1) The period we have now entered is the reason I started this newsletter so as to help you better navigate the lunacy that is upon us if you so choose: a period of ever-ravenous risk-taking, always-forever-blue skies, and groundless optimism that will soon incite a global crypto FOMO frenzy not witnessed since, well, the last bull run in 2017 of which I am extremely confident we will surpass in terms of volume, amplitude, and insanity. Soon, everyone will have a trading view account and will be glued to "the charts" from which they will believe they are somehow divining in hopes of predicting the next bitcoin move. If it isn't the case already, do not be surprised when every get-together, child's birthday party, Halloween party, night out with friends, water fountain chat, or trip to the hairdresser is completely dominated by which hot new "Eth killer" folks are invested in, its value proposition which will only be explained through the silly slogan that caused the person to FOMO into the particular project in the first place. Trust me, everyone's pet project will be different from the next, and obscure. This is also the period of outright stupidity, if not utter recklessness that will have very real and very negative consequences if the ideas underpinning the recklessness are allowed to be seriously considered in the minds of the new crypto "investors" who hatched them, many of whom, having perhaps seen their home value increase over the last 18 months, will get a second or third mortgage with which to buy more crypto in hopes that they might be able to pay off the entire mortgage if only they can throw more money into [HEX] or [LUNA] or [SOL] or whatever scam they're convinced will allow them to 10x their money in a short period of time. "I mean, crypto is the future, right? We can't lose. We need to get in early."
2) I've already shared my thoughts on how late we are in Bitcoin's adoption curve in light of its exponential growth. We are even later in this particular bull cycle, having perhaps four to six months before it pops. Rest assured, it will pop - for it must.
3) The 4-year journey, which every serious investor must undergo, can of course be abbreviated to a certain extent if one is willing to learn from the hard-fought experience of someone who has personally endured the ups and downs that this asset class is about to throw at us. Please know that this is by far the riskiest period of the entire 4-year cycle. The hardest thing will be realizing the gains you've made while losing as little of it as possible before the finish line.
4) As I've said repeatedly, prudent crypto education during a bull market is nearly impossible. Nevertheless, I still highly encourage everyone to go back over my previous newsletters which are all posted here:
https://substack.com/profile/29751235-north-star-ventures
It's a book-length amount of material, I know. It will take many hours to work through, but such should be the amount of education one must be willing to invest in one's self if one hopes to "make it" with your sanity intact and your personal wealth higher than it was when you started. Many will be spending the same, if not more, in the coming months on crypto (of which they may potentially know nothing about) than they would a down payment on a home, or a new car, furniture, what-have-you, thus it is wise to spend a comparable amount of research here as you would with those other life decisions. Smart money is not investing heavily at this time, that was done months and years ago. Americans, and Europeans too, will drive across town to save a few cents on a gallon of gas but won't think twice about throwing $2k, $5k, even $10k + on some crypto scam they know nothing about.
5) As we move into the "only up (more or less) from here" stage of the bull run, now comes the hard part: holding fast to your initial conviction and your overall strategy while remaining focused and not selling the speculative part of your portfolio too soon or holding onto it before it's too late. Indeed, I'm actually not a fan of bull runs: the price action, noise, and associated emotions are far too distracting. To fight, on the one hand, against the lies and emotional manipulation of scammers and schemers and, on the other, the well-meaning misunderstandings and miscalculations by honest market commentators will be exceedingly difficult. Controlling your own human nature will be even harder. As always, the best thing is to simply turn off, tune out, and dollar cost average whether the market is up or down. If you have ignored me thus far and are choosing to "jump in" at this time, know that this is by far the riskiest period of the entire 4-year cycle.
6) I hate to sound condescending, but if you've been in crypto for a few months or weeks and think you know what you're talking about, you don't. I often feel I hardly know what I'm talking about, and this sentiment only grows the deeper I go down the Bitcoin rabbit hole. If you listen to someone going on about crypto in the coming months, be sure to ascertain how long they've been actively invested in the market. Any less than 4 years, I wouldn't give their "insights" much stock.
7) So, the Bitcoin ETF has launched. * Yawn* What does this mean? It shouldn't mean much to the readers of this newsletter because you should all be sophisticated enough to simply download Coinbase or Cash App (or any number of fiat on-ramps) and connect your bank account so as to buy the actual asset and not the contractual derivation thereof. At this time, the SEC has only approved futures'-based Bitcoin ETFs which derive their value from Bitcoin futures contracts, another derivative of bitcoin. So, the current Bitcoin ETFs available through the major retail brokerages are derivatives of derivatives. They are cash-settled, not asset-settled (i. e. they aren't "spot" ETFs), so any realized profit or loss will be in the form of USD which is exactly what we are attempting to escape through our Bitcoin "investments". And then there's the ETF fees, brokerage fees, and the trust one must place in the managers of the ETF and the brokerage platform itself, all of which we are again trying to liberate ourselves through Bitcoin which is both permissionless and "trustless", which is to say, devoid of any single point of failure or counter-party risk. The value of the Bitcoin ETF(s) is based upon the price of futures contracts - anything but accurate and efficient. Because I have no interest nor would ever recommend the Bitcoin ETF, I will admit I am not familiar with many of its downsides, but they are numerous. As with anything, there are trade-offs. With a Bitcoin ETF, the cost of investing "convenience" is high. I think a futures-based ETF might be a good idea if one wants to get exposure to a commodity like oil, copper, or lumber for the simple fact that a normal investor could not feasibly take physical possession of such assets. Bitcoin possession, however, is simple, cost-free, and empowering. For those who are curious, here is a video that better explains the pros and cons of the ETF. Besides the obvious pro-regulatory signal this approval has engendered (considerable in and of itself), regulation that many institutional investors were waiting for, I personally don't see why a futures-based Bitcoin ETF is particularly bullish at this time. Sure, some Registered Investment Advisors (RIAs) and Financial Planners can now offer Bitcoin exposure to their clients, but unless you've been living under a rock, people who are seriously interested in owning this asset would already be doing so, thus I'm not sure where this supposed "wall of money" will be coming from. I also don't understand how betting on the price of the asset without taking "physical" possession thereof would significantly influence the spot price in the long run. Perhaps the wall of money is from institutions, but again, as with retail, Bitcoin is not a new thing, especially in the world of hedge funds and family offices that have and will continue to be the most active big money cohort in this cycle. Most have already jumped in if they were going to at this point. I am, of course, speaking from complete ignorance concerning the ins and outs of institutional investing thus concede I am probably wrong. Nevertheless, as of the time of this initial writing, the market seems to agree with my general sentiment, for we saw neither a significant pump over the weekend prior to the ETF launch nor a "sell the news" type of a drawdown, both of which would have already been witnessed at this point (Tuesday morning) if this news was to have a significant impact on the price. If anything, it's already priced in. As stated above, none of these products are buying spot, only allowing EFT investors to "gain exposure" to the bitcoin price through a trusted third party. True, at the time of this writing we are assaulting the all-time-high of $64,500 (and have as of 10/23 already surpassed and are now correcting below it), but I chalk this up to Bitcoin's general price activity at this stage in the market, not the fundamental news. When we consistently stay above all-time highs, however, the media will of course say it's because of the ETF, and institutions. Indeed, the fact that Bitcoin is continuing to behave in the way that it will irrespective of fundamentals, technicals, "whales", institutions, retail, what have you, further solidifies my thesis that Bitcoin is an entity that is now solely concerned with its own survival. If that survival demands the price push past $300k this cycle and beyond, then that is what it will do. I suppose at the same time, if that were true, the market would also anticipate the clear and present threat that such a lofty valuation will pose to the collapsing and impotent central banks and their nation-state lackeys who will do anything to hold on to power. Such is why the market will probably go down and sideways for a few years when we complete this run, a kind of "nothing to see here, guys"-type posture from which the Bitcoin network will continue to build and evolve more or less away from the limelight in preparation for its 2024-2025 run which, in my opinion, will witness the ultimate clash between big government and big Bitcoin. I am convinced only one winner can survive this conflict.
8) I believe the last 2500 plus years of history clearly shows that monetary debasement, not in isolation, of course, but in the context of greater civilizational decline - debasement which is the irresistible temptation of late-stage governments to "raise money" without outright taxation - always leads to ruin and collapse, as does the civilizational overreach, moral and physical decadence, irreligiosity, eroding values, and deterioration of the family unit that such debasement engenders, among others. From one perspective, time appears to vacillate between epochs of centralization and decentralization. Centralization has, from about 1500 onward been the general tendency of Western civilization, with the grand exception being the formation of the United States which was founded on the idea of "separation of powers" among its federal organization as expressed principally through State's rights (the US was the first Bitcoin). Exception aside, without growing centralization in Western Europe, the Industrial Revolution would have been impossible. As an aside, the US Civil War can be seen as a conflict between Hamiltonian, industrialized, centralization represented by the Union (a fitting term) and the Jeffersonian, agricultural, decentralized Conferdacy (again fitting). Industrialization was witnessing its emergence as a world-historic force, thus its victory in the Civil War from a certain metapolitical level was inevitable. Industrialization required strong governing bodies in the form of big business, big (i.e. wealthy) men, and big government to acquire, allocate, and employ capital - in the form of human manpower, money, technology, commodities, and natural resources - so as to achieve the cheap mass production of goods, materials, and later, services. Technology, at least in its early stages, typically has a decentralizing effect on society by enabling higher productivity for a cheaper cost. Such high productivity in the hands of more and more people begins to erode the power and control of the large central organizations who derive their power by the loyalty they win via the benefits that their ability to marshal human energy and capital at scale provides, tasks that in times past would have been impossible for small groups or single individuals to accomplish. Today, individuals have technological power that the kings of the past could only dream, thus with each passing year, the need for strong central bodies is lessening considerably. Now of course, the electrical, fossil fuel, manufacturing, and supply chain infrastructure that central bodies ensure are still required to enable the technological powers, but if those were to break down, not only would the government collapse, but civilization as well. Such is why, when viewed through this particular perspective, there is no good argument to make against the adoption of Bitcoin as your primary personal store of value and hedge against a decentralizing future because if the grid was to collapse in a permanent or semi-permanent way and with it civilization, there will be far bigger things to worry about than your investment portfolio, your mortgage, job, and so on. At this point, a complete and irrevocable global grid failure is the only black swan event that might "destroy" bitcoin. But, given that there are Blockstream full node satellites orbiting the earth, even if there was a grid failure, the Bitcoin blockchain would continue the moment a single spark of electricity traveled the length of a current in the whole of the global grid.
9) Digression aside, I would not recommend investing in the Bitcoin ETF. In the end, the management fees will kill you, among other things. I don't see how one can truly begin their 4-year journey by investing in an inefficient Bitcoin future's ETF. It is far easier and more beneficial to simply own the underlying asset via your direct control. If one is not comfortable with that, then by all means do what you want, but research the pros and cons first. Importantly, if you've never gone through a mania bull run, you probably also want to reduce the ease of which you can panic sell. Because, notwithstanding my opening remarks, one should expect some severe pullbacks once we really start heating up. I'd say the water is not yet boiling though the heater is definitely on. I would expect a local high in mid-November from which we could easily drop 25% or more. Many, especially the newest of newcomers as well as many market commentators who have arbitrarily pegged their market top around $100k for no other reason than $100k is a good round number and significant psychological milestone will claim that it's the top. Such is why having a clear strategy devised during the boring parts of the market is key.
10) From the start of this newsletter, I have altered my predictions very little. My Bitcoin target 18 months ago was $275k and Eth was $30k. I now think the Bitcoin top will briefly touch $290k and Eth $22k. It could go higher of course, but any lower than that and I won't be interested in parting with any of my bitcoin. I recently heard it well said that Bitcoin bull markets are psychological attacks again long-term holders to shake them from their positions. $100k bitcoin is not enough for me to sell a single satoshi. $200k isn't enough. Anything higher than $300k is getting a little more tempting. I am doubtless not alone in thinking this, and many long-term holders will have to sell in order to reach a market peak given how much of the circulating supply is held by long-term investors (i.e. those who haven't moved their coins in over 12 months). What's more, if I am wrong, I will have hopefully not led anyone astray because I have always preached that at least 80% of your portfolio should be composed of long-term bitcoin, and the rest in either Eth or a speculative bitcoin position which you will seek to liquidate so as to (1) take out your initial investment, (2) realize price gains in real life (by taking profits), and (3) so as to have some dry powder with which to buy more bitcoin during the bear market. Again, if bitcoin tops out below $200k, who cares? I'm not selling at all. If it goes up and doesn't come down, you've still realized gains and yet your core holdings are intact.
11) As I've said repeatedly, expect Bitcoin to lead the bull run from here until it tops out. To gauge where we are, I am keeping an eye on the Bitcoin Dominance chart which, in my opinion, must reach 55%-60% (i. e. 55% or more of the crypto market cap composed of bitcoin's market cap) in order to really give the remainder of the run enough juice to send altcoins, especially Ethereum, to $20k and beyond. I think the overall crypto market cap could hit $10 or possibly $12 trillion (basically the Dot Com bust level in 2001), which, If bitcoin dominance sustains at least 50% or more until it peaks, will safely get us to my $290k price level which, when it starts to go down, will flood into alts and precipitate an alt explosion that will easily surpass the Dot Com Bubble.
12) Thus, if you're holding alts, not only would I expect them to lose ground against BTC for the next 3-6 months, I would actually cheer it on. Because, no Bitcoin blow-off frenzy, no altcoin bananza. If you're holding alts, they will bleed against BTC and ETH but they should roar back about a month to six weeks after Bitcoin's top. Don't trade in and out, simply hunker down and wait. I am expecting mostly blue skies until about mid-November at which time I think there will be a huge correction. Many will think it's the end. But again, the cycle will complete only when long-term Bitcoin OGs begin to liquidate. Nothing under $250k will pique my personal interest (if I am to be a barometer for others like me).
13) In closing, it seems the gates of hell have opened and let loose the schemers and scammers, and charlatans in far greater number than in 2017. If you read this newsletter, you have your strategy, or at least a possible one. If I am wrong, I will be the first to admit it and ask for your forgiveness (even though this has never been financial advice, simply my unsolicited opinions). I will be ashamed in the eyes of my friends and family and, further, I will never seek to give crypto education of any kind and sort in the future. What's more, if Bitcoin doesn't behave generally as I believe it will, I will most likely sell my position and bow out of crypto completely. If we are not still locked in the halving cycles, my conviction with this asset will be completely and utterly shaken to the point of disbelief. Such are the stakes and my level of confidence in the future of this asset. You should all make your own decisions, but be advised from here on, one must continually fall back on your original strategy (should you have one) because all good sense and prudent behavior from here forward will be thrown out the window.
Good luck,
NSV
Postscript (sent to Matthew Krater on 10/19, the creator of Trader University, a YT channel I recommend):
"Bitcoin the asset", "Bitcoin the monetary network", "Bitcoin the tool for criminals", et al. I am coining the term "Bitcoin the entity". I don't think it is self-aware or self-conscious, but - like an animal or plant or even a very big and powerful idea - it is at this point "instinctual" and therefore "concerned with" its own survival, the same as all life forms, whether or the physical dimension or the realm of ideas. Fundamental analysis, technical analysis, "insider trading" (i.e. "whale activity" in Bitcoin parlance) - none of it matters. All prior assumptions about how a market "should" act must be thrown out the window when it comes to this asset. The 4-year cycle will hold and must, otherwise bitcoin's uniqueness as an asset would be in jeopardy of becoming just "another Amazon.com". Experienced market actors know that bitcoin is far bigger than Amazon and far stranger. Much of its survival instinct manifests in its price: the higher it goes, the more social validation it receives, if briefly; the lower it goes the more prone it is to increased distribution and decentralization among those who it entrusts with its survival (the same could be said at market peaks as well, kind of). After it receives its every-4-year limelight, it MUST go down so as to not draw the premature ire of central banks and dying nation-states before it's ready to launch the final attack. At the same time, the hype must settle so actual work can get done because when the market is only concerned about price, greed completely colonizes the human mind and it can concentrate on little else. "Bitcoin the entity" is now, quite plainly, working on us and has been for since the lows of 2018/2019. The entity is using market peaks to shake the resolve of long-term hodlers by baiting them back into fiat, if only temporarily. Yes, it's definitely weird, and I firmly believe that traditional market actors are at a SUPREME disadvantage to those who teethed on bitcoin from the start. Bitcoiners would not perform well in traditional markets, nor will traditional market folks perform better than average in bitcoin.
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