Description

I’m shorting Bitcoin because I smell arrogance.  My price target is $4.38, at which point I will cover.  I think it is a zero

Young people lack perspective.  Tech stuff happening now was simply unimaginable a few years ago.  I have in my pocket a super computer with a cinema-grade camera that is on a high-speed network connected to the entire world via objects in outer space.  That was unimaginable a couple of decades ago.  If we advance into the unimaginable as we have the last few decades then maybe crypto assets could be disrupted, dismantled, cracked, etc.  Young people are attracted to bitcoin because they simply did not witness this innovation.  My Uncle Henry (RIP) wrote a book about his life and changes he saw over his life. It really changed the way I see investments and made me love Sprouts Farmers Market (see appendix 1). Young people see only the recent period of time.  Because of their lack of worldly experience, they are especially susceptible to shared illusions of the future.

Bitcoin is not digital gold for 2 reasons:  (1) Gold’s 5000 year track record has stood up to the laws of physics and human innovation.   Crypto? 10 years?  10/5000 X $2190 = $4.38.  That is my Bitcoin price target.  (2) Gold is pretty and symbolic, bitcoin is not.  If you put a gold coin and a lead coin in front of an innocent baby the baby will be attracted to the gold coin.  Rappers with gold teeth sell more rap music than rappers with mercury fillings. Mr. T has gold chains that reinforce his macho status.  Goldman Sachs is better than Deutcsh Bank.  Gold watches are what they give you for retirement.  Bitcoin doesn’t have any superficially attractive attributes so bitcoin is not digital gold.  The analogy that bitcoin is digital gold is weak.

Maybe this is just semantics but let’s say you find a security, XYZ, and after doing due diligence you find out there is no actual asset behind the security.  Of course you would say the security is a fraud.  It is a fraud *not* because there is intentional evil taking place - it is a fraud because it is pretending to be something when it is nothing. It is acting like a stock (trades up and down on an exchange) but has nothing behind it.  Frauds represent something when they are nothing.  

Similarly, if the security, XYZ, only had a set amount of shares trading, you wouldn’t be more attracted to those shares.  The stability of the share count just means your % of ownership of the underlying asset is stable.  If there is no underlying asset, the share count is irrelevant.

The number of bitcoin shares are capped, so far.  But that can change.  It is software.  There are all sorts of mining aspects, secret committees, logistical aspects to bitcoin that allow the share count to change.  There are technical committees of sort that can pull technical strings. Are these people any better than central bankers...  probably not much better.

If crypto turns out to be a “thing” that becomes widely adopted then by definition we are in the early innings. The early innings winner is always the eventual loser… always.  It is the bogie.  It is what is being attacked.  Bitcoin is far from perfect so the attack will be easy.

Bitcoin is infinitely divisible.  Whole bitcoin units are unnecessary.  Hoarding makes bitcoin price go up but actual usage of the crypto currency will have no effect on supply and demand because it is infinitely divisible.  Dollars are not infinitely divisible so they print more to make things move smoothly. 

Right now, Bitcoin is a pain to use.  It costs more money to send fiat money using bitcoin as an intermediary than just to call Western Union.  Yes, it is easy to send bitcoin but it is next to impossible to send spendable $ using bitcoin.

You can’t actually buy anything with Bitcoin without turning it into fiat money first.  People who sell stuff on Craigslist and inside of video games, that say they accept crypto, are constantly referencing the crypto to a fiat (not vice versa).  It is a gimmick at best.

A fool is born every minute. There are many fools.  A lot of fool money has been sloshing around thanks to covid, stimulus payments, etc.  A successful bitcoin trade depends on fool supply.  

SEC Endorsement and ETF inclusion is fundamentally worthless.  The SEC endorsed Enron, Zion oil & gas, etc. etc. both of which were marketed and sold inside of ETFs to institutional investors.  Who bought AAA mortgage bonds?  Institutional investors with analysts’ blessing. 

If you have gains in bitcoin is hard to sell (and pay taxes!) but this is what is happening:

https://imgur.com/qyVfBlh

Appendix 1:  Sprouts Farmers Market Share Count.  While feeding humanity, the shares are becoming more scarce:

Appendix 2:  Autozone shares outstanding.  While keeping cars going so that humanity can go places, the shares are becoming scarce

Appendix 3:  While providing humanity with used books, re-distributing thrift store handbags and liquidating excess inventory, eBay shares are becoming more scarce.

Risks:

Fool supply.  A fool is born every minute. There are many fools.  A lot of fool money has been sloshing around thanks to covid, stimulus payments, etc.  A successful bitcoin trade depends on fool supply.   If fool supply increases then price of bitcoin will definitely increase.

Catalyst

Dissipation of the madness