Bear Market Diary 2023: Sinz Bitguide Interview
By @piratebeachbum - Analyzing The Bitcoin Bear Market Series - Volume 22
Name
Country
US
How do people know you?
I am a business scholar/professor and the co-founder of Bitguide.io a bitcoin education and consulting platform. In response to the sheer amount of bad advice and noise out there, we are building a platform that aims to bring curated and no-nonsense bitcoin education to the space.
How long have you been into Bitcoin?
Since 2016; it began with research into the business application of blockchain, which ended up in embracing Bitcoin not blockchain :)
How many Bitcon market cycles have you been through?
Two & I don’t care about cycles or short term volatility anymore.
What are you optimistic about in this space despite the current state of the market?
Several reasons. One is that the structure of our financial system is such that it requires devaluation of currency and perpetual expansion of credit and the money supply. Any pause in credit expansion, or worse credit contraction, is catastrophic for all the incumbent highly levered cronies and leeches. So downturns are only designed to keep the populous from spending or earning too much. Ultimately they will go back to pumping financial assets and Bitcoin is gonna be the main beneficiary of that. Bitcoin is the barometer of liquidity.
A second factor is Bitcoin is in the age of exponential growth via word of mouth and network effects for its ecosystem. Every new day brings with it a new idea, a new service built on top of Bitcoin, a new company integrating it with its systems all of which can accelerate adoption overnight. The direction of the future is bright. But we need to work at it, keep finding applications of this revolutionary tech to improve lives, attract investment, and keep building. Nothing is guaranteed.
What tips do you have to those who are new to this or who might be upside down?
Think long term, understand what you own, and only own if you have strong conviction in its future. Too many people fall into the trap of “I can outperform the market” and begin trading the short term volatility. Eventually you don’t hear about the failure but you do hear about the overnight successes of some degens. All this biased information tricks your brain into thinking “they did it, I can too” and then you lose it all. Most people have no idea what they are talking about. Just because you have no idea too, does not mean they know better or you should listen to them. Be very selective with sources of your information. The number 1 thing I would say to any learner is that most “educational” materials out there are sponsored promotional garbage. So read a lot, reach a position where you have confidence in your own understanding rather than relying on the “experts”, build a strong long term thesis, and forget about the short term.
Biggest regret during the last bull market?
Not buying as strongly as I should have early in the cycle and being too distracted by price to the detriment of investing my time on learning.
What have you learned so far in this bear market?
Most experts/analysts/observers have no idea.
There is little correlation between the quality of content and the number of followers.
All price predictors are scammers.
Macroeconomic dynamics and the global dollar funding systems (e.g., the Eurodollar system) are far far more influential on Bitcoin than observers realize.
What is the biggest fail you have seen during the last bull cycle?
Plan B’s astrology finally shattering into pieces. But I am afraid, as soon as the price pump he will come up with another model and attract a new crop of clueless noobs.
What do you think about all the influencers promoting companies and products that have imploded?
Snake oil is a natural part of the free markets. Most people are selling you something. Find out what it is. There is no such thing as free information online. Any content you don't pay for comes with some underlying agenda. Content producers gotta eat! Now one of the worst things to sell to noobs is the shady crypto platforms. Worse, if they do not tell you what the risks are. Putting your reputation behind businesses without yourself scrutinizing their business model and its viability is very dishonest and opportunistic. Stay away from people who do that.
Why do you think people still listen and support these people?
It is a bandwagon phenomenon and one of the biggest failures of social media in our time.
People who are new come into the space, do not have the ability to directly appraise information. Instead they rely on indirect signals such as who is more visible and already has the most listeners. Then there are the manipulative social media algorithms that amplify the voice of larger accounts to the extent that the loudest voices drown all the other voices. Human attention span is limited. From hundreds of commentators you only have space for 3-5 of them to consistently listen to and the algos guide you to the best salesmen not to the best educators. Over time the influencers also learn how to adapt to the algo and harvest more engagement – think outrage, alarmism, noise, nonsensical correlation charts, “last time this happened, that happened afterwards”, and the nauseating shout outs. This goes on until a few influencers dominate all the information channels and our reptilian minds are too gullible to resist when it hears the same things over and over again from all the “main experts”.
Learn to identify these engagement farming strategies and avoid people using these tactics. It is a sign they don’t have good quality content for you. Be ruthless with noise. We have no time for that.
What do you think helped trigger the current bear market?
Macroeconomic downturn and a global credit contraction in the broader Eurodollar market. When you look at several macro indicators (US Treasury spreads; Eurodollar futures spread, bank balances, production levels, trade, PMI sentiment data), they mostly peaked or experienced major inflection at around April 2021 and then at around October 2021 coinciding pretty nicely with Bitcoin crashes. Bitcoin is now too big for its price to behave independently of the global financial system.
Who was most exposed during this last market meltdown?
All institutional trading houses, the likes of Alameda. The “genius” lever-up-to-the-neck traders that knew how to make money in the bull market but not in the bear.
What are your thoughts on Bitcoin Maximalism?
It is great when it is from a position of knowledge and realization that most other shiny objects out there are junk. It is great when it is based on solid economic understanding and moral values. It has saved many including myself from falling prey to scams. It has exposed many bad ideas and shady snake oil salesmen.
But it is not without its flaws. Some people turn it into a thoughtless religion and just look for attacking any idea that their favorite Bitcoin PR executive does not approve of. At that point it is herd behavior. Too many self-proclaimed maxis are too quick to assume they understand how the economy and the existing financial system work. Overestimating your knowledge and overconfidence is generally a red flag. People categorize things as entirely bad or entirely good and who want to impose their personal beliefs on the market are in for a rude awakening.
Why do you think there is an emerging narrative to demonize Bitcoin Maximalists?
Historically I have used an attack on maximalism as a perfect scammer detector. Maximalism is the biggest force against the scams in the space. So the first step in developing a successful scam is to denigrate your critics.
That being said, the flaws I mentioned above do not help though, and give scammers ammunition. When even good ideas from well meaning people also get viciously attacked and sidelined it closes the doors on constructive debate and you occasionally get some people who have a legitimate criticism of how some maxis have reacted. Unfortunately, that provides scammers with ammo; not that I care too much about what they think/say.
What kind of damage do you think the latest price drop has done to buyer sentiment?
Massive damage to new buyer sentiment, while little impact on long-term holders. This is all too familiar for more experienced folks out there. It is fun to see all the mania and euphoria gone and given way to sober rational thinking. It is all good. Bitcoin frequently punishes tourists and those who have not done their homework and this is all poetic justice.
What is it going to take to turn this around?
As soon as the global liquidity recovers, it will turn around.
A combination of consumer price inflation and economic growth trajectories will determine what happens to Bitcoin. The CPI is on a clear downward trajectory. No matter what the analysts and Fed officials say inflation is done and it's just a matter of time.
Then we need to worry about recession. There is a very high likelihood that we will get a significant economic slowdown this year. Once that happens there will be pain but then it’s QE, rate cuts, and pumping of the risk assets all over again. All great things for Bitcoin.
Bitcoin will not grow much without macroeconomic conditions improving first in my opinion. Too much of the buying power comes from tradfi sources.
What are your tips for HODLing Bitcoin through this cold bear market winter?
Just DCA and learn. Do not try to make any short term prediction other than your long term thesis (unless you have done hours and hours of research and know what you are doing). I have written on DCA: https://www.bitguide.io/post/dollar-cost-averaging-a-time-less-bitcoin-investment-strategy
How do you feel about alt-coins and NFT’s and stable coins right about now?
They are all morally compromised, technically flawed, financially unsound, degen products. BUT they are filling a gap that no one has filled yet and will continue to exist until honest and value-adding products replace them. Particularly, by the verdict of the market, stable coins, while flawed, have gained a lot of usage and utility. In many parts of the world with dysfunctional currency and a lot of need for censorship resistance money you see stable coins are being used. Which should be very alarming to Bitcoiners. This utility should eventually be brought into the Bitcoin ecosystem. There is no reason for digital dollars to be controlled by a nontransparent company that can at any moment freeze my money. This is a flawed product. But at the moment, a comparable utility in the Bitcoin ecosystem is not available to disrupt this market. We should work at it, compete, and increase Bitcoin adoption. This is why I emphasize we need to get to work and build; we should not get complacent and beat the drum of “we have already won”. Winning comes after putting in the effort.
As for others, such as NFTs or inscriptions, they are gambling products. In the ideal world, I hate to see people wasting their hard-earned money on these things and naively thinking they are gonna get rich with it. However, I would not support blocking or censoring these usages. I prefer the free market to resolve the problem of degen investors and teach them the lesson. Along the way, even pure gambling brings in money and on chain activity. The most sound system design allows for free exploration even in currently unproductive directions. If inscriptions bring in more miner revenues while folks waste their money on perpetually dilutable digital junk, so be it. They are sponsoring the network; all good.
Overall, I support a nuanced take that true and useful innovation follows a lot of exploration in the wrong directions, and that the free market is the best judge of what is good and what is bad. I would love to see us Bitcoiners focus on how to improve adoption, and build user friendly products that outcompete stable coins and other chains and less get into ideological competition. Build a killer product and let it drive the snake oil salesman out of the market. If Bitcoin is going to become the world reserve currency, we have a lot of work and building to do and attracting capital and liquidity to fund devs is a must in my opinion.
What do you think about the whole collapse of FTX and Blockfi?
One sentence: if you think someone can generate a juicy yield without producing any valuable product or services and hand them your money, you deserve what happens next.
Do you think anyone will go to jail?
They should. And the overlords have an incentive to appear to be protecting us. So they may send a few to jail, leave the rest with a slap on the wrist, and declare victory.
What is the best way to accumulate Bitcoin during a down market?
DCA! It is an admission that you do know where the price will go short term and only rely on the long term trend. An admission that brings you piece of mind and much better performance.
Any tips you want to give to people new to Bitcoin?
Read a lot from primary sources; read books. Stay away from most influencers on social media.
Any last words of wisdom?
Rely on yourself, do your due diligence, understand before you act, do not blindly trust experts, and always plan for plan for the plan not going according to the plan.
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Great interview. Thanks!