Deep Thoughts on Bitcoin

There's been a lot of uncertainty and panicky feelings going around for the cryptocurrency market and in particular Bitcoin's drop in price back to the $8,500's USD level. A couple of days ago, I nearly moved to liquidate everything I had in cryptos back to fiat on the back of one news article after another warning that Bitfinex and Tether were being audited and Bitcoin's prices were about to take (by as much as 80% by some reporter's reckoning).

Then I stopped. Took a deep breath. Started asking myself, "is this real?" I honestly couldn't tell! I would read one article after another from sources I considered at least halfway reliable and authoritative and kept saying to myself, "if these guys are publishing this, it must be real." But you know what? It's not.

Real news articles don't try to serve a bit whopping dish of opinion while writing it in language that makes it feel like facts are being shared. Real news is more objective (attempting to be neutral) and less subjective (taking a side).

I go back and re-read some of the recent Tether articles. Clearly, Bloomberg is being objective and simply reports that Bitfinex and Tether have been subpoenaed, but doesn't get into the speculative game of what Bitcoin's prices are about to do.

A similar event happened not too long ago when Bitcoin Cash suddenly surged 300% in a matter of days, culminating with being listed on Coinbase. FUD was sowed about the flippening coupled with a large amount of "news articles" about the coming flippening of Bitcoin and Bitcoin Cash.

There's a pattern emerging as I look through last six months worth of "news". A lot of it is pure garbage. It's speculative and not quoting facts. Or, worse, they quote just enough facts to hook you in, then shower you with enough hype and disinformation, you don't consciously notice the trick played on your mind because you read the ironclad facts stated that you know are facts.

Remember the points your high school English teacher taught you about critical thinking:

1. Are the points made in the article balanced? Are both sides of an argument represented objectively?
2. Were all statements made backed by reliable references and facts that actually occurred?
3. Is the article free of hype or exaggeration?

According to the Reuters Handbook of Journalism, all news articles must be free from exaggeration or falsified information. Articles should use words that honestly represent the reality of the piece. Words should be chosen carefully and thoughtfully.

Here's the thing: The authors that are attempting to influence you into an irrational panic are following the rules of that last sentence. They are choosing their words very carefully! You, as the reader, must be diligent to spot the misleads.

Now, there are two ways one can react to the whole "India is banning cryptocurrencies" and "Bitfinex and Tether have been subpoenaed" news: a) Reactive and with FUD (i.e. immediately go liquidate and cash out to fiat or b) Rationally and calmly.

My initial reaction was FUD, but I did not immediately do anything because I realized something -- if I reacted and simply cashed out, I fundamentally declared I had no faith in Bitcoin or cryptocurrencies in general. That's contrarian to everything I have researched and learned over the last eight months.

On the other hand, after realizing how I was responding, and then studying the news articles for patterns I had seen previously, I came to realize much of what I'm reading is planted to induce FUD. India didn't ban crypto-currencies. They simply outlawed it as legal tender. Bitfinex and Tether isn't on the brink of collapse, they're simply being audited. Do I think something fishy is up with these two? Empathetically, YES! Do I think it's a total scam and will collapse in the face of the audit? No! We simply don't know.

But I can just about guarantee you one thing: Bitfinex has made billions in real dollar profits through their special relationship with Tether. They're almost certainly not on the brink of collapse. If anything, if the truth comes out, we're going to be absolutely floored by the amount of money and power Bitfinex through Tether has accumulated. It's going to be such that all other exchanges question continuing to carry Tether and look to launch their own pegged currency.

Nobody's really talking about this. But if you do the math on number of transactions happening on Bitfinex. The amount of money flowing in vs. amount of money being exchanged back to real USD fiat currency, it simply doesn't add up to the negative downside. It adds up to overwhelming amount of profit, or at the very least, a hugely sizable accumulation of Bitcoins.

They're complaining about the "excruciating level of details" their auditors want not because it's hard to provide, but because if the amount of shear volume of trades went into those audits and the depth and breadth of USDT backings vs. exchange volumes across all crypto-currencies is revealed, we'd all be truly gobsmacked by Bitfinex's brilliance as grossing profits through our trades.

Bitcoin's at $8600 as I write this. If this is creating panic in you, then stop and ask yourself why? Did you buy in a lot at > $10k levels? If so, that's probably all it is. Because, if you did your research into the technology and came to believe it's a truly revolutionary thing that is coming, then that should still be true today.

One thing I know: If institutions and large, very skilled investors are putting billions into the market and continue to do so even in the face of it's current downturn, then you can safely bet your currently red balance sheet is going to return to the black relatively soon. In fact, I'm more calm today staring at $8600 price tag for Bitcoin than I was 3 days ago staring at yet another dip into $10,500 territory on the back of the recent FUD news articles.

Why? Because there's too much money in it to fail now. Nobody's going to let $450 billion evaporate altogether. There may be more bad news in February before the eventual bull run, but it's buying opportunity if you believe in Bitcoin, Blockchain, and the potential to revolutionize our lives, then this is your golden opportunity to solidify your position in all digital currencies you believe in.

I'm not telling you to go buy now. Only you can make that decision. I am, however, telling you to evaluate why you're in Bitcoin to begin with. If you're in it for all the right reason, there should be no fear. Only patience and willingness to ride the volatility storm that all early adopters must ride.

Fear captures even the best of us, myself included. But one must dig in and understand the source of that fear and conquer it. I know the technology is solid. I know the money is in play. I know many, many others believe as I do that blockchain technology will revolutionize on the same level the rise of the Internet revolutionized. Some believe it will revolutionize on a scale not seen in centuries. Sometimes it's hard to believe it because we're in the midst of it ourselves and we're still growing to trust our own first-mover instincts in this brave new world. I know I am!

But I absolutely will not drive my decisions with fear. Every mistake I've made in trading was driving by fear. Every winning decision I have made was driving my research, analysis, and making probabilistically correct bets. We must all rise above the fear that grips us at time and remind ourselves to dig deep for the facts and make reasoned, rational decisions.