An Idiot’s Guide to Bitcoin (Part 1)

Don’t miss your morning briefing [Morning Reckoning] January 31, 2023 [WEBSITE]( | [UNSUBSCRIBE]( An Idiot’s Guide to Bitcoin (Part 1) - Think like a crypto outsider… - Crypto is like tech… - Two sides of the same coin… Baltimore, Maryland January 31, 2023 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, It’s one of the most frequent critiques lobbed my way on social media, email, and even delivered in person via scathing, spittle-soaked tirades… You’re wrong about crypto! Yes, I am wrong. In fact, I’ve ignored crypto for years – so I’ve been wrong. The only positive aspect of my crypto-indifference is the consistency. Even when bitcoin was mooning, I remained skeptical. Full disclosure: I’ve never made a dime directly from crypto, though I’ve successfully traded many crypto-adjacent stocks. My only actual crypto buying experience came in 2021 when the market was going absolutely bonkers. I opened a Coinbase account and bought an insignificant amount of Bitcoin, Ethereum, and a few alt-coins. I had no grandiose plans of banking huge gains during this experiment. My goal was simply to have some skin in the game to force myself to track crypto during those insane rallies. At the time, I even joked that my official foray into crypto – even with “play money” – would mark the top of the speculative mania. Unfortunately, I was right about that part. I never sold my holdings, either. They’re still sitting there in my little Coinbase account, miles from their 2021 highs. While I didn’t bet the farm on crypto, many folks poured their hearts, souls, and retirement funds into these speculative ventures. The Covid Bubble convinced many investors that stocks (and crypto) only go up. Sadly, more than a few lives were turned upside down when it all fell apart. Same as it ever was… But like many of last year’s big losers, crypto is starting to show signs of life. This calls for deeper analysis – even from a self-professed crypto hater. [CIA-based timing tool now available to everyday Americans]( What you’re about to see might sound unbelievable, but it’s 100% based on facts… my connections a controversial government insider… and my work at the CIA. I am putting the finishing touches on our new CIA-based timing tool and I want to make sure you don’t miss your opportunity to give it a “test-run”. But don't hestitate - [click here for all the details.]( [LEARN MORE]( A few important crypto questions on my mind right now: Is Crypto Winter over? Will Bitcoin snap back to life, retake its highs, and prove all the haters, losers, and dummies wrong? Has crypto earned a permanent seat at the table? Can we take it seriously as an investment, or is it a long-term zero? These are the questions I’m attempting to answer in this Idiot’s Guide to Crypto. So buckle up, grab a snack, and open your mind. What follows is a cold, hard look at how to detangle crypto’s prospects from a (mostly) unbiased third party. Just one disclaimer… If you came here seeking some laser-eyed fever dream, you’re not gonna like what comes next. Think Like a Crypto Outsider Before we begin breaking down Bitcoin and crypto’s prospects for 2023 and beyond, you need to understand how I’m approaching my analysis. For starters, I’m not qualified to discuss the technology behind crypto or its potential applications. After all, I am the idiot behind the Idiot’s Guide to Crypto – and I’m quite comfortable in this role. I have a rudimentary understanding of what Bitcoin is and how it is used. I have no interest in diving further down the rabbit hole. But I do possess a deep understanding of market mechanics. I know how price action works and the psychology driving bull and bear markets and investor behavior. I understand the madness of crowds and the power of boom-bust cycles. This is the information investors and speculators love to seek out when it confirms their previously held beliefs. Ironically, it’s the same information they dismiss as useless witchcraft when it begins to work against them. Ultimately, crypto’s answers will come through price discovery. If crypto is a winner-take-all market, Bitcoin’s value (should Bitcoin come out on top) will increase dramatically while lesser coins plummet. If multiple viable cryptos emerge from the early speculative phase, we’ll see a market of winners and losers, with “blue chip” cryptos and a few also-rans. If the entire idea of cryptocurrencies begins to fizzle, then… well, you get the idea. Again, no deeper knowledge is required to spot these trends. Sure, crypto will have more than its fair share of visionaries and technical experts beyond the pumpers and showboaters on social media. They might possess the brains and insider knowledge to capitalize on developments before this information becomes obvious to the marketplace. But, much like the stock market, the average participant has virtually no shot at figuring any of this out ahead of the crowd – no matter how many blog posts he reads. Ultimately, you don’t need to possess a deep understanding of crypto's inner workings to survive as a trader. Think like a crypto outsider, and you're less likely to get sucked into the compelling storylines that might cloud your investing judgment. [Response Requested]( 1/1000th of an ounce of gold available As a The Daily Reckoning reader, Jim Rickards is offering you 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America ([click here to view](. If you have not responded to Jim’s offer yet, and want to know how to claim yours… Please click the link below for details. [Click here to learn how to claim your new Gold Back Currency<]( Thanks! Amber Anderson Customer Service [LEARN MORE]( Crypto = Tech Next, we need to acknowledge that crypto isn’t an asset class that lives on its own magical island, far from the gravity of market forces and the consequences of herd thinking. If the Covid Bubble taught crypto investors anything, it’s that crypto and the tech-growth trade are on the same wavelength, and will therefore react similarly to various market conditions. The crypto and speculative tech markets both broke out in the summer of 2020 as the lockdown trading phenomenon picked up steam, officially launching the final mania phase of the bubble. The charts aren’t identical. Yet both Bitcoin and the Ark Innovation ETF (ARKK) – a solid proxy for the tech-growth trade – posted their biggest moves in the second half of 2020 leading into the Q1 2021 blow-off top. [chart] Source: StockCharts.com Crypto and tech each attempted to rally in late 2021. But those moves failed, and an ugly bear market materialized. Even during 2022’s short relief rallies, crypto and tech have moved in lockstep. I don't know which one’s the dog and which one’s the tail just yet. But we might have a chance to figure out this riddle in the months ahead if these groups finally display something resembling a divergence. Until the market tells us otherwise, these trades are one and the same. Next week, I’ll dive deeper into what needs to happen in the crypto space to repair the damage and potentially plant the seeds for the next rally. I’ll also dive into the charts to try and figure out where we are in this cycle – and where Bitcoin might be headed in the weeks and months ahead. Let me know what you think so far by emailing me [here](mailto:feedback@dailyreckoning.com). Be sure to tell me if there are any topics you’d like me to cover in future articles. I’ll be back on Tuesday with your next market analysis! Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Urgent Notice From Paradigm CIO Zach Scheidt!]( [This Simple Chart]( Hi, Zach Scheidt here… I’m the Chief Income Officer at Paradigm Press. With inflation raging (and showing no signs of coming to an end any time soon), almost everyone in America is feeling the pain in a big way. Which is why, several months ago, I set out on a big mission… my goal was to create a [complete, step-by-step plan to surviving and beating inflation]( one that anyone could take advantage of. Today, after hundreds of hours of research, I’m revealing all of my findings. [Simply click here now to see how to survive America’s deadly inflation crisis](. [LEARN MORE]( In Case You Missed It… Sean Ring, Contributing Editor Give Up on the Idea of a Free Society Asti, Northern Italy [Sean Ring] SEAN RING Dear Reader, In 2012, I attended the Property and Freedom Society conference. The conference exposed the organized “State” for what it was – an institution run by crooks, liars and useful idiots. Not only that, we discussed what a free and natural order would look like. Back then, I was so hopeful… so energized. I thought the world was really headed toward change. I was wrong. But that’s no reason to be miserable. It just means a change of intent. Instead of saving “society,” save yourself. [Biden’s “Hush-Hush” Plot Uncovered]( [This Simple Chart]( Right now, Joe Biden – along with 9 of the world’s largest banks – have initiated [a disturbing new experiment with YOUR cash](. It’s called “Project Cedar” – and up to now it’s been kept fairly “hush-hush”… But in [this urgent new exposé]( you’ll discover critical details behind Project Cedar and what Biden’s master plan really is. [Click here to learn the critical details before it impacts your money](. [LEARN MORE]( We’re All Prisoners of Our Biases Before you think, “Oh God, here comes the human resources lecture,” let me explain. One of my great friends from London grew up in Sydney, Australia. I remember him speaking on his cell phone outside the pub one night. Usually, I’m pretty good with languages. But I had absolutely no idea what was coming out of his mouth. I asked him, “Matey, what the hell language was that?” “Bosnian – well Bosniak, actually. My family is Muslim,” he said, as he drained his pint. I was confused, “But… you’re drinking. Isn’t that not allowed?” “My father thought organized religion is the dumbest thing in the world and starts pretty much every war,” he replied, “I didn’t even know we were Muslims until I was 18. I’ve got nothing to do with it. I’m an atheist.” I always remembered this conversation whenever he’d go on (and on, and on, and on) about biologist Richard Dawkins and philosopher Sam Harris. I never had time for either of them. Not because I’m anti-science, but because I can’t think of two more insufferable pricks on the planet. But to my friend, they were his “gods.” I felt smug in my own right, thinking my friend only had his deep anti-religious bias confirmed, rather than science convincing him via an argument that religion was counterproductive. But once I performed a bit of self-examination, I no longer felt so smug. “You can’t fight city hall!” “The game is rigged!” “They’re all a bunch of crooks!” How many times did I hear Philosopher/Truck Driver John Ring utter those phrases at home? All the time! And I must say, based on what I’ve witnessed over my lifetime, my dad hasn’t been wrong. But, like Dawkins and Harris for my friend, my own favorite freedom thinkers like Mises, Rothbard, Hayek and Hoppe merely provided the intellectual foundation for thingsI already believed. These Austrian economists were, in essence, my confirmation bias. I bring this up because I now believe “fighting for a free society” is the most futile gesture one can perform on this planet. Why? Because it’s damn near impossible to convince people of that which they don’t already believe. Voltaire Was Right… But Needs an Upgrade. French philosopher Voltaire once said: “It’s difficult to free fools from the chains they revere.” He’s correct. But for the 21st century, I’d upgrade that to: “It’s impossible to free low-IQ imbeciles from their erroneous beliefs.” And then, let’s revisit the whole COVID fiasco… How many people still think masks do absolutely anything? How many people still think the vaccines are completely safe and effective? Let’s try this one: How many people have apologized to, and begged forgiveness from, their friends for banishing them from their social circle over dissenting views on masks and vaccines? I bet it’s a non-zero number awfully close to zero. And these are the people you’re trying to save? Really? I can’t tell you how happy I am not to share a country with them. This insanity And it’s not just America that’s gone nuts. Have you seen what Dyson is selling in Australia? [Headphones with an air-purifier attachment!]( In Australia, a country with some of the cleanest air on the planet. The place has jumped the shark… Not It! I remember running around the playground in 3rd grade playing “Tag.” The tree in the middle of the playground was “home base,” where you were safe. It was an oasis in the chaos of children running amok. Remembering those lovely childhood days, I no longer wonder why so many millionaires and billionaires forgo acres of land for miniscule apartments on spits of rock like Singapore, Dubai and Monaco. Maybe you can’t swing a cat in most of their apartments. They’re tiny… claustrophobic, even. But it’s their little slice of heaven. And the best part is they don’t have to put up with the hoi polloi. In Monaco, there’s no income tax and no paparazzi. There are cops on every corner, along with police cameras. Does anyone ever accuse Monaco of being a police state? Of course not! People like Lewis Hamilton and David Coulter (both F1 Champions) love the ability to live quietly. And the bonus: they don’t have to pay UK income tax! In Singapore, parents let their young teenagers out until 4am… because nothing is ever going to happen to them. How do we know that? Because Singapore canes the bad guys with a rattan. The newest up-and-comer is Dubai because many from Hong Kong fled there after the CCP crackdown. Again, this is a place with little to no street crime, so your kids are completely safe. So are your money and your property. Dissent isn’t tolerated. Perhaps that goes against Western values. But for the well-heeled, it makes things nice and cozy. [Man Who Predicted Bitcoin Warns: “Don’t Buy Bitcoin!”]( [This Simple Chart]( James Altucher first predicted Bitcoin all the way back in 2013… And ever since, he’s been one of the biggest advocates for it. But now, he’s warning Americans that buying Bitcoin could be a big mistake… [Click here now to see why](. [LEARN MORE]( Great Things Are Done in Secret “But Sean,” you say, “I’m not Lewis Hamilton or David Coulthard or Prince Albert. How can I possibly escape?” Well, you don’t have to. My point is this: you can build your own Free State of Me using different tools and ideas, all of which are completely legal. And though I performed the ultimate act of secession – renouncing my American citizenship – you don’t have to. First, I’ll start with what I’ve called the Rude’s Four Pillars of Financial Freedom. Then I’ll give you a few more immediately actionable ideas you can consider to enhance your life. - Get a second passport. Whether it’s via ancestry, marriage, naturalization or investment… explore this idea (especially if your name ends with a vowel). You can read more about this in depth [here](. - Start an online business. Here’s a secret I haven’t told you yet. [ChatGPT]( Open AI’s artificial intelligence interface, is a gift from God… to entrepreneurs. The advantages of running a business from your laptop are self-evident. But having a [machine run it for you]( is even better. - Own a bit of crypto. Ok, only Bitcoin. And only a little bit. No more than 5% of your net worth. Perform this act only to get familiar with it, not to swing for the fences. - Get in great shape. You have your health, or you have nothing. Make sure no government will even try to stick a needle in you again. Live long enough to act on your accumulated experience and get wealthier doing it. Then leave it to your children. Now, here are a few more ideas to consider: - Move from a high-cost location to a low-cost location. When someone says to me, “I’m a writer and I live in London,” I think, “Economically illiterate.” Of course, there may be mitigating circumstances. But if you haven’t yet, trade high-inflation places for low-inflation places. Trade NYC for eastern PA. Trade Austin for Tulsa. Trade Boise for Montana. You’ll be shocked at how your housing and consumption costs drop. Trading Singapore and Hong Kong for the Philippines, first, and then suburban Italy, massively increased my cash balance. - Hire an accountant, a lawyer and a virtual assistant. A good accountant will coach you on what’s deductible and what’s not. You’ll be shocked at what’s legal. A good lawyer will coach you on how to use your companies (next item) to your greatest advantage. A virtual assistant completes stuff you don’t want to do for $15-$20 per hour. That frees you up for the business-building you need to do. - Start a company. Even if you don’t have a viable business yet, you can use the company to shield your assets. Putting your house inside a company may or may not be the best move. That’s why you hire a lawyer. But just getting used to owning a company changes your mindset. - Minimize your healthcare costs. A friend of mine told me his family’s Obamacare costs were $36,000 per year. I almost fell over. Do you think he gets $36,000 worth of medical care? Of course not. It’s a complete rip-off. When you’re looking at locations, take this into account. Remember, health insurance should be a call option on big disasters like surgery. Pay your doctors as well as you can without using insurance if you can. You’ll be shocked at how differently they treat you. - Minimize your taxes. Although I wrote #5 from a consumption-cost standpoint, one of your biggest costs is probably your taxes. If you’re in a blue state, you may want to join the hundreds of thousands of former blue-staters who are now red-staters. If you stay in America, you can’t escape federal tax. But these eight states have no state income tax: Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska. - Offshore some of your assets. If you’ve got the kind of wealth that merits it, try to offshore some of it. That can be as simple as taking cash from one of your accounts and buying a nice apartment in Lisbon. The USG can’t confiscate an apartment in Portugal. Or Spain. Or Italy. Or anywhere outside the US. Wrap Up Let’s face it: we’re never going to save the fools. So let’s save us. You can take immediate steps to ensure your future. If you haven’t already, well, giddyap. You never know when the opportunities will vanish. So taking advantage now ensures you will have exhausted every avenue to build, preserve and pass on your wealth. Good luck with it. I’ll have more advice on how to better your financial future every Thursday. Let me know what you think so far by emailing me [here](mailto:feedback@dailyreckoning.com). Be sure to tell me if there are any topics you’d like me to cover in future articles. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your The Daily Reckoning subscription, you can ensure its arrival in your mailbox by [whitelisting The Daily Reckoning.](