It’s November, usually the worst month of the first bear year when everything goes up in flames and full despair sets in.
But, don’t despair. Emotionally you all are, there’s nothing you can do about that, just keep your head cool.
Sure some of you are going bankrupt, FTX, some are almost there, Genesis, some are long past bankrupt, Luna, and some are in denial about being bankrupt, a lot of miners.
Everybody sad after a year of beating, and the thing just keeps going down. It won’t stop, until it does.
It’s December soon, usually the best time to buy during a first bear year Christmas. This time so far it has been precisely to do the dot as before, so anyone’s guess whether the Christmas bit will also apply.
Hodl though, as a matter of principle. We should try and keep 50% of crypto ownership in public hands for as long as possible.
Our grandpas were forced to give up their gold. Still some of them managed to pass down some gold coins, alas moms sold em for color TV.
The public now has a minuscule share of gold ownership, with it more in bank vaults and those of governments.
That story might repeat with bitcoin sometime in the future. Institutional investors will most likely keep accumulating. At some point they probably will get to 80%, as they have with everything else.
But for now, we’ve got the choice of whether to give it to them at all, and at what price. That’s hodl, the principle, except miners don’t get such choice and so we get the yoyo.
Crypto however is very valuable. It was worth $3 trillion at the peak, the entire GDP of the United Kingdom.
In the despair down here, it is very easy to forget a lot of it. Everyone sees how big the price was and how small it is now, and despairs.
It’s just part of the game. Nakamoto has clearly designed the tokenomics of bitcoin to make a point about wider economics: that is monetary supply manipulation is the cause of booms and busts.
That it has played so well so far is curious, and the continued inability to price it in is even more interesting.
We thought this time maybe we’d be on an accelerated rate since we’ve got these sophisticated investors and their tons of money that can be used to price in, alas it appears the bear cleanup needs that November finale for that sweet despair.
In the absence of complete information it is of course weird to suggest any mathematical laws, a direct cause and effect, which is why we’re making our point more on principle to bypass that.
This is the only asset that can be used as a means of exchange digitally that is outside of the banking and fiat system.
That in itself gives it immense value, and its volatility is not something unique. The Turkish lira has performed even worse than bitcoin. The Venezuelans peso is now in its 6th year of devastating hyperinflation. The Lebanese money, the Sri Lankan money, well both of them apparently don’t have any money at all.
The British pound was worth two to the dollar, now it is near parity. Sure, it happened over a decade, but in just a year the dollar has gained a lot and many currencies have lost quite a bit.
Bitcoin at least tends to be volatile in both directions, as incredible as that might seem in this down only despair. While fiat by definition is targeted down only: 2% devaluation a year.
And yet in some ways many want the bitcoin just for the fiat, which is where the ponzi accusation comes from with its premise being that bitcoin has no value in itself.
A global payment network with inbuilt accounting and clearing houses where there is no manipulation at the protocol level in as far as one btc is always one btc, is an upgrade of money.
Its value derives from its function, which we summarized above. It also has yield, though in a different sense than debt based activity in as far as the desire or need to use bitcoin directly reflects on its price if there is an increase in such use or a decrease.
While stocks are an artificial concept that in theory do not have to reflect the profitability or loss of a company, bitcoin is more concrete in as far as bitcoin is both the product and the stock.
The currency therefore has use at least as an alternative and in some countries as an option to participate in global commerce.
From that derives an entire ecosystem of services to facilitate that use, and some of these services are not an upgrade, instead they are the equivalent of putting up a scanned paper on a website and calling it the internet.
They are centralized databases that can be manipulated at whim, very much the opposite of bitcoin, the protocol.
Justin Sun apparently wants to bail out one of them, the bankrupt FTX, although he appears to be talking more about buying their assets at bankruptcy prices according to WSJ.
Andrew Keys, who used to be second in command to Joseph Lubin and is now at Darma Capital, wants to buy all of the Genesis eth, stating:
“Im interested in acquiring all of Genesis Trading and Digital Currency Group ethereum assets.”
All of them. Why not, they on fire sale. But, it’s despair. Holding is very difficult right now. Some very unlucky ones might even have to sell to cover necessary expenses.
We did warn in these pages back in spring to get out unless you are sure you won’t need to touch the assets. Alas you can’t predict the future and what might arise.
Hopefully it won’t be many that are so unfortunate, however. For some there will be forced holding, and maybe the FTX bankruptcy works out as well as the MT Gox one for them because FTX does have some assets.
That’s crypto, a ruthless game of survival while pioneering the frontiers to bring about raw value in actual new innovation.
And it is because a lot of this innovation is something that has never been done before that it is taking some time, with second layers in particular.
Little in crypto is iteration, at this stage. Weirdly, this gets the criticism that there’s nothing in crypto, or it used to. Well, it’s hard stuff and unless you’re looking at the pipelines, it is not very notable stuff.
But, it’s the season so they can say what they want. All we’d say is don’t despair, even though it is the despair stage. A despair stage that has just started, it might last a few months, but this has always been crypto.
It’s a ruthless asset class because it is so different from anything else or indeed anything the world has ever seen.
It’s a pure asset, the most abstract of abstractions for the concept of money. Designed as if in a lab to have all the economic qualities you want, though not scalability so far.
That makes it unique and it is also power as well as control over the measurement and storage of value.
An actual ruler, that doesn’t increase its centimeters or inches based on whatever some committee might say, but keeps them fixed.
So despair all you want, just know that the crypto story has not quite yet fully began, and that so far the only way to beat that crypto game is to hodl on.