3 min read

The Laws of Avoiding Bitcoin Depression

The Laws of Avoiding Bitcoin Depression

Below are a few pieces of wisdom that have proven accurate over time. They are certainly worth reading given current events. The intention is to save you from predictable, yet avoidable, future pain.

1. Don't tie your happiness to a number

Stacking goals can be a helpful motivator (albeit arbitrary). But don't fall for the trick that somehow, once achieved, all the financial and non-financial problems in your life will magically be resolved.

Bitcoin increases your purchasing power over time. This is a gift in lowering your time preference. So seek to develop tangible skills, unique knowledge, and sound judgement in order to generate positive sats-flow (free cash flows denominated in bitcoin). Adopting a savings mindset in general will naturally increase discipline and reduce unnecessary stress in your life while helping you to avoid lifestyle creep.

The primary goal should be to build up some amount of long-term bitcoin savings, held in cold storage, as a form of insurance against sovereign default.

2. You're not late to the party

Bitcoin is 15 years old with a market cap of ~$1T. If we estimate global wealth stands at roughly $450T and assume bitcoin's total addressable market (TAM) to be even 1/4 of this (keeping in mind that bitcoin will likely grow global wealth), then current penetration stands at <1% adoption (adoption being a measure of total global wealth converted into bitcoin, not # of users). It's still very, very early.

This means that you are insanely fortunate to a) be alive during bitcoin's monetization, b) be aware of bitcoin, c) have access to the internet to further your own education. If you have time on your side, that's a bonus. Do you think Saylor would give up all his personal bitcoin if it meant he could be 20yrs old in 2023 with all the knowledge he has now? I do.

3. You are not smarter than the algorithms you're trading against

Successfully increasing your bitcoin stack through day trading or shitcoining is rare because no one that truly understands how valuable bitcoin is would ever attempt to trade it. Having less bitcoin tomorrow by way of an unforced error is an egregious blunder. You don't trade your food/oxygen/shelter, especially not if it's earmarked for your future grandchildren.

Do not join a trading group. Do not fall for screenshots of profitable trades posted on twitter. Do not believe you are smarter than the algorithms trading against you.

Bitcoin holdings are dilution proof and 99% of the world is yet to wake up to it. Do you understand the asymmetry here!? The same holds true for counterparty risk. No custodian is going to value your bitcoin as much you do. No custodian is going defend your bitcoin as much you will. Bitcoin is the great return to personal responsibility.

4. Pursue humility

Humility is a habit to continually develop, not a destination. The work will never be done. Pursuing humility means proactively looking for holes in your thinking, being open to feedback, and avoiding overconfidence. The more you read and listen to the world's greatest investors (you won't find them on CNBC) the more you'll see what true humility looks like.

Overconfidence in a bull market is a curse (as you have surely witnessed), as is being overly pessimistic in a bear market. The antidote to allowing emotional volatility to mirror price volatility is conviction. Conviction is earned confidence. DO. THE. WORK. To steal a quote from Gigi: "education increases conviction, conviction increases allocation, allocation increases freedom."

5. Beware the FUDmeisters

As we enter a new wave of adoption, be mindful that it presents an opportunity for a new cohort of credentialled skeptics to build audiences out of fear-mongering and ego-stroking. They will knowingly recycle every old fallacy and debunked narrative.

Your time is scarce. Don't take the bait (I am also guilty of this). Spend it educating the eager vs. arguing with the close-minded or politically-captured. Preserving your purchasing power is not ideological, it's an engineering problem to which bitcoin permanently solves.

6. Bitcoin is a mind virus

Bitcoin is all consuming. If it has already started consuming you, that's great—you'll see the world through clearer eyes. But this is often a solitary journey as many of the important people in your immediate vicinity (siblings/ parents/ children/ spouse/ friends) won't get to this point for some time (or may never). You will get frustrated, but do not neglect these relationships. You'll certainly develop new relationships with bitcoiners, but they should not be a replacement for your family.

Bitcoin should bring you peace of mind so that you can be a beacon of stability for your loved ones as they grapple with the symptoms perpetrated by a flawed fiat system. Demonstrating sanity in clown world is a gift to the anxious and defeated around you (ask them, you'll see!). For bitcoin is hope.