I'm Not Afraid
Kill Your Idols
The Tweet thread above set off a firestorm of drama yesterday on Twitter, drama that has spilled over into the mainstream media today. This Tweet thread was composed by someone who is heavily invested in Bitcoin and has been for years. He is also the host of a major podcast called What Bitcoin Did. And he is likely a little butt-hurt and overly emotional about the fact that Bitcoin’s price has not been moving in the direction that he has wanted it to move in the past month. So, he did what so many middle-aged white men who love playing cowboys and Indians on Twitter over Bitcoin did; he called out Elon Musk, the person who everyone in the Bitcoin community loved when he put Bitcoin on the balance sheet of Tesla and Space X, and who everyone in the community now hates because he now seems to be more interested in Dogecoin than Bitcoin and because he has begun to contribute to the Bitcoin environmental FUD. So, there are a few lessons to be learned from yesterday’s drama. One, people like Peter McCormack (author of above Tweet) have a lot of money riding on this Bitcoin horse and are likely feeling those pangs of panic that I talked about in the previous edition of this newsletter. So, McCormack did what people often do when they feel cornered, and he lashed out. Two, we have to keep two important things about Elon Musk in mind. The first is that he is smarter than the combined intelligence of all of the people who attacked him yesterday, and, the second is that he is as likely to end up on Mars as he is in prison.
No one knows why Elon Musk likes to promote/troll people about Dogecoin, and no one know why he is pretending that he didn’t know about the environmental impacts of Bitcoin before he bought it. (And again, if these environmental impacts really troubled him all that much, he would sell all of his and his companies’ positions in Bitcoin, but he hasn’t.) We do know that Tesla has made more money off of holding Bitcoin for a handful of months than it has from selling cars over the course of the past decade, though. And we also know that without Tesla’s having sold some Bitcoin last quarter, the company would have been in the red for the quarter. This all seems to point to the idea that Musk cares more about money more than he does the environment. Or maybe he does really care about the environment, and he is just playing some sort of long game that most people don’t understand. In regard to Dogecoin, no one seems to know what Musk’s ulterior motives are. Does he really think it will be the currency of Mars? Maybe. Is he a masterful con man who wants to take control of an empty vessel of a currency for his own gain? Maybe. Is he just trolling everyone? Maybe. Because no one knows why he is doing what he is doing, it isn’t worth paying attention to. By paying attention to it, you are only letting someone who is much smarter than you string you along like a puppet. However, he did Tweet something yesterday that might get the attention of a group whose attention he likely doesn’t want.
The SEC has no control over market manipulation in the cryptocurrency markets yet, but could Musk’s reply above be considered market manipulation in regard to the future value of Tesla as a company and, therefore, its stock price? Maybe. We know that the SEC has already charged Musk with fraud, so you can bet they are watching him closely. My guess is that they would love to make an example of him. And his recent Tweets about both Dogecoin and Bitcoin are just the type of fuel the SEC is looking for when it comes to further regulating the digital asset space. Also, even if Tesla does take Bitcoin off of its balance sheet, it would hardly move the market, as it currently holds less than 0.2% of Bitcoin’s total supply (though, it could affect the psychology around whether or not other major companies put it on their balance sheet in the future). This all leads us to the big takeaway from yesterday: while Musk likes to walk fine lines and involve himself in drama, you don’t have to travel down either of those roads with him.
In the last edition of the newsletter, I explained the importance of developing a thesis when it comes to your investments. If you are just buying Bitcoin because Elon Musk owns it or Tweets about it, then be prepared to lose your money. If you are buying it just because it is a hot asset to buy right now, then be prepared to lose your money. We’re going to see more shakeouts like the ones we have seen since Bitcoin hit its all time high of about $64,000/Bitcoin. If Bitcoin does reach the price target of $288k (for this cycle) that the Stock to Flow model predicts, getting there isn’t going to be a smooth ride. Plus, we are also in the middle of what some call a “melt-up” in traditional markets, and this house of cards propped up by the Fed (the stock market) can collapse at any moment. If this happens, the digital asset space will crumble with it…at least in the short run. There are no guarantees in markets, and if you don’t have the stomach to watch your money go through wild swings, then don’t put your money into the market - or at least don’t put in more than you are willing to lose. Losing all of your money will likely make you feel worse than the feeling that you missed out on an opportunity to make money. So, please be careful, and understand the risk involved.
I say all of the above because, as a reader of this newsletter, you should know where I, the author of these pieces, am coming from. I’m not afraid of Elon Musk. I don’t care if he takes part in spreading FUD, nor if he wants to take a liking to Dogecoin for whatever reasons he pleases. I respect his intelligence, but he isn’t a hero of mine, and he surely isn’t infallible. In one of my favorite books ever, No More Prisons, the author, William Upski Wimsatt, stresses how dangerous it is to have heroes and how easily we can be misled by blindly following the words and actions of the people that we look up to. I have been reminded of this lesson in the wake of yesterday’s events. If you find yourself caught up in Musk’s drama, or in the drama of Bitcoin maximalists like Peter McCormack, you’ve likely stopped thinking for yourself. So, ignore the noise and realize that people like Peter McCormack and Elon Musk both have a lot on the line - and they both have something to sell you. And while you may choose to buy the products they’re slinging, I recommend your not buying their bullshit.
Best,
Frank
Twitter: @frankcorva
Currently Listening To: “Bullet in the Head”, by Rage Against the Machine
“…they say ‘Jump’, you say ‘How high?’” -RATM
-
If you’ve enjoyed reading this newsletter and would like to donate, please feel free to do so through the following avenues.
Venmo: @Francis-Corva
PayPal: @fcorva
Maybe a nice solution to all this Elon stuff is Tesla/Elon taking up Cardano's offer to talk. CH seems balanced enough to work with Elon, considering his previous criticism towards Elon seems reasonable (in light of the current histeria) and CH reaching out now seems appropriate and would most likely guide Elon/Tesla well in the cryptospace. It's not very interesting to me that other people are investing the current level of mental energy in Elon's decisions. About as interesting as reality TV to me was - very boring. Nice article, Frank - much thanks. Yeah - no heroes. Why would a person have a hero when they have their self? I don't know why, but people do. People to learn from, basically everyone, yeah.