Feb 5 - Market Update

Fact: The chart above is viewed in "log" mode and tells the true story of how expected this current correction is, even at today prices.

Fact #2: December gains were crazy, unhealthy, and unsustainable. As low as the crypto market seems today, it has only rolled back values to early December . The insanity is being removed so we can get back on track for healthy growth.

The market sentiment got ahead of the technology.

This kind of thing happens, especially with an emerging technology that is both changing the world and hard to understand. 

Shortly after I bought into Bitcoin years ago, the market dropped over 80%! Then it doubled and doubled and doubled... a total of 6 times! Six doublings is a lot more growth than an 80% correction. I expect the general trend to continue.

This is a stark reminder why we HODL (Hold On For Dear Life).

Everyone wants to have invested at a past low point, but that requires emotional divergence (and the opportunity is still now)

Today, with Bitcoin still above $7,000 everyone pines for the ability to go back and buy Bitcoin at $100. But guess what?

...When Bitcoin was at $100, everyone was pining to be able to go back and buy Bitcoin when it was at 50 cents.

The fundamentals for buying Bitcoin today at $7000 are the same as they were at 50 cents:

• This technology will change the world
• It will take years and further development
• There are lots of problems to be solved
• Holding cryptocurrency is a way of owning a piece of this breakthrough technology
• The easiest approach to win big is to buy and hold long term, and acknowledge the extreme volatility

For this reason, in the future the majority will be wishing they had bought Bitcoin at $7000, $10k, $20k, and even $50k.

You can't profit from changes by investing in the known past—instead profit from investing in the unknown future.

We can know the broad strokes, but the specific details and short-term time frames are unknowable.

December growth was crazy—not in a good way

The growth in December was so crazy that the percentage of crypto buyers that were buying for no other reason than "it's going up, hurry get in!" was steadily growing. That's bubble territory... just like with real estate.

But in other ways this is different than real estate because at the height of the real estate bubble in 2006, everyone already knew what real estate was. And everyone was already using real estate. Real estate itself wasn't new or different than 10 years before.

With crypto, it's still new. Even if you bought Bitcoin at $18,000 you have just as much of a chance of winning big with a long term holding strategy as if you bought today at $7000.

In the past, people bickered about whether Bitcoin was worth ten cents or only a penny. 10X is a big difference when you're thinking small.

But today the investor who bought $1000 of Bitcoin at ten cents still has $70,000,000 worth of Bitcoin. That same Bitcoin may one day be worth multiple billions of dollars.

In 5 years, whether you bought crypto at a short-term peak or dip makes less of a difference than you think. The big difference comes from whether you were able to perform emotional divergence.

Emotional Divergence

Adoption of new technology tends to happen in a Bell Curve fashion:

If making millions or billions from being early is a new thing for you, let me point something out that will become obvious once you see it...

We are at the "innovator" phase of crypto adoption. The vast majority (including the 'early majority' and the 'late majority') of people haven't chosen to not invest in crypto because they are completely unaware. They are clearly aware. 

Crypto received tons of mainstream attention in 2017. The majority have now heard of Bitcoin. And they still haven't invested. (Yesterday on the ski lift, a guy to my left asked me if I had heard of Bitcoin).

And they still haven't invested.

That's because they disbelieve the technology will change anything. They suffer from something called "normalcy bias."

Our brains like to trick us into thinking that things will always be the way we've experienced them in the past.

Normalcy bias tells us the dollar will always be the dominant currency because that's the way it's always been. Small groups of manipulators will always control the economy. The government will always squash anything that threatens its central control of life on earth. Etc, Etc.

Normalcy bias led the majority of people to say "that'll never work and I'll never use it" about:

• Electricity
• Automobiles
• Television
• Computers
• The Internet
• Cell Phones

In other words...

If you are ever to profit big from being an early adopter (or innovator) you will have to be buying and holding something  when it seems like 'everyone' has agreed it has failed and will never work

The masses aren't passive about changes they don't believe will happen while they are happening. They deny it at every step. They demonize it.

"Electricity will burn your house down and kill your family."

"The automobile will explode and kill your family." Etc Etc

The more you take this fact to heart, the more declarations of "crypto is dead" serve as a confirmation of continued adoption and long term growth of crypto.

Check in with sentiment, then return to the tech

Checking in with sentiment is a good reality check to make sure the majority still disagree with you.

When the majority agree with you, that means either:

1. Mainstream adoption has happened, or
2. There's a short term mini bubble and the majority will turn back against you as soon as their guaranteed winning lottery ticket doesn't cash in instantly

December was #2.

Mainstream adoption can't happen for a while because:

A) Crypto exchanges are the entry point for new participants in the crypto market. Exchanges are bottlenecked with ID verification regulations that were passed to try to curb terrorism.

B) The tech is not ready for mainstream adoption

If you buy crypto after the technology is ready for mainstream adoption, then you will have missed the big profits.

We are innovators here, and that means we're investing in crypto before the tech is ready. In 1996 Amazon wasn't ready to deliver thousands of products to millions of homes in less than an hour. In 1996 Amazon wasn't ready to host a huge portion of the world's internet servers. But 1996 was a stellar moment to acquire Amazon stock and hold for the long term.

The mainstream believes that the fact that crypto tech isn't ready for mainstream adoption is the reason why it has failed and is dead.

That's why they leave the big profits for us, the innovators who have the patience to let the innovation happen.

How This Affects Our Fund Performance

We don't sell the peaks because of numerous inherent dangers involved, but we do buy dips.

This is a great dip to buy, and if you want to take advantage of this timing, reach out to Rachel to get your subscription agreement and wire in for processing.

If we receive enough new investor subscription capital here in early February, we will coordinate with our administrators to do a mid-month February subscription, enabling additional capital to buy this dip.

My long term view continues to be very bullish and nothing about the correction has changed our long-term vision and fundamental reasons to be bullish on this technology as it continues to develop.

Disclaimer: Blog videos and posts from Jeff Nabers are general market commentary and do not necessarily reflect the opinions of Coin Capital LLC. This blog is not a securities offering and qualified clients may inquire by filling out the form on the home page.