Bitcoin BTC
March 06, 2024 - 1:40pm EST by
2024 2025
Price: 67,000.00 EPS 0 0
Shares Out. (in M): 20 P/E 0 0
Market Cap (in $M): 1,340 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 0 TEV/EBIT 0 0

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Me, still chilling on my untouched giant pile of bitcoin as it regains 350-bagger status:

I am humbly pondering how I am going to lose so much money once my fourth crypto winter starts, after another higher peak, probably nowhere near here, in either time or dollars.  I wonder how many more multiples bitcoin's price will rise between now and then.

The only thought disturbing my peace is this: I told you to buy bitcoin and ethereum and ETHE, within a week of the crypto bottom, for the right reasons in all three cases. You knew it was my first such suggestion to you in my ten years of ownership. And you did not buy.

I will sit in repose and reflect further, until I fully accept the truths that I did my best trying to serve you; that each traveler must choose their own path; and that I had more path-guiding success than some of my fellow crypto-travelers did - just not with you.

But there remains hope. I endeavor herein to yet make you money by softly reminding you that it is not too late to buy now, at new all-time highs, because it is never too late. As I have previously noted, while in the guise of an unlovely but powerful and indestructible Warthog:

It can't be overvalued if there's no intrinsic value.

Thus it was not too late during, or even at the peak of, the enormous run-ups I endured in 2013, or 2017, or 2021.  No matter how high the price rises, there always remains >1,000% upside with only 100% downside. Or more realistically, probably, on a multi-year time-frame, 50% downside.

I note that my sister-in-VIC recently, despite all these years of contrary evidence, replied to a gentle prodding from me with "tulips."  This is a crucial point, and I shall instruct you on its wrongness:

"No intrinsic value" + "price going up" does not = "bubble."

Bubbles involve very well known behaviors.  Bitcoin experiences bubble behavior at the tops.  I have lived through several bitcoin bubbles, one of which was incredibly obvious to me at the time yet I did not sell any then because I was still too new to the game and thought I still had time to jump, @#$% me....

Please forgive my outburst.  I will pause briefly to regain my equanimity.  Continuing the lesson:

Today there is virtually no bubble behavior.  I'll leave it at that, because I don't even see no-coiners arguing otherwise.

The difference between bitcoin and tulips, or any stock, is crucial. Those assets begin their run-ups with most buyers thinking that the asset does have an intrinsic value and should trade near that value.  People then concoct a theory to delude themselves that the intrinsic value has grown 2x and then 3-5-20-100x to justify riding the price momentum. Then something breaks the spell - often merely a sudden price decline.

No one in the entire world has ever believed bitcoin was undervalued. There is no delusion to disabuse. When the price falls, ~85% of owners continue to HODL.  You, still-young-to-bitcoin grasshopper, are simply using the wrong mental model to think about bitcoin's price, a mental model not shared by the people who own it. They will never be shaken by events or the then-current price.

If you wish a "fundamental" reason for why to invest today, I submit that the most useful thesis statement for you is the simplest and most concise possible one. The thousands of words that you can find elsewhere, including those on this site, which I do not read, because why would I, may do more harm than good by obscuring the power of these forces:

1. It's goin up, innit?

2. For years the long-term bitcoin thesis has been that most investors have hated or ignored bitcoin but a material number will change their minds, slowly over time, especially institutional ones. That theory is now in overdrive due to the bitcoin ETF approval. The approval is only step 1. Steps 2, 3, and 4 are more and more individuals and institutions getting around to buying, now that it's easy to do so, and more and more advisor-gatekeeper institutions allowing their advisees to buy and marketing bitcoin as part of their model portfolios, and then the advisees deciding to buy.  It is going to take 2+ years for that piece to play out. It has not remotely been front-run - in part because no matter what bitcoin's price is, it can't be overvalued, so the potential newcomers are less fearful that they've "missed it." Beyond the ETF wave lies buying from corporate treasuries, endowments, pension funds, and eventually, central banks.

3. The next halving is in a few months. Bitcoin always moons in the ~12 months before and after a halving. This process, too, always mechanically takes at least a year to play out and cannot be fully front-run.  Miners, the key source of selling supply, suddenly have half as many coins to sell, day after day.

4. Put differently: It's always a 4-year price cycle, innit, and we're 18 months away from the usual peak.  These cycles can keep repeating despite their obviousness, just like many other investing cycles.

5. Just as importantly: The entire crypto community of people like me expect the cycle to keep playing out as usual, and much more than in stocks, we all create a self-fulfilling prophecy despite you tardfis looking on in horror.

6. I could be wrong that this cycle runs 4 years again.  It could run 3.  It could also run 5, or 6, or 7.

I leave you with one more bold-worthy sentence and chart that should haunt you and help shake you out of your tardfi-ness:

How many years do you have to be wrong about an investment opportunity before you conclude you're wrong and not merely early?


© 2024 Wisdom By Katana

(ADMINISTRATIVE NOTE: Obviously I treat these crypto write-ups and board comments as performance art, but behind the performance are dead-serious recommendations.  I absolutely do intend this write-up to count towards my annual quota. My November 2022 ETHE write-up, which also shilled spot bitcoin and ethereum, at the precise crypto bottom, was the largest alpha I have ever or likely will ever drop onto VIC. This one may end up being #2. The fact that so many of you will keep hating crypto only makes it more fun to talk about. Meanwhile my equities book remains 95% hard-core value stocks.)

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


Newcomers keep becoming converts and buying, forever.

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