It’s all about the D!

Ok, terrible clickbait title, I know. But you clicked it and you’re here? Nice, I’ll keep this one short.

I wrote this Bitcoin is Dead post on 6 June 2022 when the Bitcoin price was around $30k, and here we are on 12 April 2023 and the price is once more around $30k. Feels different on the way back up doesn’t it?

When FTX went down it felt like the end, but what we just witnessed was a standard Bitcoin bear market. An 80% drop from the peak is the norm in the 4-year cycle. $69k to $16k – close enough. Here’s a great video of Bill Miller x2 talking about why they’re bullish on Bitcoin. Check out the price ticker in the top-right corner.

That’s called conviction ladies and gentlemen. Likewise Michael Saylor and Microstrategy, whose Bitcoin position just made it back into the green.

Anyway back to the D. The D of course stands for Demand. You knew that. When you have an asset with a known, fixed supply, all you need to ask yourself is ‘What is going to happen to demand?’

The US seems to be doing its best to block crypto, and specifically using the recent bank crisis as cover for removing on and off-ramps to crypto. That would be bad for demand, right? Yes, maybe, but what happens to demand for things when people are told that they can’t have them? Oooh, Bitcoin is too risky for you so we need to protect you…

Meanwhile, Hong Kong is ramping up on crypto. If America wants to block innovation then guess what? It’s just going to move elsewhere. Good thread on Hong Kong’s crypto reopening here.

Is demand going to keep rising? That’s all you need to ask yourself. If you think no, then stay out of it. If yes, then you want to own it. What do you think CBDCs, the ultimate big brother government-controlled money, are going to do for demand for a decentralised, permissionless protocol like Bitcoin?

So, $30k. Are we too late? Did we miss the bottom? Probably, yes. The idea was always to dollar-cost-average through the bear market. Will we get another bite at lower prices? That depends more on the macro situation than anything else. Remember March 2020? The whole world went into a panic about covid and BTC sold off from around $9.5k to $6.5k. It would take something like that to get back to $16k again, which I would say is unlikely. However, we are not yet done with this Fed tightening cycle and a summer recession is looming. A significant sell-off in risk assets is very much on the table. It takes guts to buy then, but take a look at the BTC chart from March 2020 to today.

Can you see the March 2020 panic? It’s the little red candle in the bottom left (8 candles from the left) That’s the one that had everyone terrified. If we get another one of those, what are you going to do?

For more on the thinking behind investing in Bitcoin, read my previous post: Do you want to be right, or do you want to make money. The D doesn’t stand for difficult, folks!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

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