What do you think emerged as the top comment on a viral article entitled, “The Bitcoin Dream Is Dead”? Was it a healthy debate about proof of work? Concerns about crypto’s price stability? Perhaps an intellectual exchange between a crypto bull and bear? Nope. It was a message typed out vertically in Microsoft’s Japanese extension language that read: “Have fun staying poor.”
Now, emotions aside, everyone should find this comment amusing, but it highlights the issue of how some Bitcoiners choose to come across in the public sphere. On the surface, they only seem to care about the price going up.
If that wasn’t obvious enough, let’s look at some of the most influential crypto bulls. Did the Winklevoss Twins — arguably the biggest Bitcoin evangelists after Michael Saylor — name their magnum opus: “How Bitcoin Will Change the World” or “Why Bitcoin Will Become the New Monetary Standard”? Unfortunately not. They went with, bruh, “the Case for $500K Bitcoin”.
At least, however, they aren’t as bad as those on Twitter. Like how Oompa Loompas worship cocoa beans, they seem to have an unhealthy obsession for celestial bodies, in particular, the #MOON, which, in this instance, means Bitcoin reaching $100,000, $500,000, and $1,000,000 per coin. Historians have even compared Twitter’s #Bitcoin hashtag to sacred religious texts dating back thousands of years. Fascinating stuff.
What does this say about Bitcoin when its price is the number one trending topic? If the majority really care about its underlying fundamentals, why isn’t the top trending hashtag on Twitter something more articulate than #BTCToTheFrickinMoon? If the majority really care about Bitcoin why are they not pumping its original purpose: to create a monetary revolution, a decentralized payment system, a people’s currency — Satoshi’s words, not mine.
If Bitcoin is a new paradigm, the new “digital gold”, Bitcoiners must stop talking about its price and get back to fundamentals. Price does not matter. Price stability does. For money to be money it needs to prove its price will remain stable over long periods, and especially through tough times. Bitcoin’s -38.81% intraday crash on 11th March 2020 shows that it cannot be used for money just yet. It must demonstrate less volatile behavior over the next decade during deflationary black and white swan events. It’s possible, though improbable.
My beef here, however, is that most people won’t admit greed is the real reason they have bought in — while using fundamentals as a justification. I’m here to tell you that in our crazy monetary world of ZIRP absurdity, QE infinity (quantitative easing), and MMT it’s okay to speculate on Bitcoin just because “it’s going up”. In this environment, irrational is rational, and wanting to get rich via Bitcoin is fine.
It’s okay to admit this in public because it’s clear, for now, that Bitcoin’s fundamentals no longer matter. Whatever you think about crypto or its competitors is now irrelevant. Instead, it’s what the herd believes the herd thinks about crypto, and what they say, goes.
Writer Ben Hunt calls this the Common Knowledge Game: the narrative machine has chosen Bitcoin to be the asset everybody believes everyone else will buy to protect their wealth against inflation — despite Bitcoin not proving this long term. It does not matter whether the crowd thinks Bitcoin is a scam, a Ponzi Scheme, or a bubble — or that Satoshi Nakamoto might actually be Cipher from the Matrix. Everyone could be lying to each other, yet the narrative will prevail. It’s what the herd believes everyone else believes that becomes the consensus.
Instead of Bitcoin, if somebody manipulated common knowledge so that everyone started to believe watermelons were the best store of value, we’d create exchanges to trade watermelon futures, options, and warrants. We’d sell our crypto and frantically buy melons as we believe the herd will do the same. Michael Saylor’s tweets would look quite different in this alternate reality:
Knowing that in the information age the madness of crowds dictates all public perception, is it any wonder why Bitcoin is trading at $46,000? Not at all. It has become the poster child of the escape from repressive inflationary regimes. We have even temporarily deserted gold (because somehow that’s become the nemesis of the crypto movement). Why not own both?
But before you say “You just don’t get it, bro,” stating no facts, argument, or rationale, I will one-up you. I’m long Bitcoin and have been since June 2020. That’s right: I’m a dirty speculator, but at least I have come clean. I have joined in on the mania, not because of crypto’s underlying fundamentals — though I understand them, but because the Common Knowledge Game has secured Bitcoin’s status as the primary hyperinflation escape pod.
Whether we like it or not Bitcoin is in a bubble, but that’s not a bad thing if you’re a speculator. In reflationary conditions, bubbles generate alpha. We’ve entered an economic climate I like to call the Madoff economy: a high-growth, high-inflation environment in which risky assets prosper. If you don’t want to put your money into Bitcoin because you think it’s a bubble that’s up to you. That means you have to decide which of the other bubbles you want to put your money into; either the stock market, the corporate bond market, the real estate market, the bond market, the choice is up to you. The other alternative is to “short the whole f*ckin thing” as Quoth the Raven says. Of course, that has proven to be a bad endeavor in crazy economic environments — as Jesse Livermore, Peter Schiff, and Melvin Capital found out.
If the Madoff economy remains healthy for the rest of 2021, that will secure Bitcoin’s path to reaching six figures and beyond. While the financial elites remain hell-bent on economic Armageddon, they will do everything in their power to create inflation, and Joe Sixpack will have no choice but to join in, buying the Bitcoin pump.
He knows, slowly but surely, his savings will erode in his Chase Manhattan savings account yielding 0.01% interest. His stock portfolio goes up 10% per year, but he also knows that inflation increases by 10%. The Chapwood Index says inflation runs between 8.1% and 12.9% and Walter J. Williams’ ShadowStats CPI has inflation at roughly 9%, not what the government’s official 2% target suggests. They remove anything too inflationary from the CPI, though, this is not a conspiracy. Officials publish their changes. It’s just that nobody bothers to look — or even cares — anymore. It’s a sign of the times.
Since pension funds aim for 7% annual returns and the S&P500 returns 10% to 11% per year, Joe Sixpack has figured out his index funds will not finance a kickass retirement. He’s going to have to beat the stock market twice over to grow his wealth substantially and overcome inflation.
What’s rational here? Watching his money devalue over time or buying the asset that the herd thinks will rise on average 40% per quarter? Joe Sixpack must choose the latter. He’s buying into the Bitcoin bubble because it’s the herd’s consensus weapon to fight against a repressive inflationary regime, not because he thinks Bitcoin is the future. He just wants the price to go up, but that’s okay.
All he and I have to do now is pray that Bruce Willis does not turn up in an astronaut suit in the near future. Since Bitcoin only declines when markets price in Armageddon, I will stay long until the Madoff economy begins to puke, knowing that it’s in my self-interest to do so. And if I’m wrong, it’s my own stupid fault for thinking any bubble could reach heights that fall into the realm of absurdity.
Confession over.
