Crypto crashes again: two questions for ‘crypto people’

Bitcoin crashed again, from $43k to $41k, like I said last week it would. I know it’s still a lot higher than my last screenshot when it it was at $26k, but I will still be right. [1]

It’s been 2 months now since this ETF hype began in early October and still no hint of approval, just closed-door talks and amendments/revisions to earlier ETF applications. Nothing has actually changed except the price being much higher. Anyone promising that it will be approved or spouting off figures about “90% odds of approval” is full of shit or outright lying. For one, it’s not possible to ascribe a probability or certainty to a binary, one-time event. With no prior information to go on, at best, it’s 50-50. And based on past rejections of spot-price crypto ETFs, we can infer the odds being a lot lower: zero. If anything, 50% is overly generous and giving the benefit of the doubt.

Two questions or conundrums for ‘crypto people’:

1. Why does something that is marketed as ‘disruptive’ or ‘subversive’ to the financial system, need the very approval of the financial system, which it will also inevitably obsolete/replace? If it’s inevitable, why does it matter what Elizabeth Warren says? Or what Gary Gensler says? Or what the SEC does? Why need an ETF at all? If Bitcoin undermines the fiat/dollar hegemony because it’s so much better, then wouldn’t this bear itself out? However, when people are given a choice between using crypto or fiat, ~100% of the time they choose fiat (except for certain ‘dark web’ things). Revealed preferences clearly shows Bitcoin being inferior to fiat.

But these flaws (e.g. high fees, hacks, accidental irrecoverable of loss of funds etc.) are intrinsic to the technology and not solvable by deregulation. As many have pointed out, trying to fix crypto by making it safer or punishing wrongdoers who exploit the ignorance and the failings of crypto, merely means reinventing or rediscovering why a financial system exists in the first place. “Code is law” is a poor substitute for actual laws.

2. Even if you don’t care about Satoshi, the white paper, or ‘obsoleting the financial system’ and just want to make cold hard cash, why invest in something that is so vulnerable to regulators and politicians, or so dependent on the approval of an ETF? That’s what I don’t get. We as humans are endowed with free will, no? We can make choices as to what to invest in–or not invest in. Why not invest in something whose fate is not determined by the SEC, instead of constantly complaining about it as if nothing can be done even though the option always exists to sell it and buy something better? There are way better choices out there.

For example, Senator Elizabeth Warren proposed yet another anti-money-laundering crypto bill, which unlike her other bills has five Senator co-sponsors. ‘Bitcoin people’ are understandably worried on Twitter, as this bill stands a greater likelihood of success compared to earlier ones:

This is not an endorsement of her policies. The point is why choose to invest in something that is so easily hurt by regulation? Wouldn’t it be easier to just dump the crypto crap and instead invest in something that is not only impervious to regulators, but has the regulators in its pockets? That being ‘big tech’, namely. I was able to figure this out [3].

But you don’t need to be that smart to know crypto has too much risk. When it comes to investing, it’s not so much about eliminating risk, which is impossible, but about eliminating as many conditionals as possible. Crypto’s success is conditional to some degree on not being regulated out of existence. Or conditional on the ETF approval. This is why index funds work so well. Diversification minimizes firm-specific risk, so you’re only left with macro risk.

[1] By being right I mean one or both of the following conditions are met, although they are not necessarily mutually inclusive [2]: Bitcoin is below $25k–and or–it lags the QQQ. My thesis for years has been that ‘big tech’ is the future, not Bitcoin. Accordingly, I am invested in anticipation of the near-total domination economically and even politically by these companies. The next stage of evolution or phase of the ‘US empire/hegemony’ is these companies taking over; or in other words, a soft form of secession within the host state. QQQ, which is a fund composed of the largest and most dominant of tech companies, is a suitable proxy for this prediction. So far they are close.

[2] It’s possible, for example, for Bitcoin to go to $60k but still lag QQQ.

[3] As well as the leveraged tech strategy, which returned 30%/year for past decade, META stock ( up 150% this year), as well as the method of shorting Bitcoin during market hours, which this year paid off greatly and continued to today and yesterday.