"Just Tell Me What to Buy"
It's a Bit More Complicated Than That
I was out with some of my cousins recently when one of them said to me something to the effect of:
“I read your newsletter and its interesting, but just tell me what to buy.”
I totally got where she was coming from.
She’s the mother of like 650 children and doesn’t have time to dive deep into the philosophy that underpins magic internet money like bitcoin (BTC).
Few do have such time. I mean, hell, I write about this for a living, and I’m still wrapping my head around it.
In the past, when people have said to me “Just tell me what to buy” in person, I’ve shared with them my opinion. Only twice have I ever recommended anything other than bitcoin (BTC) or ether (ETH).
Now, I no longer recommend anything, but if I were to — and I’m not, because I’m not a financial advisor and nothing in this newsletter is financial advice — I would just say, buy whatever you consider to be a small amount of BTC and then think of your initial purchase(s) as a downpayment on your education on the asset.
In other words, once you’ve purchased some BTC, be prepared to learn more so to protect your investment.
Quick note: Why do I only recommend BTC now?
There will only ever be 21 million bitcoins. Over 1 million are in the anonymous founder Satoshi Nakamoto’s wallet and they’ve never moved. Another 4 million or so have been irreversibly lost. That leaves about 16 million Bitcoin that you’ll ever have the chance to get your hands on. To put that in perspective, if everyone in New York City had just under 2 bitcoins, that leaves none for the rest of the world. In this age of fiat monetary debasement, it might be a good idea to get just a little bit of the first perfectly scarce asset the world has ever known. (But that’s just my perspective; again, it’s not financial advice.)
I’d also recommend that you learn to use a crypto hardware wallet like the Ledger Nano S to store your BTC once you’ve purchased some.
Learning how to self custody your BTC in a hardware wallet is perhaps the most important dimension to owning it.
Author Saifedean Ammous echoes this sentiment in the excerpt below from the intro to The Bitcoin Standard: The Decentralized Alternative to Central Banking — a text that many revere as the Bitcoin Bible:
“Should you come out of reading this book thinking that the bitcoin currency is something worth owning, your first investment should not be in buying bitcoins, but in the time spent understanding how to buy, store, and own bitcoins securely. It is the inherent nature of bitcoin that such knowledge cannot be delegated or outsourced. There is no alternative to personal responsibility for anyone interested in using this network, and that is the real investment that needs to be made to get into bitcoin.”
If you do choose to invest in BTC, I would highly recommend that you also read this piece that I wrote last week for Finder Canada: “5 tips to maximize your crypto dollar-cost averaging (DCA) strategy”
In it, I discuss how to dollar-cost average (DCA) not only into your investment, but out of it, as well.
Here’s the intro to the piece:
“Most people first buy crypto when the bull market is raging.
They hear from influencers, friends or loved ones that they can make a killing in digital asset markets and they want in on the action.
Unfortunately, if you’re buying once the bull market is in full swing, you may be a bit late to the party. To paraphrase an old adage, fortunes are amassed in bear markets and collected in bull markets.
Right now, the prices of many crypto assets are quite low – at least compared to where they were a year ago.
This doesn’t necessarily mean it’s time to ape into the crypto market – or make one big crypto purchase with a large sum of money.
Instead, you may want to consider dollar-cost averaging (DCA) – an investing strategy that involves making recurring purchases on a fixed schedule.
An example of “DCAing” into crypto would be buying CAD$100 worth of Bitcoin (BTC) on the first of every month regardless of the price of BTC. Doing so provides you with several potential benefits, including:”
Read the full piece to learn more.
And please note that the platform VirgoCX that I refer to in the piece is only available to Canadians. Most popular crypto exchanges or brokerages offer a DCA option, though.
I’d like to conclude this section with some words from Papa Raoul, someone who’s proven to be not exactly the best market forecaster, but who is still a good-natured human being, which is most important:
I wrote the same words in the first-ever edition of this newsletter: “I’m not a guru.”
I barely even like to think of myself as an educator in this space. I honestly just enjoy writing about it, because I find it endlessly fascinating, and I genuinely do think of Bitcoin (the network) and BTC (the asset) as a financial life raft for many around the globe.
Many in the US don’t understand the importance of this asset yet, because we live with the privilege of having the world’s reserve currency.
Something tells me, though, that within my lifetime, everyday Americans will start to see the value of Bitcoin, just as many everyday Africans, Latin Americans, SE Asians, Middle Easterners and Eastern Europeans have started to see the value in it.
Cool Docs
I watched these two docs this past week. They’re cool. Both provide good overviews of what Bitcoin is and how it came to be.
Unelected Bureaucrats Want You out of Work
Here’s a video of a former US Secretary of the Treasury Larry Summers sitting on a tropical island discussing how more people need to be out of work in efforts to contain inflation.
Please remember that it is bureaucrats who created inflation, let it get out of control and then said it was “transitory” for months before deciding to engage in aggressive QT — which has only brought inflation as per the CPI down by 2%. And now they want you out of work so that they can contain inflation. Good system.
Here’s some of my favorite commentary on the video above:
Clown world.
My Commentary in The Street This Week
I shared some thoughts with The Street this week on what might catalyze BTC’s next big price move:
"Bitcoin has been trading like a stablecoin — mostly in the $16,000 to $17,000 range — since the collapse of FTX almost two months ago," said Frank Corva, senior analyst for digital assets at Finder. "This likely won’t be the case for much longer, as the price of bitcoin has a tendency to make significant moves to the upside or downside after consolidating in a tight range for some weeks."
"We may see the price BTC violently break up or down by Jan. 8, though," he added.
Corva said that Cameron Winklevoss, one of the owners of crypto exchange Gemini, asked Digital Currency Group CEO Barry Silbert in an open letter to help Gemini resolve the issue around the almost $1 billion in halted redemptions for 340,000 customers who were lending digital assets via Gemini’s Earn program by this date.
"Gemini had outsourced the yield generation for its Earn program to Genesis, a crypto market-making company under the DCG umbrella," he said, "Genesis is rumored to be on the brink of bankruptcy and Silbert has said very little about whether or not he has the funds to keep Genesis solvent."
[The Wall Street Journal on Jan. 5 reported that Genesis is evaluating options, including a Chapter 11 bankruptcy filing.]
Corva said that many in the crypto space are hoping that the carnage seen in crypto markets in 2022 won’t extend into 2023, "but if Silbert doesn’t keep Genesis afloat and make Gemini Earn users whole, we’ll likely see BTC stop chopping sideways and break to the downside."
You can read the full article here.
We Should Ban Amazon Stock
This week, the price of Amazon stock ($AMZN) returned to its March 2020 COVID crash lows, down 55% from its highs in just 14 months.
If we were to follow the logic of certain politicians who don’t like BTC because it’s too volatile, then let’s also ban $AMZN — and let’s completely fail to recognize that maybe lots of assets went up in price and then came back down because we printed 80% of the US Dollars that ever existed in less than four years.
Oh yeah, and, for the record, BTC is still up 500% from its March 2020 lows.
Gold
If $BTC feels like too much of a risky investment for you and you’re looking for something else that might do well in the coming year, you might want to take a look at Gold ($GLD).
I’m not as familiar with how gold moves as I am with how digital assets move — and I wouldn’t necessarily buy right now after the breakout the asset has just had — but it may be worth monitoring, especially since central banks around the world are accumulating gold.
Could be a decent buy around $165. But, again, I’m not a financial advisor. I’m just a guy sharing some thoughts and charts.
If you do choose to buy any gold (or any asset for that matter), please see the article I wrote on DCAing into and out of crypto above. This practice can be applied to investing in any asset class.
Okay. Brain hurts. I’m going to stop here.
Happy Sunday and/or beginning of the new week, everyone!
Frank the Tank, signing off.
Best,
Frank
Twitter: @frankcorva
