Fasten Your Seatbelt
Investors,
Since yesterday’s publication, the price of Bitcoin has fallen to $52,400 and has now experienced a -28% decline since the intraday highs on July 29th.
Amidst an array of concerns about a recession, geopolitical tensions, Mt. Gox, the Federal government’s Bitcoin wallet, the unwind of the Yen carry trade, and a variety of other concerns/catalysts, Bitcoin is experiencing downside from both market-wide risks & idiosyncratic risks.
Is this decline justified? Is it overblown? Will we laugh about this in 6 months?
I don’t know.
While some analysts might feel the need to take a firm stance on what this decline is (or isn’t) and why investors should (or shouldn’t) be worried about it, I’m going to keep it straight with you and say “I don’t know” because I truly don’t know.
As investors, analysts, and market participants, we aren’t required to know all things at all times, particularly as they relate to the future and what can happen next.
One of the things that I’ve gotten comfortable with as a maturing investor is the concept of possibilities. I often get asked, “is it possible for XYZ to happen?”
I used to be focused on these types of questions too, but I’ve realized one important thing over the years as an investor: if you accept that all things are possible, then you stop worrying about whether or not something is possible… because it is. Then, you focus on building contingency plans and reaction functions based on a wide range of possible outcomes.
Essentially, “if this happens, then I’ll do this, but if that happens, then I’ll do that”.
This allows us to stop worrying about what may happen and instead focus on a solutions-oriented approach by knowing what to do if something does happen, which is a beautiful philosophy for life and for the markets.
For what it’s worth, I’ve noticed that bearish analysts are publishing a relentless amount of negative commentary, highlighting the negative possibilities.
They’re talking about bank runs, the next Great Depression, World War 3, and an -80% decline in the stock market. Mind you, these fears are being promulgated by the same people who have been calling for the exact same dynamics since 2022, and many of them have been screaming that the sky is falling for more than the past decade.
Should they be listened to?
Think about it… even those who were proven right about being bearish in 2022, did they acknowledge that asset prices were getting cheap in the 2nd half of 2022 and that long-term investors should start to gradually purchase stocks for the long-run?
Or did they scream that worse declines were around the corner and that more apocalyptic events were going to plague the markets?
Vividly, I remember the latter.
This is the fallacy that permabears have:
When times are good, they warn that the end is nigh.
When times are bad, they warn that they’re going to get worse.
How has that strategy worked?
Not well.
So I won’t tell you that bad things can’t happen from here on out, because they can.
But I will tell you that more money’s been made betting that the world won’t collapse.
So hey, the people who have been wrong for the past 12, 24, 36, and 60+ months might be right this time… but history shows that their success is fleeting & unsustainable.
That’s their problem, not mine.
In the remainder of this report, I’ll provide updated analysis on Bitcoin & crypto, and also share in-depth thoughts on the stock market and the sector that’s catching my attention the most right now.
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