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About this Episode
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To investors,
The price of bitcoin and digital assets have fallen more than 20% since the bitcoin spot ETFs were approved. Sentiment online has degraded and it seems we are living in a different world than just a few weeks ago.
But nothing has actually changed.
Price is a liar and can make a fool of anyone who can’t control their emotions. These two insights are important to remember whenever the volatility of this asset class shows itself. It remains true whether the assets are going up or down in price.
Since the ETF approval, the S&P 500 and Dow Jones Industrial Average have both hit new all-time high levels. Bitcoin’s hash rate has hit a new all-time high. And the market continues to think the Fed will cut interest rates in the first half of this year.
Bitcoin’s software is executing exactly as designed — producing block after block of transactions. The halving is less than 100 days away. And more people have access to buy bitcoin now than two weeks ago.
So all the fundamentals are signaling positive signs, and the macro market is preparing for an injection of significant liquidity, yet crypto prices are trying to distract investors from these facts.
Don’t be fooled.
As Benjamin Graham said, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” The fundamentals eventually prevail over the fear and greed in a market.
So why is the price going down? People have been selling Grayscale’s GBTC shares.
According to Bloomberg’s Katie Greifeld, there has been more than $3.4 billion in outflows over the last week and a half.
The FTX estate is reported to have been approximately $1 billion of the $3.4 billion in outflows.
This selling is largely due to the fact that GBTC’s previous discount to NAV has essentially closed back to 0%. This means the fund is now trading at NAV, so anyone who was previously underwater has a chance to get out without the discount penalty.
Even with the heavy selling of GBTC, there has still been a net inflow of more than $1 billion to these spot bitcoin ETFs.
Some people will point to the fact that price is down and say this is catastrophic for the Wall Street investors who are losing money on their first introduction to bitcoin.
There may be some of that pain happening, although much of it is exaggerated because the asset was only trading at much higher levels for a short period of time, but another way to look at it is the hundreds of millions of dollars that are flowing into the ETFs at lower prices are getting a better entry level and will likely end up in a better position in the future.
Short-term pain, long-term gain.
Crypto investors have learned over the years to buy the dip when assets are in a bull market trend, which is what we are experiencing now. It has taken longer for Wall Street investors to learn this lesson in traditional markets — the dips experienced in the equities market are much less severe.
It is natural to see multiple 30% declines in crypto bull markets, so Wall Street will have to get used to this type of volatility. That volatility will dampen over time. We just aren’t there yet.
So investors have a choice to make this week — you can look at the fundamentals of these assets and markets, or you can panic because price is showing red.
I bought more this morning. You should do your own research and think about what is best for your portfolio. We’ll see how everything plays out in the coming weeks.
Hope you all have a great day. I’ll talk to you tomorrow.
-Anthony Pompliano
Juan Meisel is the Founder & CEO of Grip Shipping.
In this conversation, we talk about how he took his business from 0 to 8 figures in revenue, attacking an incumbent industry using innovation & technology, hiring, processes, and how the world is changing.
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Entrepreneur Built $100 Million Business In 1 Year
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