The Breakdown - Bitcoin Hits $15,000: Here Comes the FOMO

Episode Date: November 6, 2020

As the U.S. election picture starts to become more clear, bitcoin has smashed through $15,000 – its highest price since 2017’s record-breaking run. Alongside the price action has come a wave of mainstream media coverage.  In this special he-was-supposed-to-be-on-vacation episode, NLW breaks down Twitter’s response and shares interpretations, including: “Quietest bull run ever” Stimulus on the way Halving bull redemption Death of the nation-state  Start of a reflexive cycle It feels real

Pay attention to how media is paying attention to this. That's the reflexive cycle that will either drive this thing like crazy or have it cool off a little bit. Right now, it seems to me like we are just at the beginning of a cycle where these prices mean a lot more eyes are going to be coming over on into this space. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. The breakdown is sponsored by crypto.com and nexo.io and produced and distributed by CoinDesk. What's going on, guys? It is Thursday, November 5th, and you may realize that I have said all week that I was not going to be recording during the week.

I'm up in the White Mountains in New Hampshire for an anniversary, but something happened. Bitcoin has hit 15,000. In fact, it has smashed through it. It's currently at $15,196 at the time of recording. And this is the type of thing that I think is worth pulling out that spare portable microphone that I brought for just such an occasion. I asked people on Twitter for their hot takes, their interpretations of this. And so I wanted to give you a quick down and dirty episode about how people in the Bitcoin and and FinTech community are looking at Bitcoin at 15,000. So what I'm going to do is I'm going to quickly go through the different areas or different ways that people are thinking about it, and then I'll wrap up with some thoughts of my own. First interpretation is that this bull run has actually been happening right in front of our eyes. We've just been really distracted by the presidential elections. Nick Carter put this beautifully in a four-word tweet, he said, quietest bull run ever. Of course, another line of interpretation has to do with the

having, and you can see the halving bulls feeling very redeemed right now. Eugene Grant responded to my post saying supply matters a lot. Of course, supply does matter a lot, but it matters in context, and the context that many people are looking at is more stimulus. Will McCormick says a split government means less crackdown on tech overall, so all tech is booming. But it's clear now that more stimulus is coming, meaning a weak dollar and Bitcoin to the moon. In a Reuters piece about this price action this morning, Pomp actually reaffirmed that same idea. He said, quote, Bitcoin is the big winner from the current macro environment. As we saw coming out of the 2008 liquidity crisis, inflation hedge assets do very well when the Fed steps in with QE. That Reuters article also made note of the

fact that the Bank of England this week just decided to increase its bond purchase program by $150 billion. Another theme that I saw pretty frequently was the idea that this included a new wave of traditional market traders. Death Disco says, very simple. Trump is out so stimulus will be regulated and guarded and not used to pump markets and prop up zombie companies. This money is the first wave of more savvy traders from the traditional markets. Caring low blow said it's impossible to overstate how important the ambassadors for Bitcoin have been. I listened to the breakdown on a whim, shout out to us about eight weeks ago, and heard several smart people talking about crypto. Then I started my due diligence. The actual voices of the likes of Lynn Alden, Preston Pist, Pish, while Paul, and

others with legit traditional macrofinance brilliance, calmly saying in my ears how Bitcoin would play out is what sold me. Before I even really understood things, I jumped to irresponsibly long. Proof of wisdom then discussed the FOMO effect. Quote, lots of people will start to feel seriously uncomfortable if they're either underinvested or worse, not invested at all yet. The irony of this asset, the more expensive it is, the more irresistible it becomes. That's a theme of reflexivity that we're going to come back to in a few minutes. Now, another line of thinking and interpretation has to do with bigger questions of

the institutions that surround us. Mother Superior tweeted, having combined with stimulus, combined with people in Europe being locked inside, combined with a general overall worldwide awakening and realization that our institutions have failed us, people are looking for a life raft. Harry Halpin went even farther, he said the death of the nation state. I mean, if the Biden-Trump election has any clear meaning, it's that the U.S. Empire is declining far quicker than anyone unexpected, and the same with USD Fiat Reserves. Dad Pression had a really interesting way of putting where Bitcoin fits in that context, if that is indeed the context. He tweeted, Bitcoin is a new informal political party. As traditional political parties continue transitioning

into becoming tribalized social networks, will realize they've moved the game to Bitcoin's home court. This episode is brought to you by Crypto.com, the crypto super app that lets you buy, earn, and spend crypto all in one place and earn up to 8.5% per year on your Bitcoin. Download the crypto.com app now to see the interest rates you could be earning on BTC and more than 20 other coins. Once in the app, you can apply for the crypto.com metal card, which pays you up to 8% cashback instantly on all purchases. Reserve yours in the crypto.com app today. Looking for the best way to stay on top of your investment game? Nexo.io has you covered in three easy steps.

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Get started at nexo.io. And now we transition to just a few things that I want to put some emphasis on. One of the themes that I saw, but I think is much bigger than people are even giving it credit for, is that we are on the verge of a new intellectual battle around how to design the economy. Frederick, a crypto-muppet, says, look around you, people afraid, locked up, scared. Bitcoin's 21 million is the only certainty that every work from home has been able to piece together with their peripheral browsing. The ones who dig just a bit deeper also understand it's a neutral hedge to MMT and its pitfall.

This mention of modern monetary theory, I think, is worth paying attention to. It is highly likely, especially in the context of a Biden administration, that we're going to see a stronger attempt not just to implement MMT policies by default like we've seen around crisis response, but to actually have MMT be the intellectual underpinning of a new approach to economics more broadly. We are going to have a national conversation about things like universal-based income and just what government's responsibility to people should be. In that, although much of that conversation may focus on MMT, as a natural sound money alternative, almost an intellectual

foil to MMT, I think that you're going to see a lot of attention on Bitcoin as well. A second piece that I want to put extra emphasis on is this idea of the beginning of a reflexive cycle. Chow Wang put it really, really well. He said, we're at the beginning of the beginning of of a highly reflexive Bitcoin cycle. Macroinflation slash QE slash MMT slash NERP narrative equals smart money buying Bitcoin as a hedge. Bitcoin price goes up. More than all other asset classes

leads to reinforcing people's view that Bitcoin is the best macro hedge. Add that circle and see it repeat over and over and over again. This is the first time in the last couple weeks that we're starting to see prices that justify publishing, pushing out articles about the price action in Bitcoin. And frankly, it is always price that drags people over into this space. It's not what keeps them here over the long term, but it's what gets people through the door. Once you hit that point where the price becomes interesting enough for other

publications outside of crypto to be writing about it, it adds huge fuel to this fire. The last point that I saw articulated over and over is that this feels real. Future Ready and investor tweeted short squeezed, no sell orders in sight. You are not free to move about the cabin. It's going to be a nausea-inducing ride straight up. Bill Bayart from Abra said, we are just getting started. Impact of the having, impact of institutional money, low retail sentiment, i.e. retail just getting started. No sellers, all hodlers, perfect storm for a move to 25k, which will generate enough retail momentum to get us to 50k. And then a few days ago, actually, Alex K. Kruger tweeted something, which I think is more relevant than ever. He says Bitcoin. Second highest

monthly close in history. No bubble this time. 2021 is going to be a great year. If you're watching this, the thing that I would suggest is pay attention to how media is paying attention to this. That's the reflexive cycle that will either drive this thing like crazy or have it cool off a little bit. Right now, it seems to me like we are just at the beginning of a cycle where these prices mean a lot more eyes are going to be coming over on into the space. So enjoy it. Have fun. Thanks for listening. I'll be back next week. I mean, I guess I'll be back tomorrow, but you know what I mean. Thanks for listening, guys. Be safe and take care of each other. Peace.