Good Morning Everyone,
The macro environment has clearly changed over the last 8 months. We’re in the middle of a global energy crisis. The trend of globalisation appears to have come to an end, and de-globalisation looks to be underway. Inflation is at 40 year highs in the US, and there are many indicators suggesting things within the TradFi system are breaking. The fed is posturing like they are going to raise rates until they win the battle against inflation. The costs of living have skyrocketed and consumer confidence is at all-time lows. The bitcoin bears are celebrating the crashing of the price relative to melting US ice cubes, and everywhere you look the sentiment is bearish af.
Well, we had a good run. Bitcoin seemed like a good idea at the time. The possibility that we could have a global monetary substrate for humanity that is tethered to the fundamental fabric of life, being energy, that is completely free of human intervention, and entirely driven by market forces as opposed to the artificially engineered system we currently have; where the most important number which effects every economy in the world - the fed funds rate - is decided by 10 people alone in a room - has clearly proven to be inferior.
I guess it’s time to hang up the boots. Bitcoin is dead.
Excuse the sarcasm on this fine Monday morning, but the emotionality of markets makes me laugh harder than Ricky Gervais or Dave Chapelle. While no doubt everyone would prefer to see higher prices, obviously. The reality is, this is a marathon - not a sprint.
People looking at bitcoin as a risk-on tech stock or a get-rich-quick scheme will likely continue to be disappointed. Consider what bitcoin is actually solving for.. Anyone that thinks the separation of money from the state is going to happen overnight, clearly is not grasping the enormity of what is at stake here.
The truth of the matter is bitcoin is definitely being traded like a high-beta risk-on asset. Meaning, that it’s like a more the emotional little brother of the broader market. While in the short term this is certainly the case, over the long term it’s the best performing asset of the last decade and over the last two years has outperformed gold, the Nasdaq, and the S&P index by orders of magnitude.
Jan 2020 - today
* Gold +24%
* S&P +14%
* NAS +31%
* Oil +115%
* Bitcoin +200%
The reality is, not only is bitcoin alive and well, bitcoin is operating exactly as designed, and that includes having no intervention from a single human to pull the strings - regardless of the situation. When you consider the chaos going on in the TradFi world with the ECB convening an emergency meeting with concerns around Italy, Japan struggling to maintain their peg, the fed in full on firefighting mode and layer on top of that the Terra blow up, which lead to the Celsuis blow up, which looks to have impacted major crypto lending platforms; the bitcoin network looks phenomenally orderly.
Given there is no buyer of last resort as there is in TradFi with the fed, this means the market is much more honest in it’s movements which also means volatile, but all things considered the fact it continues to just chug along highlights bitcoins stability in amongst a world of chaos.
This clip below from CNBC captures the state of play beautifully, and provides a glimpse of where we’re really at.
In talking about the price drop the interviewer comments:
“it’s still a lot though for something that we don’t really know what the heck it is”
To which Jim Cramer responds:
“Well it really isn’t anything”
I couldn’t agree more with Odell here. There is no clearer demonstration for how most in normie land are viewing the beast, that is bitcoin. Most are just puppets to the whims of the market. Price goes up, and bitcoin is going to change the world. Price goes down, and it’s a ponzi scam that’s going to zero.
Times like these demonstrate who as taken the time to do the work, and who has not. Who was simply part of the crowd following along with the hype of the market. Conviction is a bi-product of knowledge, and you have to have gone deep on bitcoin to have acquired this knowledge. Those that have done the work to understand bitcoin maintain a massive informational edge.
Many will buy the feds tough talk and think they are going to be able to continue to hike rates into a recession, however if you cast your mind back to the beginning of the pandemic when every TradFi economist and central banker said there would be no issue with inflation, and pretty much every bitcoiner called this out as absolute nonsense - who actually told the truth?
Bitcoin is the truth in a world of political noise, and for the bitcoiners who have taken the time to develop deep conviction, it’s in moments like these where their edge is most apparent.
Long live the king.
Hope you all have a great start to your week. I’ll talk to everyone tomorrow.
AK
