Bitcoin believers, schemers and cowards*

Yodel while you HODL

I’m a sceptic on bitcoin but I’m not going to get into an argument about why etc…what’s the point! As bitcoin goes up ergo bitcoin believers are correct. I’ve been wrong before and can’t always be on the winning side. Maybe bitcoin is THE money.

There are three types of big guys getting into Bitcoin:

1) True believers

2) True schemers

3) True cowards

True believers will hold it to the moon and back to the depths. In number this is probably a minority interest but in dollars (if you will permit that) they most likely dominate quite extensively and represent the big holders. Sounds good? It’s not from a flow perspective as these guys will be significant net sellers of bitcoin so as they can use their wealth. They need buyers of their coin.

True believers are often VC types or tech-y geek evangelists. In the early days of bitcoin after the monetary black hole of the financial crisis (where we all looked into bank balance sheets with horror and realised it was all smoke and mirrors….the glorious fiat was a cruel joke!) I met a lot bitcoiners in tech-land….youngish, not from a financial background but had felt strongly through the crisis that something was wrong, had often then read about money and the history of money and kind of decided money needed a reboot. Bitcoin was their messiah. They told me what money should be. I confess I marvelled at their credulity. Who’s marvellous now!

True schemers are an interesting bunch. I reckon 99% of all big hedge fund and financial personalities you have heard talk up bitcoin are in this category. We’re always suckers for their views and brilliance…and they know it…and they know that we will follow them into the trades they announce publicly. Stan Druckenmiller is a prime example. If you believe this guy ever tells you what he wants to buy you are a dummy. If he’s talking he’s somewhere between talking it up for his benefit and fluffing a big position for a profitable sale. Schemers know they are playing a grand speculation.

Many a punter that doesn’t write soliloquies to bitcoin (maybe just regular rampy tweets and abuse to sceptics) are really also schemers. They think they really really believe in it….but they’ll ditch it easy enough when it disappoints or fades and move on to the next passionate speculation. We are good at passionate speculation.

True cowards are making noise in the media right now and have the bitcoiners excited. Fidelity, PayPal, Ruffer, etc. I’d perhaps include Ray Dalio in this category too though he could also be a schemer. There are two general types of true cowards in bitcoin — career risk insurers and those who traditionally have sold clients investment with downside protection but now find that the world looks really weird and scary now that bonds are limit up, equities are pricy, cash is trash and gold is its permanent strange combo of alluring and unnerving.

Fidelity, Blackrock, etc are in it as its now big or noisy enough to register with these behemoths and so they need it in their display window…and these guys will put any old dross up there. PayPal and other payment and cool banking/fintech sorts need to have it as they can’t be cool if they don’t…got to have a bitcoin wallet!

Ruffer and Dalio are perhaps the most interesting type. These guys are effectively at the end of comprehensible history of financial risk management and don’t know what to do! Bonds ain’t what they were. They’ve already got gold and own more than really makes them comfortable as they know its unpredictable particularly short term. Bitcoin is them flailing about looking for ‘safe’. They will say publicly they think its a safe assets…but really its an option, a just in case it works if the world goes belly up (and Mad Max land is still networked).

One final note. Money is not real as this suits the sociopolitical system we have. A real/hard money system is not compatible with proletarian ‘populist’ democracy absent either true unlimited energy abundance or a super high and accepted taxation of those in society that have ‘lottery’ winnings be it from getting bitcoin correct or making Amazon. To get orientated to what I mean think Bezos giving >95% of his wealth to the government as lottery or windfall tax.

IMO the above is the reality bitcoin must navigate. I don’t know quite what it means for its future but it makes it unpredictable and unstable. It could hold some ongoing interest so we see higher prices with volatility both ways. It could be a passing fade with the guts of the idea stripped out and used for new online fiat money (see China).

Paradoxically, most stores of value do not turn out to be immutable and indestructible. All currencies are an example. So far only gold has truly shown this ability for reasons that are quite unfathomable but durable. Productive land is the next closest. Some would say fine art too but I’d disagree on the grounds that one cannot commission the fine art and know it will stand as an eternal store of value.

Bitcoiners will probably not win 2021 unless the year turns into a debt deflation panic. Otherwise, recovery, reflation and some hints of rates/yield rises will see capital flow to more ‘understandable stores of value’…after all, everything durable and decent is a store of value…take Disney, Unilever, etc as prime examples (of course, not for ever, that has only been awarded to the madman gold so far).

Nevertheless good luck with the revolution. The way with you guys seems to be to laugh at non believers for being future poor…so chortle away.

mojo’s mojo, out ;)

*’Coward’ equates to fear of being consensus wrong and ‘career risk’ this entails. This could be from an investment or a business perspective

Disclosure: I hold approximately £1 of bitcoin in a Revolut wallet.

CVO (Chief Visionary officer) behind mojostrat™ a new global incoherence recognition and interpretation advisory

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