Bitcoin: How a Great Idea Became a Speculative Mania.
Updated
Bitcoin has had all the hallmarks of a speculative mania for a while and recent discussion with BTC bulls has further convinced me we're in a speculative mania.
There's a strong recurring theme to the comments:
"It has intrinsic value" ...
But what is it? Saying something has an intrinsic value does is not a default justification for the current valuation. "Value" isn't a there or not sort of thing. There can be varying degrees of value. Simply stating there is a value, even if this is correct, is not even an attempt at arguing to support the current valuation and forward looking forecasts of higher prices.
"Supply is limited and demand is growing" ...
Growing based on what? Expectations of higher prices? That's just speculation unless you can provide some hard numbers as to why we should expect higher prices.
"I don't like the government / banks" ...
Okay. I'm not too fond of them myself. But how does that make a BTC worth $70,000?
"A strong community gives it intrinsic value"
Nope. That'd be extrinsic value. A mark up on the intrinsic value. If the current valuations are based on the extrinsic value of the communities expectations, this is a speculative bubble.
"You don't understand Bitcoin"
But I do. And I've taken further time to research counter points made against my thesis and found them to be lacking.
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All in all, I found most BTC bulls do not know nor care much about the intrinsic value of a BTC. And why would they? Number go up. From their perspective, this is proof of value. From my perspective, the fact no one seems to care about what the number should be, makes it a speculative mania.
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The Forgotten Dream: An Infallible Fungible Proxy
It started out with the intentions of a fungible proxy to serve the people and it evolved into non-fungible tokens being dumped on the people to devalue 99%.
As tragic as it is ironic.
First let's define a fungible proxy and why we need them. "Fungible proxy" is just a fancy term for "Currency". It's something that has equal value to different parties. The reason we need one is the bartering system sucked. Imagine I produce eggs and you produce wheat. In the barter system, I can only get wheat from you if you want eggs.
We need something both of us agree has equal value to us. A currency. A medium of exchange that we know we can trade on for something else we want.
The creation of a peer to peer digital currency with no central control was a good idea, it's sad we didn't follow through on it and instead turned it into a speculative mania.
We've become so far removed from the original premise of Bitcoin that some people even claim it was never meant to be a currency now. It was always an investment to hedge inflation or a store of value. It's absolutely not true. The abstract of the original paper explaining Bitcoin clearly stated what it was meant to be:
" A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without the burdens of
going through a financial institution."
You can look through the entire paper: Bitcoin: A Peer-to-Peer Electronic Cash System
- Satoshi Nakamoto
There is not a single instance of the word "Investment" or the phrase "Store of value" in it.
BTC Bulls Don't Want it to be a Currency
BTC bulls will lean on the tropes of the original currency idea when defending the case for long BTC but they do not actually want it to be a currency.
What BTC bulls want is very clear. They'll tell you in no uncertain terms that they're in it for speculation rather than the development of a functional currency. It's apparent in their wording. The mottos the community has adopted and the things you're sure to hear if you present any sort of bear thesis on BTC.
Let's look at some phrases and what they tell us about BTC bulls;
"To the moon" - Isn't "To the shops". It's a claim for speculative future gains. Not real world application of BTC.
"HODL" - Is very literally the antithesis to a currency. A currency is of no use at all if the "Users" of the currency hoard it.
"WAGMI" - "We're all gonna make it!". Isn't "WAGSI" ("We're all gonna spend it).
These are mottos for speculation. I don't see any way to argue against that with a straight face.
The other mottos further reveal the underlying motivations of BTC bulls:
"NGMI" - "Not gonna make it". A classic personification of the FOMO one should expect to see in a speculative bubble.
"Have fun staying poor" - Speaks for itself.
Go and search the phrase, "Sold the bottom" on Twitter or somewhere like that. It's very revealing to the mindset of crypto bulls.
Real talk, if someone was actually trying to use BTC as a currency and they engaged with the BTC communities - they'd get abuse for being a "Paperhands".
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BTC bulls do not want a functional currency. They want an army of people mindlessly buying and holding the currency. They're not telling you about the benefits of BTC, they're telling you how BTC is going to make them rich and how you'll be poor if you don't participate in this one speculative avenue to make money.
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The Speculative Mania
Some of you might think this is a valueless post but I'm actually planning on putting this post on the Blockchain and that makes everything instantly worth more, right guys?
This post may appear to be just a bunch of words but I'm actually tokenising these words, which makes them infinitely valuable.
If you're one of the early readers of this post, you're in luck! After I rebrand this post to a "Project" and do my ICO you'll have the chance to make millions in my get rich quick scheme that stores value by you telling people how valuable it is and getting them to pay a higher price for it than you did.
You'll be the community. Bringing value to the project. We'll all go to the moon as long as you all believe enough and no one asks any awkward questions.
I'm just being satirical. There's no offerings of unregistered securities here. But "Ponzi coin" is a thing.
I remember in 2021 reading a post on Reddit in r/Bitcoin where someone was showing how easy it is to make a scam crypto currency. How it can be done very quickly. Very low barrier to entry. The user was saying, in no uncertain terms, this was worth nothing and they had no plans to do anything with it.
The next day the user updated to say there'd be quite a lot of buying. His coin, fully disclosed as a sham money grab, had pumped.
In 2021 we had clear mania in crypto. There were countless pump and dumps and you really can not execute a pump and dump without some degree of mania. Some people were running one pump and dump and in the process of setting up the next one while dumping the previous one. This is only possible in a mania.
I hope the statement that there's a broad speculative mania in crypto is a widely accepted one. Even if you want to dispute the claim of mania in BTC, hopefully we're all on the same page when it comes to saying the fact blatant pump and dump scams have been easily ran on many occasions evidences a mania.
People usually don't like to take speculative risk in markets. At this point in time, there's a very high appetite for it. With extreme expectations and many people seeing the things they get into dropping over 90%. It's not "Normal" for the general public to be acting like this. It's caused by the peer pressure and fear of missing out brought on by the mania.
What if it's "Like the Internet"
BTC bulls love to liken it to the early years of the internet. It's one of the better arguements in my opinion but it overlooks A LOT.
It's easy to argue against it being like the internet. The argument goes like this, "After 10 years lots of people were using the internet for purposes outside of making money. What's the equivalent growth in use cases for BTC?".
But let's go with it being like the internet. What happened in the Dotcom boom and bust?
It started out with a few companies. Most of them doing real things. A lot of them not making money (Like AMZN). These took flight and then suddenly there were lots of "dotcom" companies. People started to buy anything related to tech because there was a belief this was the way to make fast money.
A bubble was born. The bubble attracted fraud and scams. IPOs with no substance were a common thing with those launching them running pump and dumps on the public ready to buy anything related to the new great thing. Valuations that made no sense at all were justified with the promise of future endless demand and growth.
People lost interest in the "Thing" and became obsessed with the price. If the price is going up it must be good. In reality, most of the things that were going up were just making a big D tour on their way to zero. They were nothing more than successful marketing gimmicks. Taking advantage of the speculative mania.
Kinda sounds a lot like the NFTs and clear pump and dumps, right?
Well, this was not the time to execute a "Buy and hold" strategy in tech stocks! This was, quite literally, the worst time (To date) a person could have went long these stocks. Most of them went bust and the ones that grew from a solid foundation (The AAPL's and such) would drop 90% from their highs.
It'd take a decade to get back to the highs of the dotcom boom. By the time we were getting up to those highs, there was a lot of real world application of the tech in question. More people were interested in buying Apple phones than owning AAPL stock - And this is a very important metric, in my opinion.
The percentage of people interested in using Bitcoin verse benefiting from the price moves of BTCUSD is fractional. Of this tiny amount of people, the bulk of probably criminal activity. A lot of people are interested in the price of BTC. Hardly anyone is interested in the use of BTC as anything other than wealth generation.
If we were in a "Like the internet" situation, what this would forecast would be a wipe out of the speculative mania surrounding crypto. The things that had no reason to go up in the first place go to zero and like tied ships these drag everything else along with it as the optimism turns to a speculative panic - regardless of if it's warranted or not.
During this time the things that were going to make it (And we're not "All gonna make it" would be the implied forecast) would take the initial hits and then head into range based markets for a long time. Perhaps with a slight downtrending bias over time. During this time, there'd be some real fundamental moves forward. Real use cases. Tangible value.
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Everything living on speculation alone would die as the years passed and people forgot about the speculative mania. Things that merited a higher valuation would continue to build on that merit and, eventually, produce a fundamentally sustainable rally. After a while, this would likely start to again act like a bubble. That's what trends develop into.
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Have We Given Up on Finding Use Cases?
It's an honest question. At first BTC was to get its value from being a cool currency. Then we didn't really do anything with that so the value changed to talking about how Blockchain can revolutionize everything but we didn't really do much with that either and now it's just to be called a "Store of Value".
So have we just given up on there being a use case for BTC outside of an aspiration that it will be worth more in the future?
In a previous thread someone told me multiple times I was "Obsessed with defining BTC". Should we not have some sort of definition for it? What is it if the primary purpose of it is to hope it's worth more in the future? To me, that defines something as a bubble. If it's not a bubble, we should be able to say what it is instead.
In over a decade of it existing there's been a lot of progress in people interested in the ticker BTCUSD and almost no progress in the use of Bitcoin in any practical application.
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So many people have said to be the case for the BTC bull is the supply will decrease and the demand will increase because of the impressive track record of gains. 80% or more of the interactions I've had with BTC bulls can come down to this. That ... is exactly what a speculative bubble is.
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Does Anyone Talk About Anything Except Price?
The only time BTC bulls do not want to talk about price is when you ask them how to work out a fair value price based on the intrinsic value of BTC. When you do that, they only want to answer in words. No numbers at all - but any other time, BTC bulls favourite talking point is price. Price. Price. Price.
Some convos have been comical in their structure. I've proposed I think BTC is a speculative bubble where people are not interested in the real value. It's just momentum and FOMO and asked if they can explain their reasoning for the current valuation. Which got a reply of something very close to;
"Cya at 100K. Try not to miss out again".
It's funny ... but it's not funny when you consider armies of people using this level of thinking are going out of their way to tell people they should be buying BTC. It's a sure bet. Then they'll say a bunch of stuff that implies they could answer a lot of questions on it. But they can't answer any questions.
Ask them five questions and you'll end up being told, "You don't understand Bitcoin!". It appears neither do you. Because you're evangelical about telling me why I should own it but you can't give a logical answer to the most basic of objections. If people do not ask these questions, it appears they other person is well informed. But they're usually not!
Think about the ludicrous gap between what BTC bulls say they are promoting and how they act.
It's not as if they're just long a stock. They claim to be the advocates of a new global monetary system. Do they present as such?
"I've a few questions and concerns about the functionality of the system"
"Your on crack. Get rekt!"
"Can you explain to me how the system would overcome these seemingly obvious pitfalls?"
"LMAO must be a bear! Just angry they missed out!"
The Logical Fallacies
Most of the points made by BTC bulls can be broken down into several categories of fallacies.
Bandwagon Fallacy:
Arguing that Bitcoin is valuable or should be adopted simply because it's popular or gaining traction.
Appeal to Authority:
Relying on the opinions of well-known figures or experts in the cryptocurrency space to justify the value of Bitcoin, without providing substantial evidence or analysis.
Appeal to Tradition:
Assuming that Bitcoin's historical performance or longevity is proof of its future success, without considering potential changes in market dynamics or technological advancements.
False Cause:
Incorrectly attributing the rise in Bitcoin's price or adoption to a specific event or factor without considering other possible causes or correlations.
Hasty Generalization:
Drawing broad conclusions about the future of Bitcoin based on limited or anecdotal evidence, without considering all relevant factors or potential counterarguments.
Appeal to Fear:
Using fear-mongering tactics to encourage investment in Bitcoin by suggesting that traditional financial systems are on the verge of collapse or that fiat currencies are inherently unstable.
Straw Man Argument:
Misrepresenting the criticisms or concerns about Bitcoin in order to refute them more easily, without addressing the actual points being made.
Red Herring: Introducing irrelevant or tangential arguments to distract from the main point of discussion, such as discussing the flaws of traditional banking systems when debating the merits of Bitcoin.
Tu Quoque (Appeal to Hypocrisy):
Dismissing criticisms of Bitcoin by pointing out similar flaws or issues in traditional financial systems, without addressing the validity of the specific criticisms.
Anecdotal Evidence: Using individual success stories or personal experiences with Bitcoin to argue for its broader adoption or investment potential, without considering the overall statistical trends or risks involved.
Appeal to Emotion:
Manipulating emotions such as greed, fear of missing out (FOMO), or distrust in traditional institutions to encourage investment in Bitcoin, rather than relying on logical reasoning or evidence.
Ad Hominem:
Attacking the character or motives of individuals who criticize Bitcoin, rather than addressing the substance of their arguments.
I Like Your Bitcoin but I Don't Like Your Bitcoiners
Ghandi is often quoted as having said;
"I like your Christ, I do not like your Christians. Your Christians are so unlike your Christ.".
He probably didn't say it, but this is the internet so that's allowed.
I feel the same thing can be said for Bitcoin now. If you read the original paper on what BTC was meant to be, it was a great idea. However, if you judge what BTC is based on how those who promote (And this is the right word) speculation (Again, this is the right word) in BTC it's hard to conclude it's anything other than a speculative bubble.
It's so clear that people want BTC to do one thing, go up!
So long as it's going up, everything is right. The most flimsy of reasons to support why it's going up and why it should go higher are accepted and even well thought out and respectfully posed counter theories are to be met with attack. If people question BTC's valuation in any way, you should belittle them.
Almost every discussion you have with a BTC bull will sooner or later become a call for FOMO (Usually sooner). They'll tell you how much you've missed out already. Always assume you hate BTC because you missed out. Mock you any time BTC heads higher (Even if this does not address any of the points you raised). They'll always tell you how you're missing out.
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Bitcoin was intended to be a peer to peer exchange system and instead it's turned into a peer pressure speculation system.
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The Overexposure
There are a lot of people with too much exposure to BTC. In the instances where these are young people it's usually not that bad. When you're young you have time to make mistakes and learn lessons. There are older people who also have full exposure to BTC, and this seems excessively risky.
BTC has only existed for 14 years. If you look at the length of time it has historically taken bubbles that never recovered to form and pop you'll find most of them had a lifespan of around this length of time. People will cite the decade of success as a reason BTC will succeed in the future - ask them for one major asset class that failed in under a decade. They won't answer.
There's no where near enough time elapsed to have any solid read on the long term expected trend in BTC and even if we were to take a bullish stance where we're entering into a 100 year uptrend it would be entirely possible we see a decade plus bear market in that. It's possible BTC has complete the first big bull leg and due the first big bear leg.
BTC bulls will scoff at you when you present this risk but it's right there in all of the examples they use for why BTC should go higher.
We covered the Nasdaq one earlier. Another thing people like to say is it's a store of value "Like gold".
They'll often tell you about the breaking of the Bretton Woods agreement and how that sent gold into a sustained uptrend against the USD.
They will neglect to mention there was a 20 year bear market after this initial boom.
Gold hit around 900 in this rally. Went into a bear market for 20 years and 45 years later it's up about 130% from the high.
If BTC was to follow a trajectory like gold - now would seem a terrible time to be long BTC.
When you propose the idea that BTC could head into this type of move, people outright act like its impossible. Reading the comments of people in the post below it's very easy to see some of them are very likely to have more exposure than it would seem wise to have.
The Interest Rates
The changing of interest rates really shined a light on the attitude of perma-bulls. For the longest time they said "Don't fight the Fed" but then as soon as the Fed turned against them they started to talk about how the Fed wasn't serious and just stick it out. It turns out markets rallied in rising rates, but the hypocrisy was hilarious.
Same with BTC. The Fed has literally done nothing but things to act against inflation over the last years and the BTC inflation hedge narrative has not changed one inch.
Inflation is historically mean reverting. You can look this up. Levels get really high and then they drop again. In some rare instances they've went negative (Deflation). What's always happened in the history of US inflation was when it got to certain levels it topped off and then mean reverted.
So this would be the historical bias. Then the Fed does the very thing blatantly designed to make this happen and all the way during it people maintain the narrative of inflation to infinity.
What disproves your thesis the Fed will infinitely inflate the USD if the rising of interest rates doesn't?
Now, as it happens, interest rates are paradoxical signals for markets most of the time (More on that in the link below) but the key point here is people just fit things to their narrative. When rates were low, they loved talking about interest rates and how they cause inflation. When they're high they just don't mention them but keep talking about inflation.
They'll always tell you about the action of the previous halvings but not address the fact there were dramatically different interest rates at that time. If the main thrust of your case is USD devaluation how can it possibly entirely ignore US interest rates and still be said to have credibility?
As it happens, I think it's likely markets will drop when interest rates do. That backtests well (See link above) but it highly discredits the BTC bull case when their case has very much been based on the low rates and they didn't make any sort of adjustments to what they said when the rates rose.
Ignore the Hype Artists
A lot of people you see promoting BTC these days are just going with hype. If BTC drops significantly and loses the public attention, they'll just move onto the next thing.
There are people who are big names in BTC promotion now that I remember being big names in drop shipping when that was the trending thing.
I'm not here to tell you to long or short BTC. I do not know the future and my directional bias is subject to change based on what price does.
That's because I'm a speculator. All that matters to me is price. Whether the price makes sense or not, doesn't matter to me. If it's long or short, doesn't matter to me. I am just here to speculate using strategies I've found to be net profitable.
What I want to propose to you, is anyone else who's whole case for BTC going higher is predicated on the price is also a speculator. Some of them, don't know it.
I'd propose it's wise to discard the opinions of people who think they know the future based on the previous movements in price.
"Past performance does not guarantee future results".
According to the Bulls, It's a Speculative Mania
They don't usually like to use the term. Some of them go as far as to take offence to the term. But over and over again when you dig into the reason BTC bulls expect it to go higher in the future they'll tell you there will be growing demand based on the previous gains and expectation of higher gains.
They'll tell you how people will have to FOMO in.
When you speak with BTC bulls, they really do tell you in their own words they're participants in a speculative mania. They just expect more people to join it.
"But it was a value".
Tulips have a value. Just not as high as the Dutch are once said to have priced them...
There's a strong recurring theme to the comments:
"It has intrinsic value" ...
But what is it? Saying something has an intrinsic value does is not a default justification for the current valuation. "Value" isn't a there or not sort of thing. There can be varying degrees of value. Simply stating there is a value, even if this is correct, is not even an attempt at arguing to support the current valuation and forward looking forecasts of higher prices.
"Supply is limited and demand is growing" ...
Growing based on what? Expectations of higher prices? That's just speculation unless you can provide some hard numbers as to why we should expect higher prices.
"I don't like the government / banks" ...
Okay. I'm not too fond of them myself. But how does that make a BTC worth $70,000?
"A strong community gives it intrinsic value"
Nope. That'd be extrinsic value. A mark up on the intrinsic value. If the current valuations are based on the extrinsic value of the communities expectations, this is a speculative bubble.
"You don't understand Bitcoin"
But I do. And I've taken further time to research counter points made against my thesis and found them to be lacking.
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All in all, I found most BTC bulls do not know nor care much about the intrinsic value of a BTC. And why would they? Number go up. From their perspective, this is proof of value. From my perspective, the fact no one seems to care about what the number should be, makes it a speculative mania.
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The Forgotten Dream: An Infallible Fungible Proxy
It started out with the intentions of a fungible proxy to serve the people and it evolved into non-fungible tokens being dumped on the people to devalue 99%.
As tragic as it is ironic.
First let's define a fungible proxy and why we need them. "Fungible proxy" is just a fancy term for "Currency". It's something that has equal value to different parties. The reason we need one is the bartering system sucked. Imagine I produce eggs and you produce wheat. In the barter system, I can only get wheat from you if you want eggs.
We need something both of us agree has equal value to us. A currency. A medium of exchange that we know we can trade on for something else we want.
The creation of a peer to peer digital currency with no central control was a good idea, it's sad we didn't follow through on it and instead turned it into a speculative mania.
We've become so far removed from the original premise of Bitcoin that some people even claim it was never meant to be a currency now. It was always an investment to hedge inflation or a store of value. It's absolutely not true. The abstract of the original paper explaining Bitcoin clearly stated what it was meant to be:
" A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without the burdens of
going through a financial institution."
You can look through the entire paper: Bitcoin: A Peer-to-Peer Electronic Cash System
- Satoshi Nakamoto
There is not a single instance of the word "Investment" or the phrase "Store of value" in it.
BTC Bulls Don't Want it to be a Currency
BTC bulls will lean on the tropes of the original currency idea when defending the case for long BTC but they do not actually want it to be a currency.
What BTC bulls want is very clear. They'll tell you in no uncertain terms that they're in it for speculation rather than the development of a functional currency. It's apparent in their wording. The mottos the community has adopted and the things you're sure to hear if you present any sort of bear thesis on BTC.
Let's look at some phrases and what they tell us about BTC bulls;
"To the moon" - Isn't "To the shops". It's a claim for speculative future gains. Not real world application of BTC.
"HODL" - Is very literally the antithesis to a currency. A currency is of no use at all if the "Users" of the currency hoard it.
"WAGMI" - "We're all gonna make it!". Isn't "WAGSI" ("We're all gonna spend it).
These are mottos for speculation. I don't see any way to argue against that with a straight face.
The other mottos further reveal the underlying motivations of BTC bulls:
"NGMI" - "Not gonna make it". A classic personification of the FOMO one should expect to see in a speculative bubble.
"Have fun staying poor" - Speaks for itself.
Go and search the phrase, "Sold the bottom" on Twitter or somewhere like that. It's very revealing to the mindset of crypto bulls.
Real talk, if someone was actually trying to use BTC as a currency and they engaged with the BTC communities - they'd get abuse for being a "Paperhands".
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BTC bulls do not want a functional currency. They want an army of people mindlessly buying and holding the currency. They're not telling you about the benefits of BTC, they're telling you how BTC is going to make them rich and how you'll be poor if you don't participate in this one speculative avenue to make money.
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The Speculative Mania
Some of you might think this is a valueless post but I'm actually planning on putting this post on the Blockchain and that makes everything instantly worth more, right guys?
This post may appear to be just a bunch of words but I'm actually tokenising these words, which makes them infinitely valuable.
If you're one of the early readers of this post, you're in luck! After I rebrand this post to a "Project" and do my ICO you'll have the chance to make millions in my get rich quick scheme that stores value by you telling people how valuable it is and getting them to pay a higher price for it than you did.
You'll be the community. Bringing value to the project. We'll all go to the moon as long as you all believe enough and no one asks any awkward questions.
I'm just being satirical. There's no offerings of unregistered securities here. But "Ponzi coin" is a thing.
I remember in 2021 reading a post on Reddit in r/Bitcoin where someone was showing how easy it is to make a scam crypto currency. How it can be done very quickly. Very low barrier to entry. The user was saying, in no uncertain terms, this was worth nothing and they had no plans to do anything with it.
The next day the user updated to say there'd be quite a lot of buying. His coin, fully disclosed as a sham money grab, had pumped.
In 2021 we had clear mania in crypto. There were countless pump and dumps and you really can not execute a pump and dump without some degree of mania. Some people were running one pump and dump and in the process of setting up the next one while dumping the previous one. This is only possible in a mania.
I hope the statement that there's a broad speculative mania in crypto is a widely accepted one. Even if you want to dispute the claim of mania in BTC, hopefully we're all on the same page when it comes to saying the fact blatant pump and dump scams have been easily ran on many occasions evidences a mania.
People usually don't like to take speculative risk in markets. At this point in time, there's a very high appetite for it. With extreme expectations and many people seeing the things they get into dropping over 90%. It's not "Normal" for the general public to be acting like this. It's caused by the peer pressure and fear of missing out brought on by the mania.
What if it's "Like the Internet"
BTC bulls love to liken it to the early years of the internet. It's one of the better arguements in my opinion but it overlooks A LOT.
It's easy to argue against it being like the internet. The argument goes like this, "After 10 years lots of people were using the internet for purposes outside of making money. What's the equivalent growth in use cases for BTC?".
But let's go with it being like the internet. What happened in the Dotcom boom and bust?
It started out with a few companies. Most of them doing real things. A lot of them not making money (Like AMZN). These took flight and then suddenly there were lots of "dotcom" companies. People started to buy anything related to tech because there was a belief this was the way to make fast money.
A bubble was born. The bubble attracted fraud and scams. IPOs with no substance were a common thing with those launching them running pump and dumps on the public ready to buy anything related to the new great thing. Valuations that made no sense at all were justified with the promise of future endless demand and growth.
People lost interest in the "Thing" and became obsessed with the price. If the price is going up it must be good. In reality, most of the things that were going up were just making a big D tour on their way to zero. They were nothing more than successful marketing gimmicks. Taking advantage of the speculative mania.
Kinda sounds a lot like the NFTs and clear pump and dumps, right?
Well, this was not the time to execute a "Buy and hold" strategy in tech stocks! This was, quite literally, the worst time (To date) a person could have went long these stocks. Most of them went bust and the ones that grew from a solid foundation (The AAPL's and such) would drop 90% from their highs.
It'd take a decade to get back to the highs of the dotcom boom. By the time we were getting up to those highs, there was a lot of real world application of the tech in question. More people were interested in buying Apple phones than owning AAPL stock - And this is a very important metric, in my opinion.
The percentage of people interested in using Bitcoin verse benefiting from the price moves of BTCUSD is fractional. Of this tiny amount of people, the bulk of probably criminal activity. A lot of people are interested in the price of BTC. Hardly anyone is interested in the use of BTC as anything other than wealth generation.
If we were in a "Like the internet" situation, what this would forecast would be a wipe out of the speculative mania surrounding crypto. The things that had no reason to go up in the first place go to zero and like tied ships these drag everything else along with it as the optimism turns to a speculative panic - regardless of if it's warranted or not.
During this time the things that were going to make it (And we're not "All gonna make it" would be the implied forecast) would take the initial hits and then head into range based markets for a long time. Perhaps with a slight downtrending bias over time. During this time, there'd be some real fundamental moves forward. Real use cases. Tangible value.
-------------------------------------------------------------------------------------------------------------
Everything living on speculation alone would die as the years passed and people forgot about the speculative mania. Things that merited a higher valuation would continue to build on that merit and, eventually, produce a fundamentally sustainable rally. After a while, this would likely start to again act like a bubble. That's what trends develop into.
-------------------------------------------------------------------------------------------------------------
Have We Given Up on Finding Use Cases?
It's an honest question. At first BTC was to get its value from being a cool currency. Then we didn't really do anything with that so the value changed to talking about how Blockchain can revolutionize everything but we didn't really do much with that either and now it's just to be called a "Store of Value".
So have we just given up on there being a use case for BTC outside of an aspiration that it will be worth more in the future?
In a previous thread someone told me multiple times I was "Obsessed with defining BTC". Should we not have some sort of definition for it? What is it if the primary purpose of it is to hope it's worth more in the future? To me, that defines something as a bubble. If it's not a bubble, we should be able to say what it is instead.
In over a decade of it existing there's been a lot of progress in people interested in the ticker BTCUSD and almost no progress in the use of Bitcoin in any practical application.
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So many people have said to be the case for the BTC bull is the supply will decrease and the demand will increase because of the impressive track record of gains. 80% or more of the interactions I've had with BTC bulls can come down to this. That ... is exactly what a speculative bubble is.
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Does Anyone Talk About Anything Except Price?
The only time BTC bulls do not want to talk about price is when you ask them how to work out a fair value price based on the intrinsic value of BTC. When you do that, they only want to answer in words. No numbers at all - but any other time, BTC bulls favourite talking point is price. Price. Price. Price.
Some convos have been comical in their structure. I've proposed I think BTC is a speculative bubble where people are not interested in the real value. It's just momentum and FOMO and asked if they can explain their reasoning for the current valuation. Which got a reply of something very close to;
"Cya at 100K. Try not to miss out again".
It's funny ... but it's not funny when you consider armies of people using this level of thinking are going out of their way to tell people they should be buying BTC. It's a sure bet. Then they'll say a bunch of stuff that implies they could answer a lot of questions on it. But they can't answer any questions.
Ask them five questions and you'll end up being told, "You don't understand Bitcoin!". It appears neither do you. Because you're evangelical about telling me why I should own it but you can't give a logical answer to the most basic of objections. If people do not ask these questions, it appears they other person is well informed. But they're usually not!
Think about the ludicrous gap between what BTC bulls say they are promoting and how they act.
It's not as if they're just long a stock. They claim to be the advocates of a new global monetary system. Do they present as such?
"I've a few questions and concerns about the functionality of the system"
"Your on crack. Get rekt!"
"Can you explain to me how the system would overcome these seemingly obvious pitfalls?"
"LMAO must be a bear! Just angry they missed out!"
The Logical Fallacies
Most of the points made by BTC bulls can be broken down into several categories of fallacies.
Bandwagon Fallacy:
Arguing that Bitcoin is valuable or should be adopted simply because it's popular or gaining traction.
Appeal to Authority:
Relying on the opinions of well-known figures or experts in the cryptocurrency space to justify the value of Bitcoin, without providing substantial evidence or analysis.
Appeal to Tradition:
Assuming that Bitcoin's historical performance or longevity is proof of its future success, without considering potential changes in market dynamics or technological advancements.
False Cause:
Incorrectly attributing the rise in Bitcoin's price or adoption to a specific event or factor without considering other possible causes or correlations.
Hasty Generalization:
Drawing broad conclusions about the future of Bitcoin based on limited or anecdotal evidence, without considering all relevant factors or potential counterarguments.
Appeal to Fear:
Using fear-mongering tactics to encourage investment in Bitcoin by suggesting that traditional financial systems are on the verge of collapse or that fiat currencies are inherently unstable.
Straw Man Argument:
Misrepresenting the criticisms or concerns about Bitcoin in order to refute them more easily, without addressing the actual points being made.
Red Herring: Introducing irrelevant or tangential arguments to distract from the main point of discussion, such as discussing the flaws of traditional banking systems when debating the merits of Bitcoin.
Tu Quoque (Appeal to Hypocrisy):
Dismissing criticisms of Bitcoin by pointing out similar flaws or issues in traditional financial systems, without addressing the validity of the specific criticisms.
Anecdotal Evidence: Using individual success stories or personal experiences with Bitcoin to argue for its broader adoption or investment potential, without considering the overall statistical trends or risks involved.
Appeal to Emotion:
Manipulating emotions such as greed, fear of missing out (FOMO), or distrust in traditional institutions to encourage investment in Bitcoin, rather than relying on logical reasoning or evidence.
Ad Hominem:
Attacking the character or motives of individuals who criticize Bitcoin, rather than addressing the substance of their arguments.
I Like Your Bitcoin but I Don't Like Your Bitcoiners
Ghandi is often quoted as having said;
"I like your Christ, I do not like your Christians. Your Christians are so unlike your Christ.".
He probably didn't say it, but this is the internet so that's allowed.
I feel the same thing can be said for Bitcoin now. If you read the original paper on what BTC was meant to be, it was a great idea. However, if you judge what BTC is based on how those who promote (And this is the right word) speculation (Again, this is the right word) in BTC it's hard to conclude it's anything other than a speculative bubble.
It's so clear that people want BTC to do one thing, go up!
So long as it's going up, everything is right. The most flimsy of reasons to support why it's going up and why it should go higher are accepted and even well thought out and respectfully posed counter theories are to be met with attack. If people question BTC's valuation in any way, you should belittle them.
Almost every discussion you have with a BTC bull will sooner or later become a call for FOMO (Usually sooner). They'll tell you how much you've missed out already. Always assume you hate BTC because you missed out. Mock you any time BTC heads higher (Even if this does not address any of the points you raised). They'll always tell you how you're missing out.
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Bitcoin was intended to be a peer to peer exchange system and instead it's turned into a peer pressure speculation system.
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The Overexposure
There are a lot of people with too much exposure to BTC. In the instances where these are young people it's usually not that bad. When you're young you have time to make mistakes and learn lessons. There are older people who also have full exposure to BTC, and this seems excessively risky.
BTC has only existed for 14 years. If you look at the length of time it has historically taken bubbles that never recovered to form and pop you'll find most of them had a lifespan of around this length of time. People will cite the decade of success as a reason BTC will succeed in the future - ask them for one major asset class that failed in under a decade. They won't answer.
There's no where near enough time elapsed to have any solid read on the long term expected trend in BTC and even if we were to take a bullish stance where we're entering into a 100 year uptrend it would be entirely possible we see a decade plus bear market in that. It's possible BTC has complete the first big bull leg and due the first big bear leg.
BTC bulls will scoff at you when you present this risk but it's right there in all of the examples they use for why BTC should go higher.
We covered the Nasdaq one earlier. Another thing people like to say is it's a store of value "Like gold".
They'll often tell you about the breaking of the Bretton Woods agreement and how that sent gold into a sustained uptrend against the USD.
They will neglect to mention there was a 20 year bear market after this initial boom.
Gold hit around 900 in this rally. Went into a bear market for 20 years and 45 years later it's up about 130% from the high.
If BTC was to follow a trajectory like gold - now would seem a terrible time to be long BTC.
When you propose the idea that BTC could head into this type of move, people outright act like its impossible. Reading the comments of people in the post below it's very easy to see some of them are very likely to have more exposure than it would seem wise to have.
The Interest Rates
The changing of interest rates really shined a light on the attitude of perma-bulls. For the longest time they said "Don't fight the Fed" but then as soon as the Fed turned against them they started to talk about how the Fed wasn't serious and just stick it out. It turns out markets rallied in rising rates, but the hypocrisy was hilarious.
Same with BTC. The Fed has literally done nothing but things to act against inflation over the last years and the BTC inflation hedge narrative has not changed one inch.
Inflation is historically mean reverting. You can look this up. Levels get really high and then they drop again. In some rare instances they've went negative (Deflation). What's always happened in the history of US inflation was when it got to certain levels it topped off and then mean reverted.
So this would be the historical bias. Then the Fed does the very thing blatantly designed to make this happen and all the way during it people maintain the narrative of inflation to infinity.
What disproves your thesis the Fed will infinitely inflate the USD if the rising of interest rates doesn't?
Now, as it happens, interest rates are paradoxical signals for markets most of the time (More on that in the link below) but the key point here is people just fit things to their narrative. When rates were low, they loved talking about interest rates and how they cause inflation. When they're high they just don't mention them but keep talking about inflation.
They'll always tell you about the action of the previous halvings but not address the fact there were dramatically different interest rates at that time. If the main thrust of your case is USD devaluation how can it possibly entirely ignore US interest rates and still be said to have credibility?
As it happens, I think it's likely markets will drop when interest rates do. That backtests well (See link above) but it highly discredits the BTC bull case when their case has very much been based on the low rates and they didn't make any sort of adjustments to what they said when the rates rose.
Ignore the Hype Artists
A lot of people you see promoting BTC these days are just going with hype. If BTC drops significantly and loses the public attention, they'll just move onto the next thing.
There are people who are big names in BTC promotion now that I remember being big names in drop shipping when that was the trending thing.
I'm not here to tell you to long or short BTC. I do not know the future and my directional bias is subject to change based on what price does.
That's because I'm a speculator. All that matters to me is price. Whether the price makes sense or not, doesn't matter to me. If it's long or short, doesn't matter to me. I am just here to speculate using strategies I've found to be net profitable.
What I want to propose to you, is anyone else who's whole case for BTC going higher is predicated on the price is also a speculator. Some of them, don't know it.
I'd propose it's wise to discard the opinions of people who think they know the future based on the previous movements in price.
"Past performance does not guarantee future results".
According to the Bulls, It's a Speculative Mania
They don't usually like to use the term. Some of them go as far as to take offence to the term. But over and over again when you dig into the reason BTC bulls expect it to go higher in the future they'll tell you there will be growing demand based on the previous gains and expectation of higher gains.
They'll tell you how people will have to FOMO in.
When you speak with BTC bulls, they really do tell you in their own words they're participants in a speculative mania. They just expect more people to join it.
"But it was a value".
Tulips have a value. Just not as high as the Dutch are once said to have priced them...
Note
Here's the uncomfortable truth, if you are looking for any sort of real sustained progress in BTC, you want to see a wipe out of the speculative market. Something deep, drawn out and painful. Something to kick out all the people who are here merely for speculation.
Something to cool off the mania that's built up and put the focus on real progress.
Something to stop the mal-investment with money being allocated to useless stuff.
For real long term progress, you want to see some sustained pain taking the fortune chasers out the market.
And if you don't want to see that, you might be a fortune chaser.
Note
A point I forgot to cover in the OP is the fact it costs money to produce a Bitcoin is what gives it it's value. That's not how it works. Ask anyone who produces anything and they'll quickly tell you that. That'd be a dream.
How much it costs to produce determines how much you have to sell it for to make a profit but it does not determine how much someone will buy it for.
That is the demand side of the equation.
Example:
Let's say tomorrow an oil replacement is invented. Overnight oil becomes useless because we have something much better.
Tomorrow it will cost the same to get oil out the ground. Same tools, same energy, same wages - these things will not change.
What will change is people's willingness to do that because they'd just be pouring their money down the well and stuck with this awkward black runny stuff.
So product cost does not dictate demand price. Demand price dictates if product costs are viable.
Since we've looped back to demand we've looped back to the point that if the demand is only driven by expectations of higher prices later, this is a bubble.
Note
Quality of the comments really degrades as posts become more popular. Usually early on there's some interesting discussion to be had but then once it gets popular a bunch of people show up with;
"Ur stoodid"
And then they want to talk about price, of course.
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A lot of them would be much more upset if they actually read the post. But they didn't. So they can just show up talking about price and think that's a valid point rather than a classic personification of all the things I said in the post they're commenting on.Note
If anyone is interested in such a thing, here's a thread where we can have a good faith discussion about how we should go about determining a valuation for Bitcoin. 
Note
I'd like to start focusing more on TA again now. Here's a post covering some thoughts on different TA patterns we have pending now. The risk of a false breakout and when the bear risk has passed.
Note
Someone contacted me and said they got into BTC around 2-3K on the breakout after the MT-Gox thing and after going through this post decided to exit their position. I asked them what I'd said to trigger that and they said it wasn't what I'd said, it was what the bulls didn't say.
Out of 100s of comments, there were hardly even any attempts to argue against the bubble.
Almost all of the points made fit neatly inside the list of fallacies the OP predicted.
Note
The main thing I want to show people with these posts and the back and forth in the comments is although BTC bull present themselves as being very knowledgeable - they tend to flounder in debate. Although they are great "On script", their points fall apart when you ask them questions.
It's important to show this because when left uninterrupted, it appears they have all the answers.
But they don't. They just don't.
If you let a flat earth talk and talk and talk without anyone making any counter points they look like they know what they're talking about.
As soon as someone with some science background asks some Qs the whole thing falls apart.
The same thing happens with BTC bulls.
It's very easy to appear like you know what you're talking about if no one highlights the flaws in it.
But if you can't keep going after the flaws are highlighted, you don't know what you're talking about.
Note
Clearly BTC bulls do believe in the market mantra of "Buy low, sell high". It seems they think the only combo is,
"Buy low and be optimistic that works out forever".
"Short low, FUD high".
It'd be funny people think you have to have a static point of view on something that was 4K a few years ago and is 70K now. It'd be funny, if it wasn't so tragic.
Note
And a lot of them really are just buying high, off of people who bought low and then telling the people who bought low how stupid they are. It's a bold strategy.
Note
Optimistim isn't an analysis.Nor is dismissing bearish analysis as FUD, doom, gloom or "Negative" a counter analysis.
If BTC crashed with a lot of average people having their life wrapped up in it, it'd be a negative thing.
It's a simple observation. Which tells you nothing about how "Doomy and gloomy" I am.
You don't have to be sad inside to notice markets tend to do bad things after shooting up 1,000s of % and gaining endless optimism from new market players.
To think that, is very naieve.
I think that's my last word on the subject.
Note
Yet again we get another signal from the market that BTC is a risk on / off asset rather than a safe haven / store of value asset. 
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