could become a real green, more efficient alternative to Bitcoin
His proposal is akin to saying that his rockets should be propelled by cow farts solving climate change and transportation to Mars in one go, and by the way, he’s working with his cousin on a great idea for bottling up cow farts.
It would be a cute take from a 10-year old but it betrays either malfeasance or blatant ignorance about the tradeoffs involved in a blockchain. Regardless of what his true intentions were, the effects were noticeable:
Needless to say, Bitcoiners were not pleased. Even Doge’s creator (Palmer Lucky) who has been largely absent from Twitter reemerged briefly to make it known he was not on board:
All of this was already bad. But it did not end there.
Peter McCormack wrote a solid thread calling Elon out with well though-out arguments, his response was that of a churlish child.
Around the same time Michael Saylor also tweeted at Elon cordially, inviting him to reconsider his position, but the “Technoking Imperator” responded with an attempt to demean Saylor.
We have wasted enough time on this: Fuck Elon.
Jack Mallers —the brilliant young man who is using Lightning to reshape the global financial landscape as we speak— chastised Elon in a phenomenal thread:
It’ll be interesting to see if Elon starts putting his billions to work pumping Doge or chooses to leave behind a destitute army of followers once he absconds to Mars.
In the meantime, Bitcoin is on sale and I suspect that it’s partly due to this week’s Tether news, read below in the CRYPTO WARS section.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Bitcoingram
MoneyGram is partnering up with Coins to offer its customers Bitcoin ATMs at some locations. An interesting start.
Fundamentals
Despite the bearish news this week, Bitcoin’s fundamental proposition remains unchanged and the clear signs of inflation only underscore the importance of having insurance against out-of-control monetary policies.
They say “be greedy when others are fearful.”
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Joining the Club?
There’s always a stir when someone famous first jumps (or seems to jump) into Bitcoin. Often these stories have disappointing endings.
This week we saw two":
Facebook’s Mark Zuckerberg announced he had two goats named Bitcoin and Maxi respectively.
A lot of people tweeted excitedly about how Zuck would soon reveal a massive BTC position.
Me? I have an open $20 bet that he’s going to slaughter those goats himself (as he does) and feed them to some Bitcoiner acquaintance.
There was also Tom Brady going Laser Eyes™, but then he may also be doing an NFT thing? Happens all the time.
Tether Woes
I’d like to thank Alexander Cortes for bringing this to my attention. I’d glanced through Tether’s report and dismissed it, thinking mistakenly that Tether FUD had been buried for this cycle. I was wrong.
If you are already aware of Tether, skip ahead to “The Problem”
For those of you who tuned in after Bitcoin breached $20k, here’s a quick summary:
Tether is the largest “stablecoin” —a cryptocurrency that tries to retain a stable exchange rate, in this case 1 Tether = 1 USD.
There are multiple reasons why stablecoins are useful, speed and low regulatory friction being two important ones. Stablecoins allow traders to move virtual-USD between exchanges quickly even if those exchanges can’t accept USD directly (because they don’t meet the necessary regulatory requirements).
Tether also became a practical tool for people who wanted to skirt various regulations in different countries. So there’s always been an air of opacity and shadiness around Tether.
Theoretically, Tether’s promise was that they would always have full backing —which means $1USD in the bank for every Tether printed.
Early on, this promise came into question. Skeptics rightfully pointed out that there was no way to verify wether Tether’s “fully backed” claim was true and there was at least one instance in which it became clear that Tether was not fully backed.
Eventually Tether and its parent company Bitfinex came under investigation by the NY Attorney General over allegations that they’d tried to cover up $850 million in losses.
“These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”
— New York Attorney General Letitia James
The two-year investigation was settled in February of this year with Tether admitting no wrongdoing and agreeing to an $18.5 million payment and to issuing quarterly transparency reports.
The Problem
Is Tether being created out of the blue to pump the price of Bitcoin?
If Tether is not backed 100% by cash, what is it backed by?
The first of these questions became a furious debate back in 2020, before Bitcoin breached $20k and Michael Saylor started his campaign to drive institutional adoption. The short answer appears to be a rather definitive NO, Tether is not created out of thin air to pump Bitcoin. A lot has been written about this, Dan Held offers a good summary in his piece: Don’t Fear Tether.
The second question gets more interesting. Unfortunately, the short answer is No, Tether is NOT fully backed by cash.
Tether released their first Reserve Breakdown and —beyond the Elon drama— it could be a big part of why Bitcoin has been dumping these past few days:
This is the reserve breakdown that Tether published. Click on the image to go to the original link.
In their amateurish, 2-pie-chart report, Tether offers a “Cash & Cash Equivalents” category, representing 75% of their reserves. Which means Tether is 75% backed at best. Drilling down we find that actual cash is less than 3% of reserves with another 2.2% from the T-bills portion. If you are feeling generous you can also add the 10% from “Corporate Bonds, Funds and Precious Metals” to conclude that Tether’s backing consists of 15% “real money” and 75% is backed by “sumthin sumthin”. Nocoiners rejoiced at the news:
Tether’s situation is doubly unfortunate because it could have been easily avoided if discipline had been able to supersede greed.
Caitlin Long (an industry treasure) explains why it’s both inappropriate and stupid for Tether to have introduced credit risk into the reserves that were supposed to back its peg. And she drives home the point that —not only does the market already have access to other stablecoins than Tether— thanks to Wyoming’s forward-looking legislators, the market will soon have access to stablecoins issued within a legal framework that will make it impossible for them to be anything other than 100% backed.
Greg Foss —who should be in your radar given his broad experience and insight in the bond markets— responded thoughtfully to Caitlin’s thread.
I interpret his thoughts thusly:
Tether risk is tied to fiat risk, your bank is probably in worse shape than Tether. If credit risk starts to spread (contagion) with corporations defaulting and causing others to default, your only insurance option will be Bitcoin. So some of the very conditions that could drive Tether to fail would drive Bitcoin to thrive.
In conclusion: Tether remains a shady operation operating cowboy style and is best avoided, it’s likely the current dump is due in part to the market discounting Tether risk, but Tether does not represent an existential threat to Bitcoin. Anyone using Tether today is cognizant that it comes with risks.
There are already other stablecoins that are less risky than Tether and the number and quality of competitors will only improve with time.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Surprised?
The Fed was surprised by high inflation numbers.
Really? Maybe it’s just me, but it seems they should get out more.
The Setting Sun
It’s no secret that the USD’s tenure as the world’s reserve currency is not guaranteed to be permanent. Indeed the increasing cracks in its foundation are increasingly visible. Here’s Druckenmiller’s take on it:
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.
Falling off the Board
Bitcoin fell off the board, this week will be about seeing it struggle to get back on or possibly fall further.
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.
Dip Fishing
I thought I’d already retire my “Dip Fishing” chart from a month ago, but it’s still proving useful, I added the 200 day Moving Average (rising blue wave). Previous bull runs have had several “touches” of the 200MA, we've yet to see one this cycle.
People often complain that “Bitcoin is too expensive” and say they would buy if it were cheaper.
This is that moment. Bitcoin is on sale right now.
Are you loading up?
Each candle in the chart represents one day.
Never invest in something you don’t understand.
I help individuals, families and corporations understand the WHY and HOW of investing in Bitcoin.
Schedule a free 30-minute call with me if you’d like to find out more.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.18 - The Prestige
For Keeps || Curiouser and Curioser || Missed the Barn || Russia Shopping for Money || Woe Is Me || Govcoin || Accumulation
TLDR:
If “Crypto” is a magic trick, we’re getting ready for “The Prestige.”
Are you being misdirected by greed?
THE STANCE
My personal opinion on where the ball might be heading.
Act Three is coming
Every great magic trick consists of three parts or acts. The first part is called “The Pledge”. The magician shows you something ordinary: a deck of cards, a bird or a man. He shows you this object. Perhaps he asks you to inspect it to see if it is indeed real, unaltered, normal. But of course… it probably isn’t. The second act is called “The Turn”. The magician takes the ordinary something and makes it do something extraordinary. Now you’re looking for the secret… but you won’t find it, because of course you’re not really looking. You don’t really want to know. You want to be fooled. But you wouldn’t clap yet. Because making something disappear isn’t enough; you have to bring it back. That’s why every magic trick has a third act, the hardest part, the part we call “The Prestige”.
― Christopher Priest, The Prestige
Spoiler alert: I’m about to reveal how this movie ends.
The Pledge: You are shown a collection of ordinary shitcoins. they are worthless digital tokens that for years have failed to live up to their promise (if any).
The Turn: Scammers Savvy “crypto-investors” drive the price of these shitcoins up to THE MOON by pumping some money into them —the more worthless the coin, the more the price goes up because of their shallow markets. Everyone jumps excitedly into the shitcoin casino with both feet, dazzled by the astonishing wealth they are accumulating on-screen. Eye-popping returns for absolutely no reason, crypto is AMAZING!
I MEAN, LOOK AT THESE RETURNS!! (WHY AM I SCREAMING?):
The Prestige: The mercenaries savvy traders dump their shitcoins which crashes their price) taking your money and plowing it back back into Bitcoin.
Not only does this pump Bitcoin’s price and leave you holding a bag with heavy losses. To add insult to injury, it also makes you miss out on one of Bitcoin’s legendary moves, all because you invested in some dodgy coin “because it was going up a lot”:
What’s that?
It won’t happen to you because you’re going to sell on time and be part of the few who get to ride the alt-coin wave AND the Bitcoin wave?
You say you’re a well-connected, elite trader with daily insider-info?
Cool story bro.
You had the chance to buy the best asset in history at a rate of 1,700 sats for a single US dollar but decided to buy shitcoins instead. Well, maybe your grandkids will find the memes funny one day. Or, you know, not.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
For Keeps
The boys at NYDIG are not playing around. They are aiming to become part of the backbone that will connect legacy finance to Bitcoin, which sounds lofty and nice. But they are executing fiercely.
NYDIG is positioning itself as a one-stop-shop where the Banks, Insurance Companies, Corporations and High Net Worth Individuals can go for all things Bitcoin, and they are killing it.
In fact this is so bullish, that this will be the only piece of news in this section this week. No shitcoin has a single company doing this caliber of work, So stop scrolling, go research what they are doing and listen to this interview with NYDIG’s CEO
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Curiouser and Curioser
The government seems very curious about your crypto transactions
According to this report, the IRS has been authorized by a US court to seek the Identities of cryptocurrency users.
“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer”
Data released by Coinbase shows that the IRS is not the only government agency interested in your crypto:
In a controversial interview, Edward Snowden criticized Bitcoin’s lack of privacy (from min. 13:10 to 15:35)
His remarks are not wrong, but many felt it was an unfair characterization of the situation. There is no “easy privacy” switch, particularly at the base layer and while Taproot or Lightning won’t fix all of Bitcoin’s privacy problems immediately they are solid steps in the right direction.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Missed the Barn
The jobs forecast was off. Significantly. Dramatically even. In fact they had never issued a forecast that missed by such a wide margin
This is not a good sign at all. The long overdue crash —the one that’s been kicked down the road for more than a decade— seems to be getting closer.
Russia shopping for money
Surprising no one, Russia would prefer to avoid US sanctions and have the ability to transact freely. They are in the market for money that allows them to do that.
Woe is Me
The Bank of England doesn’t like Bitcoin. Right back at you Guv.
Govcoin
The Economist sung the praises of the non-existent but potentially imminent Panopticoins. Electronic fiat that will give governments unimaginable surveillance and control capabilities over its citizens.
They say these new currencies are “to be treated with optimism and humility”. I disagree with their learned opinion. I strongly suggest treating them with a firmly upraised middle finger.
One of the many angles to study when learning about Bitcoin is the role that governments have played in the issuance and control of money (hint: it’s impossible for them to resist debasement) and the subsequent importance of having a money that is not controlled by government.
The implications are as enormous as they are hidden from sight, but in case you are new to the subject know this:
Your money is broken (regardless of what country you’re from)
It was broken by governments present and past
A broken money is poisonous not just to humans but to the entire planet.
The positive impact of returning to sound money is hard to imagine.
You are faced with the alternative right now of choosing Bitcoin or submitting to the governments’ surveillance-coin.
There is no return from either path, choose wisely.
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.
Accumulation
While most of the world is distracted with shitcoins, the smart money is accumulating Sats at ridiculously low prices, taking care not to push the price above $60k (lest the masses wake up from their shitcoin trance).
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.
Bitcoin has spent a little more than nine weeks above the $50k mark.
The next big leg up is coming and all you have to do is nothing.
Never invest in something you don’t understand.
I help families, individuals and businesses develop an understanding of why and how to invest in Bitcoin. If you’d like to find out more schedule a free 30-minute call with me.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.17 - Distraction
Bending the Knee || Dave Portnoy: Bitcoiner || Nexon Next || Houses Not Coffee || Nevercoiners || CryptoTurkey || TurboTax || Red Candle
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.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.16 - Reset
Venmo Me Bitcoin — Then There Were Three — State Lines — Striking El Salvador — IRS’ Hidden Treasure — Eat The Rich? — Screwing Savers — Dip Fishing
TLDR:
Last week’s dump and liquidations are just Bitcoin’s way of shaking off a few degens. Hodlers are thankful for the dip and have been stacking aggressively in preparation for the next leg up.
THE STANCE
My personal opinion on where the ball might be heading.
Seeing the Matrix
Like Neo seeing the Matrix, Bitcoin’s Onchain wizards study the blockchain and extract meaning from it. They come up with fascinating analysis.
A newcomer that I’ve been following with interest is William Clemente III who popped out of nowhere and started dropping excellent analysis:
If you want to read up on On-chain Analysis I can think of no better place to start than these two articles by Yassine Elmandjra and David Puell.
In a Nutshell
It’s difficult to understand Bitcoin’s price action if you don’t understand derivatives —and maybe I should write a blog post about it— but the short version is that they are financial instruments that allow you to shift risk. They can be used for hedging (protecting against possible price movements) or speculating (hoping to profit from said price movements).
What this means is that there are people who can just as easily make money on price decreases as most people can on increases; I like to think of derivatives as instruments that “tense the rubber band” of price action. It takes more effort to pull the band in any one direction and it tends to snap back more violently when the tension is released.
With over $3 Billion in liquidations (explained below-left) in Bitcoin alone, last week was a bloodbath for leveraged traders, but as the quote below-right points out, this is healthy for Bitcoin as it “cools down” an overheating market after six straight months of gains.
Bitcoin’s price dynamics are not always easy to understand. There’s always a flood of narratives after a dip to understand WHY? In most cases it’s both unknowable and irrelevant. Rarely do price drops track truly significant news.
“We believe the root cause of the sell-off had to do with investor positioning rather than fundamental news. Simply put, traders were overleveraged and positioned long, resulting in forced liquidations."
—Greg Cipolaro, Global Head of Research, NYDIG
Instead of focusing on short-term price narratives. Make a plan to buy regularly, stack extra-hard on dips, and study Bitcoin’s long-term value proposition. That will strengthen your conviction in the asset and make these dips feel like blessings.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Venmo me Bitcoin
Following in PayPal and Cashapp’s footsteps, the enormously popular, US-based payment platform Venmo has announced it will integrate Bitcoin into its platform. This is not just big because of Venmo’s size, but also because of what it signals for the industry.
Then there were three
The third crypto-bank in the USA was just approved. Following Anchorage and Protego, NY-based Paxos —who are also Paypal’s cryptocurrency partner— has been conditionally approved for a national bank charter.
Paxos has been conditionally approved for a bank charter from the US Office of the Comptroller of the Currency (OCC), becoming the first crypto firm to get the green light to create an entirely new bank.
State Lines
US States will have to define their positions vis-a-vis Bitcoin sooner than you may think. indeed we’ve already heard from several with Wyoming leading the race, Florida wanting to catch up and Kentucky offering Bitcoin miners a tax-free status.
This week two more states joined the race in their own way:
The biggest takeaway for me is this:
Bitcoin is a race. A global one. Early adopters can benefit disproportionately and the world is starting to split into those who understand this and those who don’t.
If you are reading these words you are already ahead of more than 90% of the world, don’t get left behind.
Striking El Salvador
I was planning on writing an update on Lighning Strike’s rollout in El Salvador, only to realize it I didn’t share the news when it happened. Inexcusable as I’m a huge fan of Jack Mallers.
After a successful US release, Mallers and team decided to start their global rollout in El Salvador. The results speak for themselves.
Put simply Lightning Strike is one of those “change the world” caliber ideas. It will make money transfer fees go the way of telephone long-distance fees. And it can’t happen soon enough.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
IRS’ Hidden Treasure
The recent popularity of cryptocurrencies has not escaped the IRS’ notice. They are gearing up to do something about it:
This one is going to get messy. Anyone who’s tried to do tax reporting on crypto transactions will tell you, it’s not fun.
This is not my area, so I’m just thinking out loud here: When you pay in Bitcoin you’d have to calculate the difference between Bitcoin’s exchange rate at the time of your spend and compare with the exchange rate at which you bought those particular sats to see if you had a taxable gain/loss(?), oh boy.
All I can say is if I were an accountant, I’d be studying how to help people with their crypto tax reports.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Eat the Rich?
Let me be clear, I’m not opposed to the rich paying taxes. I’m opposed to stupid plans. And if you think that raising the taxes on the rich will mean a healthier economy, well I have a bridge to sell you.
I won’t go off on a rant here, I’ll just make 2 quick points:
The rich can afford sophisticated tax strategies.
If you confiscated the wealth of the top 1% you wouldn’t make a dent in the deficit.
Speaking of the devil, have you seen the deficit lately?
Screwing Savers
Convicted criminal and ECB President Christine Lagarde had a message for those who have spent their lives cultivating the discipline of saving part of their earnings and living debt-free: your discipline and responsibility will not go unpunished.
For the young couples of the EU, her message was : get into debt, we are making it a no brainer for you! so I’m including a little reminder here next to her video:
Gigi summarizes most people’s the situation well here and adds a timely reminder that should you choose to not participate in Bitcoin, you may be assigned a role in “The Great Reset”:
It’s not ALL bad though. As a client of mine —who knows what he’s talking about— reminded me:
Negative rates are one of the best opportunities to generate wealth. If you acquire good debt…it’s basically free money
—JPM
He is definitely not wrong.
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.
Slipping
Bitcoin is close to “falling off the board” this week, if it doesn’t manage to hang on to the board it could keep falling until it touches “water” (currently at just over $37.5k). As I state below, I’d be surprised if that happens but it’s not out of the question. Remember that the entire airspace above the water and below the stratosphere is fair game in Bitcoin surfing.
Speaking of the stratosphere, notice how this prolonged chop between $50k and $60k is helping the stratosphere bend upwards —which means Bitcoin can rise higher (Stratosphere currently starts at $98.5K) without crashing
This makes me grateful for this sideways price action —it’s like Bitcoin is being given the chance to get acclimated after a steep climb, allowing it go getter strength before the next leg up.
Dip Fishing
Did you buy the dip? If you haven’t, it’s not too late! Let’s revisit our chart from April 12th. It immediately broke $60k only to spend dive back down to the high probability area at the end of that same week, and dipping down to moderate levels the week after that.
After a couple of exploratory wicks, price dipped into the “Low” probability category and seems to be bouncing straight back up.
If you used the chart as a map to go fishing for dips, I hope you caught some nice ones!
The “white washed” area contains the price activity published 2 weeks ago, the more “vibrant-colored” candles correspond to price action since the original chart was published. Each candle in this chart corresponds to 1 day.
Price predictions are risky business, but I’m happy with how this analysis turned out and I stand by it —I’d be surprised if we dip below $43k, although it’s good to remember that the end of the month tends to be a time for carnage (not that there’s been a shortage), Bitcoin could be shoved off the board yet:
Regardless of whether it goes down further or not, this is a great opportunity to add to your Bitcoin stack. We have much higher to go this cycle.
Never invest in something you don’t understand.
I coach individuals, families and corporations in the Why and How of investing in Bitcoin.
Schedule a free call with me to find out if Bitcoin coaching could be a good fit for you.
DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.15 - Stupid
Place your Bets || Don’t Take My Word || Bitcoining Billionaires || Blockchain Gary || Not a Nation-State Attack || CBOC: Hello Bitcoin || We had a dip
TLDR:
Dogecoin is massively outperforming Bitcoin right now. What can this possibly mean?
The best response I’ve seen on the matter came from one of my clients:
“Dogecoin is unquestionably stupid. The vast majority of the population is also undeniably stupid. I applaud people for taking advantage of the popularity of stupid shit and making bank from it”
—Devin M.
The sad reality is that betting on human stupidity may be better short-term bet than betting on human ingenuity. Stupidity is winning today.
If you bet on Doge congratulations and book some profits.
THE STANCE
My personal opinion on where the ball might be heading.
Place your Bets
Whether most people can see it or not, Bitcoin is the next step in the evolution of money.
This upgrade changes how money is produced, controlled, distributed, stored and exchanged.
Because Bitcoin changes what we can DO with money, it requires us to update our understanding of what money actually IS —this isn’t easy to do.
As I research what’s happening with Bitcoin, Lightning and DLCs (Discreet Log Contracts) I need to stretch my brain to understand what’s going on and my mind is awed by the spectacle of the infrastructure of a better future being built in front of my eyes.
Doge on the other hand, is a cryptocurrency created (kind of) as a joke to combine two popular trends, the Doge meme and cryptocurrencies, the goal was to make it fast, fun and free from fees. It’s early years would see Doge garner a colorful history, in many ways emblematic of much of the crypto scene.
Its monetary policy is shit (unlimited supply), it has virtually no development, security or roadmap. So why does Elon Musk love it?
Because stupid shit is funny. There’s no arguing the facts.
Breaking news: the recent price surge has moved the developers to look at the code again. Yay.
How it’s going:
How it started:
Doge is a fun way to “tip someone”. Say some funny shit, I’ll send you some Dogecoin..
For the record, I’m not a Doge hater. It’s a relatively honest shitcoin, at least it’s not pretending to actually be useful or secure, as opposed to some…
Personally, I hate betting on human stupidity, even when it’s “the smart play”.
Not all bad
Perhaps Doge’s most redeeming and valuable quality to me is its role as a person filter.
When plebs celebrate their “sick gainz” with Dogecoin, I’m laughing right along with them. But when someone —especially someone who pretends to be an educator in the space— disingenuously treats Dogecoin as something other than a hilarious pump-and-dump engine, you can safely label that someone as a scammer. Few bigger or more disappointing than Raoul Pal:
He knows better, he’s just hoping you don’t. I hope you prove him wrong.
Contrast this with Willy Woo’s sober look at Doge:
Willy knows that —despite there being no good reason for it— Doge has managed to remain alive and periodically pumps and dumps. And for a shitcoin, that’s all you need.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Don’t Take My Word
Bitcoining Billionaires
Legendary fund manager Ray Dalio has been one of those puzzling cases for Bitcoiners. His extensive knowledge of long debt cycles and appreciation for gold would seem to make him a natural candidate for rabid Bitcoiner.
As of his latest writing on the topic, his attitude had shifted to “I have these concerns but I could be wrong.” He’s still not rabid, but he’s now recommending Bitcoin.
Welcome to the team Ray, we’re honored to have you. Some laser eyes would look great on your profile pic ;-)
Blockchain Gary
Cheers from the Bitcoin community as Gary Gensler, who actually understands Bitcoin —he taught the course Blockchain and Money at MIT— was confirmed as chairman of the SEC.
Mr. Gensler joins several other high-ranking members of the US Governments who are pro-Bitcoin.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Not a Nation-State Attack
The Xinjiang/Inner Mongolia provinces in China host a sizable number of crypto miners during the dry season (they move to Sichuan/Yunnan during the wet season) .
A recent accident in a coal-mine (either flood or gas explosion, it’s hard to tell) and the subsequent inspections post-accident have caused widespread power outages in the region.
The outages had a visible impact in Bitcoin’s hash rate —the measure of computing power dedicated to securing the network.
It seems 8 miners were rescued and 21 remained trapped. Best I can tell, rescue efforts remain underway.
Critics immediately jumped on this to make the point that an accident in a coal-based (dirty) plant had made a significant dent on Bitcoin’s hash rate, ergo Orange Coin Bad.
The point is a little more nuanced than that. Apparently the accident didn’t just shut down a plant, but the whole local grid
The most interesting takeaway for this incident is that this accident is a great model for what a national ban on Bitcoin mining would look like. Some miners go offline, and the temporary hash rate decrease results in slower blocks and higher fees (therefore higher miner profits).
This incident will cause a very steep hashrate drop. Will the network be attacked? Tune in next week…
CBOC: Hello Bitcoin
The first official positive mention of Bitcoin from China’s government came from a high-ranking official at its central bank:
Perhaps they heard Peter Thiel’s speech?
Bitcoin as a power tool in geopolitical chess is highly underrated and most definitely not priced in, stack accordingly.
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.
We had a dip
You can’t understand Bitcoin’s price action if you don’t consider leverage.
When traders are over-leveraged that means that a lot of people are betting price will move in one direction and it’s very profitable for whales to dump some coins and make the price drop in order to trigger liquidations —which cause whales to scoop cheaper coins back up.
It seems over $4B were liquidated in this event. Ouch.
Still, Bitcoin remains “on the board” all systems seem nominal despite the drop in hash rate and outlook is still wildly bullish for the mid and long term as far as I can see.
Last week’s daily chart (on the left) is aging well so far. Bitcoin broke through the $60k resistance and promptly came back down to test supports.
The (more up to date) chart on the right shows how it’s common for Bitcoin to re-test supports after making all-time highs. On Feb 23rd the $50k support did not hold and Bitcoin proceeded to go lower and test the $43k support (which held).
On March 22 it tested and broke the $55k support going down to the $50k line. And now, this latest test broke the $55k support on a daily wick but the body of the candle has (so far) managed to hover above $55k.
I stand by my original assessment, I’d be surprised if we go lower than $50k again.
I don’t generally like making price predictions but I believe that we’ll close the month below $58,800 Why so specific? because Bitcoin has never printed 7 green monthly candles in a row and I don’t think that will change right now.
So stack hard, because starting next month we’re going to give Doge a run for it’s money ;-)
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DON’T TRUST, VERIFY
Always DYOR (Do Your Own Research)
I am not a financial, tax or legal advisor. All of my content is intended for educational purposes and should not be construed as financial advice
2021.14 - Brutal
Insurers DIG BTC || Et Tu Bloomberg? || Semper Fidelity || Weaponizing Bitcoin || Coinbase IPO || HSBC: HFSP || SHE Gets it || The Surrender Of King Arthur || CCI: Friend or foe || Stonks Go Up? || The Cruelest Tax || Knocking on the Ceiling
TLDR:
The fight to take out $60k has been fierce. If doesn’t end decisively this week, it’ll likely drag on for the rest of the month and we should see some nice dips.
Regardless: keep stacking hard.
THE STANCE
My personal opinion on where the ball might be heading.
Bitcoin’s global, 24/7 price discovery is a remarkable and somewhat mysterious thing filled with complex dynamics and high drama. It’s probably the closest thing we have to a real-time rendering of the mythical “invisible hand” of the market.
The scenario right now seems starkly clear:
Bitcoin is not only growing in adoption as a passive reserve asset, it’s also growing in functionality as a financial instrument. As insurance companies, credit card companies, local governments, oil and gas producers and countless other entities start to understand Bitcoin and what it can do for them.
Maybe $60k will hold for the rest of the month, maybe it won’t, it doesn’t really matter. If you can see what’s happening, it’s painfully obvious that Bitcoin is a monetary juggernaut that is upgrading the very concept of money. The price is simply a function of people waking up to what is already in front of them.
Some will join of their own accord, others because they had no choice:
Make no mistake, regardless next week’s/month’s price, one thing is now clear: they are ALL coming.
Stack hard, HODL harder.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Insurers DIG BTC
NYDIG has been firing on all cylinders . Their latest announcement has them partnering with insurance companies to develop Bitcoin strategies that will protect their ability to pay out to policy holders.
"Fiat depreciation causes inflation in fiat premiums, while collapsing the purchasing power of claims. We see a brighter bitcoin-powered future for the billions who depend on the insurance industry every year.” —Ross Stevens
It would be difficult to overstate the size of this opportunity.
Et Tu Bloomberg?
Bloomberg joins the chorus of wild price forecasts from mainstream outlets with a bold $400k call should the pattern from the 2017 run repeats.
Semper Fidelity
Fidelity is one of the few institutions that were early to Bitcoin, they understand the space well. They may be stating the obvious, but coming from them it’s big deal. As long as governments keep raising to debase their currencies, Bitcoin will shine bright.
We’re not going to get out of this stimulated environment anytime soon. —Tom Jessop
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Weaponizing Bitcoin
Billionaire Peter Thiel is a long-time Bitcoin maximalist. He’s also the founder of Palantir (think Big Brother Corp). His reputation seems to be “you don’t want him as an enemy”.
He made some interesting statements about Bitcoin at a recent event":
Consensus among the students of Bitcoin tea leaves seems to be that Thiel is not advocating for the US government to crack down on Bitcoin, but rather to look at its adoption seriously —perhaps adding a Palantir surveillance kicker— before China takes an insurmountable lead.
Coinbase IPO
Coinbase is a polarizing company. Honor where honor is due, their interface is clean, easy to use and they have become a well-established brand name (surely more so after the IPO), all of which makes them an attractive platform for beginners. Their size and professional custody also makes them an attractive option for large corporations —they are the crypto-equivalent of “no one gets fired for buying IBM.
Their success is not in question:
But not all is roses when it comes to Bitcoiners and Coinbase, in fact they are often denounced as being anti-Bitcoin.
Grievances include Coinbase pushing “crypto” ahead of Bitcoin (sometimes with a tenacity that borders on the ridiculous), their aggressive deployment of Chainalysis (crypto-surveillance systems) on their customers and their lackluster reputation in customer service —among other issues they are infamous for going offline whenever there’s a pronounced spike or dip.
Perhaps most damningly, they have failed to show faith in Bitcoin as an asset, as evidenced by their holdings, which are pitiful considering both their revenues and how early they got into the game:
Add a very rich valuation to the mix and one wonders if the IPO will be a worthwhile investment. Personally, I’ll just keep holding Bitcoin.
HSBC: HFSP
In a remarkable show of chutzpah, HSBC announced it would no longer allow its customers to make further investments in Microstrategy under the “Orange Coin Bad” blanket argument.
Will they have the guts to do the same with Coinbase once it goes public? Dumb and patronizing moves like this will make it increasingly obvious which institutions will not display the adaptability required to survive in the era of decentralized money.
From me to HSBC: Have Fun Staying Poor.
SHE Gets it
I’m grateful that the US has legislators like longtime Bitcoiner Hester Pierce, who understands that banning Bitcoin is not the way.
The Surrender Of King Arthur
BitMEX founder Arthur Hayes surrendered to Hawaii authorities. He and his co-founders face up to 5 years in prison for failing to take the necessary steps to prevent money laundering in their exchange.
CCI: Friend or foe
On the surface, the announcement of the shiny, new Crypto Council for Innovation (CCI) seems benign enough
The Crypto Council for Innovation (CCI) is a global alliance of crypto industry leaders…
…comprises some of the leading names in crypto, including Coinbase, Fidelity Digital Assets, Paradigm, and Square. —CCI Website
Seasoned Bitcoiners know better than to brush off this announcement lightly though, they feel the CCI could simply be the new face of an old foe, the DCG —the consortium that tried and failed to push for big blocks back in the 2017 blocksize wars.
Beautyon describes this at length in this highly recommended thread (which has apparently been censored on Twitter) how he believes the consortium will try to kill Lightning in favor of a proprietary database shared between the consortium members as well as any privacy-enhancing improvements to Bitcoin.
The existence of the CCI could be setting the stage for a new war between Bitcoiners. I was new to Bitcoin when the 2017 blocksize wars came. I followed them with interested but could not get up to speed fast enough to participate. Seeing them firsthand made a deep impression on me about the importance of running your own node.
If you are invested in Bitcoin, this is the time to become a proper part of the Bitcoin Network and Run Your Own Goddamned Node, it’s no longer that difficult or expensive.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
Stonks Go Up?
You thought your stocks had been doing well? It seems they may just have been keeping pace.
If they used leveraged stock buybacks to achieve these results the cost of staying in place was a weakening of their balance sheets.
The Cruelest Tax
Inflation has proven impossible for governments to resist, it goes almost unnoticed when low but its devastating effects are very palpable when it inevitably starts running out of control.
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.
Knocking on the Ceiling
Bitcoin has been bumping against (even breaching) $60k for over a month now. I the chart below we see that Bitcoin’s “board” (currently just north of $55k) is on a trajectory to bump against the $60k ceiling soon.
In my mind, the “crash up” to $65k is ultimately inevitable, a question of when, not if. The real question on the table is whether we will revisit $50k before going up, which we well might.
Could we drop lower than $50k? Sure. Do I think it’s likely? no I don’t, but Bitcoin has surprised me many times before.
I wouldn’t “wait for the dip” to buy. For me, fishing for dips is an accumulation strategy for people who already have a decent allocation to BTC, not for someone building an initial position.
Each candle in the chart represents 1 day. My comments are a personal opinion on the likelihood of BTC revisiting each price range.
Remember: ALL LINES IN THIS CHART ARE IMAGINARY
There are thousands of ways to interpret/draw charts, mine are no better than others. I claim no edge here.
The one thing that you need to keep in mind to make sense of price action at moments like this, is that whales can make money from price going up and from price going down.
So whenever “everybody knows Bitcoin has to go up” that’s the perfect time for whales to dump coins on the market, trigger stop-losses and liquidations, and scoop up some cheap coins. And they know that we are about to run out of sub-$60k Bitcoin, so they’ll do their best to get as much as they can
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