Behind the Wild Bitcoin Surge

People quickly forget the panics of the past and yet learn nothing from them [Gilder's Daily Prophecy] July 28, 2021 [UNSUBSCRIBE]( | [ARCHIVES]( FDA Calls Controversial New Therapy “Breakthrough” [This molecule]( was BANNED by medical science for 70 years… But after trailblazing research, the gates are open and investment dollars are starting to pour into [a controversial biotech niche.]( It’s not cannabis or stem cells— you won’t believe what it is when you see it. [Click here to see what might become “a $100 billion investment opportunity,” according to analysts.]( [Warning] Do you enjoy receiving Gilder's Daily Prophecy? Please [Click Here Now]( so we know to continue sending you Gilder's Daily Prophecy for free! Behind the Wild Bitcoin Surge [Jeffrey Tucker]Dear Daily Prophecy Reader, In conventional financial markets, people don’t expect Sundays to be days of wild action. But crypto markets are anything but normal. They are democratic in the sense that anyone can join the party, which is a key to their popularity. They are international, not restricted to nationally regulated trading floors. Price changes to the spot are influenced by ever deeper and more complex actions in derivatives. Markets in general never sleep, but crypto markets take that principle to a new level. Dramatic moves pay no attention to the calendar or clock. This past Sunday served as a reminder. While Americans were enjoying the laziest day of the week, sipping mimosas and eating smoked bacon, Bitcoin suddenly woke from three months of doldrums to soar from $30,000 to $40,000, even touching $48,000 on some exchanges. In an instant, yet another round of “Bitcoin is dead” itself died the death... For the 350th time. All the people who bought the dip felt a real sense of schadenfreude. For some, it was the 1000th time. The next question everyone asked was: why the price move? Here’s where things always get entertaining. As people with lizard brains, unable to be satisfied with complex and opaque explanations of cause and effect, we seek one solid and justifiable reason. We want to believe what is self-evidently untrue, namely that the price of anything has a single causative agent. What is it? The burning desire to know leads financial journalists to seize on the one thing. In this case, the answer was sitting there for anyone with a search bar. It was the rumor that Amazon would soon start accepting Bitcoin and other cryptos as payments for goods. Bitcoin surged with excitement, the world’s largest retailer would bless the once-sketchy magic internet money. But then Amazon denied the rumor, thus sending the flagship token back to a reasonable $37K. [Government rule to unleash $15.1 trillion?]( Always Seeking Why Is there plausibility to the claim that the Amazon rumor rocked the markets? Sure! To what extent it accounts for the actual shift, much less the whole of it, is another matter. One reason for suspicion on my part is the tendency of the great explainers to seize on whatever public news coincided with the price. The fallacy here in Latin is post hoc ergo propter hoc, that is, after this therefore because of this. It’s a way of thinking that leads to huge errors in cause and effect. For the last several months, every interviewer where I have appeared on this topic has demanded to know why Bitcoin did not seem to show any response to news of rising inflation. If Bitcoin really is the new gold, wouldn’t we see some relationship there? My answer is maybe, but not if the existing price already reflects inflation fears dating back months. After all, we’ve been able to document the Fed’s irresponsible monetary policy for the better part of a year. In addition, just because some single factor can influence price does not mean that it is the decisive factor. The crypto market is now and always will be in a period of price discovery. Twelve years ago after it was released the price on public markets was exactly $0. There it sat for 10 months. The first posted price was 1/16 of a penny. To go from that to a two-thirds of a trillion-dollar market cap in 12 years is an astonishing change by any measure. Let me present to you a chart of an epic crash in Bitcoin that rocked my world. I had nearly perfectly predicted the initial run up for $250 to $1,000. Resting on my laurels, I didn’t bother with making a next prediction and I’m glad I did not. I present to you a chart that led what felt like the whole world to throw rotten tomatoes at me. What you see is a market top of $1,000 – followed by a devastating crash to $170. [Bitcoin Crash] You talk about blood flowing! I never once suggested anyone buy at $1,000, but many people did in response to my enthusiastic articles. Very soon after and for the full year, they blamed me, just as they blamed George Gilder for the dot.com bust (that later turned into the greatest earning bonanza in financial market history). He got the long term exactly right but the impatient want day-to-day oracles not true seers into the future. Now look at this above crash over the long term: [BTC] Does it not fascinate you how people are so quick to forget the silly panics of the past, move on, and yet learn nothing from the experience? That’s how the mob thinks. Hence, did the most recent “devastating crash” from $60,000 to $30,000 lead to another tedious round of commentary that crypto is dead and has no future? It’s no wonder people who are heavily invested in this sector feel rather smug about their choice. They keep being right over the medium term – not even the long term, but only a few months after experiencing unrelenting ridicule. Incredibly it keeps happening. And will keep happening. 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Because people and institutions are using stable coins as leverage for going long in the markets, while others are betting in the opposite direction, the price can now be subjected to a short squeeze. This happens when many traders simultaneously attempt to execute sell orders that the opposite happens: a sudden surge in demand. There seems to be evidence that this unusual phenomenon affected crypto markets this weekend. The trouble with that explanation is that while it may account for temporary price movements, it hardly explains the long-run pattern in these markets. That pattern is for a long period of doldrums to be followed by a wild wake-up and price run, sustaining itself only until the enthusiasm abates, and then falling back and more-or-less splitting the difference between the high and the previous stable price. Then it starts over again. That pattern does not account for all price moves between 2010 and the present but enough to make it a good rule of thumb. The Goal: Be Even Tempered A friend of mine decided years ago that crypto markets had the potential to massively outperform regular financial markets, so he put his entire portfolio into the crypto sector. In general, he has done well but he lives in constant stress about all the opportunities he misses both within the crypto markets (he got burned out on trading) and from conventional markets. His strategy strikes me personally as ill-advised. The reason for hedging via a diverse portfolio is because there is no living person who can consistently act on personal knowledge that is always superior to that which the market, in all its incomprehensible complexity, as a whole embodies in its hourly operations. To the person who can get it right sometimes or often, all credit is due. A wise man once told me that the key to mastering crypto is simply to understand and believe. It’s not about outguessing market trends, discerning the underlying rationale behind every shift in price, or being smarter than the markets themselves. It is purely a matter of intellectual discipline. That is the path to avoiding the madness of crowds. Regards, [Jeffrey Tucker] Jeffrey Tucker P.S. Love or hate her, AOC is finally trying to do right by America. She just threw her internet fame behind [a biotech marvel]( is showing promise in the fight against diseases like Alzheimer’s and Addictions. Fellow Three Founders Publishing editor James Altucher has the story behind the biotech stocks AOC wants to get your tax dollars. [Click here for the details.]( Will Apple, LG, Samsung… Recall their 5G phones? [Person with a cell phone]( people with 5G phones are facing the harsh truth - their phones aren’t receiving 5G signals consistently… and keep slipping back to 4G. Even some of the latest and greatest smart phones are not immune to this 5G flaw. The good news is there is a breakthrough new technology that will work with 5G phones, 4G phones, and even outdated 3G phones. And it has advantages that 5G can never have. [To know more about what could arguably be the future of smart phones and internet, Click Here.]( [Three founders Publishing]( To end your Gilder's Daily Prophecy e-mail subscription and associated external offers sent from Gilder's Daily Prophecy, feel free to [click here](. If you are having trouble receiving your Gilder's Daily Prophecy subscription, you can ensure its arrival in your mailbox by [whitelisting Gilder's Daily Prophecy](. Gilder's Daily Prophecy is committed to protecting and respecting your privacy. Please read [our Privacy Statement.]( For any further comments or concerns please email us at GildersDailyProphecy@threefounderspublishing.com. Nothing in this e-mail should be considered personalized financial advice. 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