Bitcoin weak again as I am right

I am net bearish on Bitcoin and using it as a hedge against my leveraged tech portfolio. This method has done great since late 2022 even though the price of Bitcoin has appreciated considerably. Shorting bitcoin also worked great as a hedge last Friday when it fell from $104k to $102k in a flat overall market, and last Sunday during the DeepSeek selloff when it fell from $105k to $101k by Monday morning.

I looks like I was right again: The Silk Road coins will haunt Bitcoin forever:

These are a new batch of Silk Road coins, this time seized from “Individual X”, not James Zhong.

There is no end to the supply to be dumped. The coins will be dumped even as Trump is in office, as he lacks the authority, resources, or inclination to do anything about it. MicroStrategy’s 5% ownership of Bitcoin is still minuscule compared to selling pressure from other entities, like early adopters, miners, hedge funds, and governments. See what happened when the Hunt Brothers tried to corner the silver market in the late ’70s. Did not end well for them.

Lost or stolen Bitcoin never go away–they get dumped later. As mentioned earlier, coins that were stolen or procured through illicit marketplace activity were presumed to be removed from circulation, as they were inaccessible or restricted to the illiquid ‘dark web’. Now that world governments have gotten much better seizing, tracking, and reselling such Bitcoin, this introduces considerably much more supply and hence sell pressure to the market.

So many people in November and December of 2024 were predicting a whole new bull cycle for BTC to $150k and beyond. $90-100k was the peak. At best, it will be flat for at least eight more months, similar to March-Nov 2024. Or March-October 2023. The U.S. government still dumping coins from Silk Road on Coinbase everyday, keeping a lid on price and resulting in random dumps intraday.

Here is the initial story from March 2023 when the U.S. govt. announced its intent to sell all 41k coins (these are the James Zhong coins):

US government plans to sell 41K Bitcoin connected to Silk Road.

Each protracted flat period corresponds to a sale of a 10,000 or more batch of Bitcoin:

On December 2nd, 2024, when a huge 10,000 Bitcoin batch of Government-seized Silk Road coins were initially moved to Coinbase after being dormant, the initial response by the community was dismissal. I was correct in predicting that the sale would be unwound gradually during market hours and keep a lid on the price of Bitcoin for the foreseeable future. 2 month later, from December 2024 to February 2nd 2025, Bitcoin has done nothing, like I said, bouncing between $90-105k.

Part of the confusion is when the U.S. government initially moves a batch of Silk Road coins to Coinbase, people assume it gets sold instantly, so when the price does not fall much, it’s erroneously assumed that the market absorbed the entire sale. But this is wrong. The initial movement is not the sale–the sale is much more gradual over many months. It’s a subtle but important point.

He’s right:

There will not be a reserve. As I correctly predicted, Trump punted on the reserve, choosing to delay any decision for up to 180 days. I wish there was a way to increase my bets on the ‘no’ outcome (for the first 100 days and 2025) without moving the market too much, as the liquidity still sucks. This allows me to diversify my bets in other ways aside from only shorting Bitcoin itself.

A recurring theme which I pointed out is that those who donate the most get the least, whereas those who opposed Trump before his 2024 run (or never supported him at all) get preferential treatment and are first in line. So this means private meetings with NVidia CEO and $500 billion blank check for AI, but nothing for crypto except a meme coin in the President’s likeness (which only makes exiting crypto holders worse-off due to dilution).

Moldbug writes:

Another analogy: true top-down White House control of the executive branch is like a bicycle that’s been sitting outside in the rain for 80 years. Previous Republican presidents, including Trump himself, had picked it up, posed with it, pretended to sit on it, actually sat on it, etc. But no one has actually tried to ride FDR’s rusty old bicycle.

What happens when you try? Do the pedals move? Does the chain break? The post? It’s fascinating to see Trump—plus a small army of revved-up nerdy zoomers—try to actually ride the bike. For all the reasons I said, it works much better than I expected. But—couldn’t we afford a new bike? Wouldn’t it be worth it? For the paper route?

I am sure he will be backtrack on this post when the anticipated restructuring never happens. What some get wrong is the implosion of the woke-left since 2022 is more about the rise of the center-left/right, not the far-right gaining more power or having more influence on discourse. Instead of a fundamental restructuring of anything, it’s more like a repudiation of the excesses of the far-left whose power was unchecked from 2016-2021 or so, as the pendulum swings back to the center. At some point even reasonable people got tired of the pronouns and cancellations.