Bitcoin’s Status Today: my personal perspective
I haven’t posted for awhile – I’m pretty busy around the homestead – but given my past advocacy for bitcoin and its price action I think it’s incumbent on me to say something during this tepid and disappointing period.
Nothing has changed for bitcoin on the fundamental level. In fact, I’d say its fundamentals get stronger all the time. The El Salvador adoption is certainly bullish regardless of how it plays out over time. The fact now is that a Sovereign has added bitcoin as a currency. It is a foregone conclusion that more countries will follow. Likely, it’ll be more developing countries first – the very nations that both want to get out from the USD lock-hold on their economic development, and need to get out from under the controlling thumb of IMF, World Bank, and dollar hegemony – whose controllers are as interested in doing what’s right for the common people of the world as is the CDC and WHO concerned for our suffering under bogus Covid crisis lockdowns and its economic destruction.
Hey, the same people benefit from both abuse systems, so I expect more official push-back from both international and First World banking structures who stand to lose big money and influence. They’ll pressure El Salvador, and other Central and South American countries that are interested in endorsing the option of bitcoin for their mostly unbanked peoples. If the powerful don’t nip this revolution in the bud, their system will fail, and they know it. The monetary revolution is now in full play.
So I also expect we’ll see more FUD from captured media, from officials in various institutions, governments, and alphabet agencies, and (of course) from politicians. LeGarde seems particularly aware of the systemic risk bitcoin offers. We’ll also see more endorsement – overt and implied – of alternatives to bitcoin because no other coin offers the high degree of freedom from coercion that exists in bitcoin’s leaderless, borderless, dispersed network – as the current episode of China banishing bitcoin mining shows.
China demonstrates Bitcoin’s resilience. The Bitcoin system has been hit by the forced shutdown of (by some counts) 50% of the coin’s mining operation (hashrate) as rigs are moved out of the country; and the effect on the network’s operation and security has been – exactly nil. Nothing. This is why we say that as long as one computer runs a node the network will continue; and as soon as a second computer downloads the protocol, the network re-establishes itself and starts metastasizing. And the hashrate difficulty adjusts to account for the amount of computing power devoted to the mining process, keeping the block creation rate averaging one block every 10 minutes, forever. (This is why everyone interested in bitcoin should run a full node; it costs about $250 to set one up.)
Meanwhile, we’re going to see the network effect of influential persons move bitcoin’s value (think Elon, or Saylor). At least for a while longer. And especially in bull market scenarios when so many gamblers enter the space hoping to ride the bull or force a contrarian position. Easy emotional adoptions are always balanced by easy emotional abandonments. One day that will moderate (actually, it’s already moderating), then essentially end – but I suspect that’s a cycle or two away yet. For now, along with the powerful upside potential resident in buying and holding bitcoin through thick and thin, we will see long periods of sideways action and depressing declines in value exactly when we’re all hoping for big gains.
Bitcoin’s value is not in emotional roller coaster runs and retreats. As I’ve illustrated before, the 4-year cycle repeats in stages. If history is prelude, then there is a significant rise yet to come; it will be later this year and possibly spill into the start of next; and it will be followed by a throat-closing decline, followed by a new, higher mean leading into the next halving (which is built into the protocol base layer, and will take place in spring 2024). Then the cycle repeats.
It’s not short term trading but the long term trend that is the investor’s friend. In the adoption that the long term trend promotes is the assurance of bitcoin’s future value. The emergent move toward sovereign adoption is a predicted stage in bitcoin’s development into a world currency and, frankly, it’s come sooner than even optimistic bitcoin maximalists anticipated.
My point, to reiterate, is that the fundamental case for bitcoin, and bitcoin’s fundamentals, have not changed. So I’m still very bullish and irresponsibly long. I think it’s even more true now than at any prior time that the mistake is to not own at least a few satoshis. And with the price so low, this is a good time to acquire a position or to build up an existing allocation.
The technicals, on the other hand, suck. Right? At least, right at this moment. Yet, in comparison to past cycles, we’re not doing that badly, as the charts here illustrate.
I’m not a technical analyst so I can’t indicate when is the “best” time to enter. Frankly, I don’t worry about that. I buy every week a scheduled amount on a scheduled day: basic dollar cost averaging. I’m down about 30% on what I’ve purchased that way via Swan since last summer – mostly because I’ve done a stellar job of putting in large extra purchases as the price picked up (anticipating the restoration of the bull phase), only to see the price capitulate and return to lower choppy levels. (Full clarification: my deep position is strongly in the black, some of which I’ve held from 2014; it’s my recent buying since abandoning Coinbase for regular Swan Bitcoin purchases that’s deeply red.)
What experience has taught me is that bitcoin’s dramatic rising action takes place in a very few days of the 4-year cycle. The rest of it is either scary decline or boring choppy sideways action. But the declines don’t return to the previous base low, so in any 4-year period of bitcoin’s history that you can pick, the price is higher at the end than at the beginning. Now with large corporations entering – even if more slowly than we’d originally expected from the early post-Saylor hype – and with the first nation legalizing bitcoin as transactional money, the probability of it declining below a previous baseline is significantly reduced. Not eliminated – never eliminated – but much less probable. Despite the pushback from powerful governments and international monetary agencies.
What is most likely, in my opinion (worth every penny I’m charging for it) is that governments will bifurcate in their bitcoin goals. Developed economies will try to discourage or block bitcoin adoption; developing countries will increasingly embrace bitcoin as a parallel money. And because bitcoin holds and grows value over time despite its volatility (which is just free market price discovery), and does not require access to a bank account, the peoples of those countries will tend to migrate from their local currency toward bitcoin. Increasing bitcoin adoption will facilitate p2p and b2b cross-border trade without reliance on USD’s availability or volatility, which is trending toward losing value over time. Game theory very nearly guarantees the longer term outcome, whatever power the US and international money agencies exert, will be in bitcoin’s favor as a constraintless trade money and better store of value over time. (The longer you hold bitcoin, the more it’s worth holding onto it; that encourages saving, and we know that increased rates of saving leads to the development of a strong middle class, which leads to a host of virtuous outcomes.)
Anyone who approaches bitcoin as just another commodity trade will be shaken up and shaken out, repeatedly, and at personal cost. We who embrace bitcoin’s fundamental use case will hodl through all of the shaking, and will realize its fruits over time. More importantly, in my opinion, our hodling and our running of full nodes will strengthen the coin and help advance the global monetary reset that is bubbling up from the dispossessed – and we’re all dispossessed; we in the First World just haven’t realized it yet, but the breaking supply chains, the concocted reasons for additional lockdowns, and the conversion of people from home ownership to permanent rental status will soon combine to teach us our place.
I embrace bitcoin partly because of its counter-revolutionary promise. A coin that the sovereigns can’t control and can’t stop is embodied hope. The bitcoin-dominant monetary reset future is a whole lot more hope-filled and energizing (at least, to me) than the WEF’s plans for a global monetary reset that impoverishes and reduces us to company-owned peasants in their neo-feudalistic wet dream. For that reason alone, you can’t get me off bitcoin. The steady rise of bitcoin’s mean price is icing on the revolutionary cake.
Your perspective is a reminder of all the reasons why I first bought some… just over 6 months ago.
I so agree that Bitcoin is a potential counter revolutionary move against the consolidation of power by the oligarchy. The money system allows this consolidation of power.
The ability to:
1. print money out of thin air
2. Loan it to cronies at a big funds at near zero interest.
3. The fund buys up all the single family homes….
4. Then rents the homes back to the working class who have been priced out of the home market.
And of course, buying up hospitals, physician groups, pharmaceutical companies, gas stations, shopping malls, auto repair chains, farm land, oil fields, refineries, newspapers, media platforms, server farms, etc., etc.
“You will own nothing….”
This money magic trick is at the core of the consolidation project.
Just saying no.
My savings are in Bitcoin.
My Mom told me not to catch a falling knife, whatever that means. A chainsaw injury is bad enough. Okay, I hit my head on a sidewalk but someone was chasing me with a chainsaw.
What does bitcoin have to do with knives? Can the tokens injure you? I know a bag of hammers can.
Good to see you posting again, VTG.
You can blame me for the fall in BTC. I finally took the leap into it about a month ago. (Fortunately, I’m dollar cost averaging my way in.)
Serenely HODLing (my modest stash)….
Plus, if you hold staking/PoS coins or if you hold your PoW/BTC in a custodial wallet, you can get huge annual interest (like up to 6.5% for BTC and 12% for stablecoins/digitized fiat)… which is quite a bit higher than what the banks give you for your inflationary fiats, in fact these days they charge you to offset the negative interest rates and even without that the interest returns don’t even cover the inflation, hahahahaha, how ridiculous!