Crypto is Easy, Issue #1 (March 9, 2020)

Perfect timing?

Tough week for bitcoin.

If you’ve read my free content, you know I expect at least two more years of higher prices. On the way up, we will have lots of horrible crashes. Fortunately, we also have some great data to tell us which crash is just a dip and which crash signals the end of the bull market.

Contrary to the news reports, bitcoin’s price is not correlated with the U.S. stock market or any other financial asset. We have tons of evidence to prove that statement. Some weeks, prices move in tandem. Some weeks, they don’t. Despite epic crashes in traditional markets, we don’t have any data suggesting this is the end of bitcoin’s bull run. As you’ll see in the video below, we can go as low as $5,400 and still stay in a bull market.

Within the next few weeks, I will publish my plan for making most of this bull market and avoid the inevitable 80-90% crash that comes at the end. I’m just trying to figure out how to present it in a way that’s easy to follow.

Later this month, I’ll also send out info on a new airdrop and deliver my first altcoin review. Today, I wanted to hit on four topics:

  1. Housekeeping: Your Crypto and Books

  2. How Crypto Will Probably Evolve (and Why That Matters Now)

  3. Crypto is Easy Introduction Video

  4. Bitcoin Market Analysis, Investment Thesis

Housekeeping: Your Crypto and Books

Paid subscribers and everybody who signed up before March 1, 2020:

My publisher still hasn’t told me how we can get you your free copy of Consensusland. As a result, I will email you the EPUB file. This file will work on all non-Kindle phones, laptops, desktops, and readers. If you’re dead-set on using Kindle, contact me directly and we can work something out.

In my email to you, I’ll also include a link to your free copy of Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency, along with the Tx info for your $5 crypto payment.

Expect that within the next two days. Sorry for the delay, right now it’s just me and a laptop. If the newsletter grows, I’ll hire some help.

How Crypto Will Probably Evolve (and Why That Matters Now)

Do you know what’s my biggest pet peeve about people’s understanding of bitcoin?

They think of it only as money.

This narrow scope keeps people from appreciating the bigger picture: bitcoin is the unit of account for a peer-to-peer electronic cash system.

Over the years, that system—the blockchain, the network, the infrastructure built around it—has grown in size, scope, and value.

It’s not bitcoin that gives this system its value. It’s the other way around. The system gives bitcoin its value.

As that system grows, bitcoin will gain more value. Eventually, that system will serve as a global settlement layer for all sorts of transactions. When you exchange “things,” you will use a product or service built on bitcoin’s blockchain.

Few people will hold actual bitcoin in any quantity. They will continue to use local currencies, with APIs and merchant services converting their money in and out of bitcoin on demand. Only we and maybe 50 million other people will actually hold any significant amount of bitcoin. (This is a very small number of people.)

A few altcoins will fill specific niches or support some unique product or service. You won’t think about them as investments, just things you use to get what you want. E.g., you’ll buy a little BAT crypto when you want to publish an ad. You won’t expect to get rich, you just want to make sure a real person sees your ad.

In time, bitcoin’s side chains will replace many altcoins, but some alts will persist. Not only will they have loyal users and large networks, but they will offer something distinct and essential. People will not want to give them up without a compelling reason to switch to something else. That’s human nature. We love convenient, familiar experiences that we can share with others.

So, maybe BAT will serve as the de facto currency for the internet while bitcoin does everything else, simply because that’s what people get used to.

It’ll take a while to get there, but once we do, the investment opportunity will disappear. That’s why we need to stake our claims now.

Of course, that means we will have to wait longer to “get rich quick” and “win the lottery,” as people say when they want to disparage the bitcoin OGs that bought in 2012 or 2015. We will also risk seeing some of our altcoins go to zero.

That’s ok. We’re playing for a stake in the financial networks of the future, not fast money from a fleeting bull run.

When we get to the peak of this market cycle, people will think we got lucky. In truth, we saw the opportunity before they did—and dared to put our money into it when nobody else would.

Crypto is Easy Introduction Video (YouTube Video #1)

Since you are the first group of subscribers, I could use your help.

I need to make an introduction video. I posted an unlisted demo on YouTube and would love to get your feedback and comments so I can record a proper video. Would you mind checking out the video and commenting/critiquing it? Here it is:

Warning: it’s about 20 minutes, which is too long, and I will cut it down when I do my second, and final, take.

At some point, if I have more time, I may try to grow my YouTube channel. Not yet, though (and maybe never). I will use hashtags to get my content in the proper feeds and might post links on Twitter, but I do not plan to promote my videos. Please feel free to share them as you wish.

Bitcoin Market Analysis, Investment Thesis (YouTube Video #2)

Speaking of YouTube, I posted my first video about the market right now, as well as my overall investment thesis. Check it out below. Here’s the very short summary:

  • My thesis: bitcoin makes a good investment because it’s a hedge against the collapse of our financial system and its price tends to go up over time.

  • So far, both statements remain true. Bitcoin’s price has always stayed above the 200-week moving average, a mathematical formula that aggregates four years of investor behavior into a line on a chart. This line always goes up. Since price always stays above this line, and this line always goes up, we can assume this pattern will continue. Also, bitcoin’s technology relies on math, not people. Math never fails. Computers will always do what they’re programmed to do regardless of what’s going on in the financial markets. Equations do not have counterparty risks.

  • Today’s market is in a very dangerous position but there’s nothing to worry about yet. Ideally, we want to stay above $8,500. The longer we stay below that price, the more likely we’re heading into a market shift that might push bitcoin’s price down for a while. It’s all related to the relationship of today’s price with the 150-day moving average (150 DMA), a mathematical formula that tracks how prices have changed over the past 5 months.

  • For bitcoin, the 150 DMA offers a very strong psychological signal about the overall market sentiment. When the price is above this line, people are generally positive. Momentum tends to carry bitcoin’s price upwards. When the price is below this line, people are generally negative. Momentum tends to carry bitcoin’s price downwards. Eventually, these trends shift as the 150 DMA catches up to the changes in price. The problem is, we can never know how long that will take. Let's hope we get above the 150 DMA (and stay there). As of today, the 150 DMA is slightly below $8,500.

  • While I’m not worried yet, I would not assume this is “just a dip.” That said, we are still in a bull market. Big drops happen all the time during bull markets. If you think a drop from $10,500 to $7,800 is bad, wait until we get a drop from $105,000 to $78,000. If we go where I think we’re going to go, it will happen.

What’s the difference between a bitcoin bull market and a bitcoin bear market?

In a bull market, the price sometimes goes up!

Get more details and perspective in this video, my first ever YouTube video:

Relax and enjoy the ride!

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