An Ode to Bitcoin Pricing

Throughout the year, bitcoin has zigged when we thought it would zag. Every sense of expectation has seemingly been tempered, while the opposite thought has occurred.

October was supposed to be Uptober, yet we received the worst October for bitcoin in years.

We also experienced the highest liquidation event in crypto history.

November is a week in, and bitcoin has dipped below $100,000 for the first time since late June. The current sentiment in the bitcoin world is “Extreme fear.”

Ego and overextending yourself are what make people have “extreme fear” when it comes to bitcoin being priced at $100,000. If you dollar cost average and live within your means, $100,000 per bitcoin is a blessing.

For reasons like this, there has never been a more important time to understand bitcoin. Education is key.

If you cannot defend or discuss why you hold bitcoin, as in explain your investment thesis, then there is no reason why you would not capitulate when bitcoin goes down in price. Look at $NVDA ( ▼ 0.53% ) , it’s down over 6% from its recent all-time high, are you capitulating there? Or are you trusting that it is a good long-term asset to hold?

Bitcoin is historically a volatile asset, and in bull runs, pullbacks of over 30% are common. Currently, bitcoin is down about 22% from the highs, and this pullback is one of 5 corrections this cycle of similar magnitude. This pullback is also smaller than the 2 pullbacks we have already experienced. In April we went down to ~$75,000.

Success with bitcoin requires a low time preference, patience, and realizing the characteristics of what bitcoin is.

Bitcoin is the scarcest form of currency in the world.

And in an ever increasingly digital and global world, bitcoin will win.

My thesis has not changed; the fundamentals surrounding bitcoin have never been stronger.

$100,000 per bitcoin is a gift.

The next point is a continuation of the time horizon you should have when investing in general, and definitely have with bitcoin.

Capital can move bitcoin as we have historically seen, and more recently, with a much larger asset—gold. There is no denying this. However, praying for an overnight omega candle in the price chart of bitcoin is not an effective strategy. The only effective strategy is not trying to time the market and buying bitcoin via a dollar cost average strategy and sizing up a buy when the price goes lower, and then holding for the future. The lower your time preference is, the higher your differential for the future is, the better off bitcoin will treat you and your life. This is a historically true statement.

At the same time, it opens up a discussion of what a life-changing return on your investment is. This is a can of worms because obviously a 5x (500%) return on a $5 investment is dramatically different than a 5x return on $500,000 investment. Size matters in investment just as much as the returns.

But let’s talk through my main bitcoin thesis within the next decade. Bitcoin will pass gold in market cap. Repeating a statement I say constantly—in an ever increasingly digital and global world, bitcoin is better than gold in every meaningful way. Therefore, it is logical that bitcoin will pass gold in market cap.

Again, I want to emphasize, this is not in the next week, this is not in the next month, this is over the next 10 years. Think of how different your life was 10 years ago from today, now think of what 10 years from now can look like.

Long-term investing is the strategy that wins.

Now, in the event that bitcoin passes gold in market cap over the next decade, you yield a return of over 10x (1000%) at today’s prices.

Is there an asset, company, or idea where you can have a similar level of logical certainty over the next decade?

I would argue no.

Yes, AI is a huge talking point, and there will be tons of money to be made if you invest in the right company, at the right time, for the right amount. These “if” scenarios fail to mention how many years of stomach-turning volatility you may have to stomach along the way to Valhalla! However, those actions are a lot more complicated and filled with chance than just buying and holding bitcoin. AI could also just be a facade (I don’t believe it is a bubble for the record)! You never know…

The point I am making is that yes, there are opportunities to outperform a potential 10x that bitcoin may yield over the next decade, but it would require you to be early and right about the next technological innovation in the world.

A bet on bitcoin is a bet on sound money and the idea that people will continue the thousands of years pattern of investing in hard assets.

Stack SATs.

The views and opinions expressed here are for entertainment purposes only and should, in no way, be interpreted as financial or investment advice. Always conduct your own research when making an investment or trading decision, as each such move involves risk. Nothing contained in this e-mail/article constitutes, or shall be construed as, an offering of financial instruments, investment advice, or recommendations of an investment strategy.