Bear Market Is Time to Invest in Bitcoin – Bitcoin Magazine
This is a transcribed excerpt of the “Bitcoin Magazine Podcast”, hosted by P and Q. In this episode, they are joined by Vijay Boyapati to talk about the “Bullish Case For Bitcoin” and how a bear market is where true conviction pays.
Watch this episode on YouTube or Rumble
Listen to the episode here:
Vijay Boyapati: I think we are in a bear market. I think I called the bear market. I think I was a little early, but I think I called it somewhere in June or July. I thought the bear market was starting. I think it is probably correct to say that it started a little later in 2021.
I think what we’re seeing is a composite of both Bitcoin’s natural cycle, which we’ve seen with these bear markets before with the macroeconomic picture. That explains why this bear market feels as painful as it does. I don’t really think this is – it doesn’t feel that long.
I’ve been watching Bitcoin since 2011. The longest bear market in my memory was from 2013 to early 2017. I thought it was the most painful and still is the most painful bitcoin bear market because it really felt like, “Wow, this thing is coming maybe not back.” It just felt like crickets during the bear market. There was no interest in Bitcoin. Some of the major voices in society had quit with fury. Mike Hearn was a highly respected developer at the time, and he quit in a rage. He wrote a piece in the New York Times like, “This thing is dead. I’m not interested in it. I’m out.”
There was very little interest in some places. People weren’t talking about Bitcoin; it was not written about. It was a very tough time for people who believed in Bitcoin. I actually think this is very different. I think Bitcoin is now fully established as a macro asset. The price has dropped, yes ok. It’s down to 20,000, but if someone had told you three or four years ago that bitcoin is going to crash to $19,000/$20,000, you’d be like, “Wow! That is unbelievable! We’ve made it!”
This illustrates one of the aspects of money that people don’t really understand, which is path dependence. You cannot value money based on cash flow because gold and bitcoin are monetary assets; they do not produce cash flow. They’re valued by a market process of people trying to figure out — it’s a game-theoretic process — is this better money than all the other money that’s out there? Is it better than gold? Is it better than dollars? Is it better than silver? Is it better than Ethereum or all the competitors out there? That process works in these cycles that we’ve seen where people get very enthusiastic and then run out of steam and then you have a crash. The point I’m trying to make with monetary assets is that they don’t have cash flow, so you have to measure their value as a monetary asset against other competitors and along the characteristics that make good money.
What are these characteristics? There are things like visibility, portability, transferability – how easy it is to transfer – and most importantly, scarcity. Along with this one critical feature that all money needs, bitcoin is the best form of money that has ever existed. This has not changed. This fundamental aspect of what makes bitcoin good – or I think the best – money has not changed. It’s just the market going through these cycles of people trying to understand what it is and people getting overexcited and then losing hope.
Each of these cycles is defined by a group of people. In the first cycle, the group of people was very small. There were only people who could understand bitcoin: cypherpunks, computer scientists and maybe some hardcore libertarians. It was a very small circle of people, but every cycle that circle gets bigger and bigger, and so we’ve gone through a cycle where we actually brought in a lot of retail investors, but there are a lot more retail investors. There are many more institutions. There are many more nation states out there and many of them got a taste of bitcoin. They might have given up and said, “Oh, this thing has failed,” but maybe they bought a little. Maybe they bought, say, 1% of their portfolio, or maybe even $100, and they gave up bitcoin, but these people are prepared to come back in the next cycle.
I’ll give you one example of this: Stanley Druckenmiller is a very famous macro investor billionaire. [He’s] very successful over a very long period, investing in macro games. He owned bitcoin during this last cycle and just recently I heard him say he doesn’t own any bitcoin. Now it sounds bad: He has given up bitcoin. He has been mentally trapped. He’s always going to be paying attention to the price of bitcoin, and when bitcoin starts – as it always does in every cycle – slowly but surely coming back, he’s going to be paying attention. He’ll say, “Oh, it hasn’t died. It’s been stuck around $20,000” or whatever it is, wherever it finds the plateau. “It’s been stuck around that level for a long time. It hasn’t gone away, and it looks like it’s crawling up.” Now it’s $23,000, $24,000, $25,000, maybe $30,000. People like him will come back because they’ve been exposed to bitcoin, they’ve been mentally trapped. They’ve had enough touchpoints where they’ve heard enough about it, or they’ve invested a little and they will come back.
This is the same thing that happens every cycle. The same thing happened back in 2017, where a bunch of people got burned when they bought $19,000 or $20,000 worth of bitcoin and it dropped to $3,000, and they’re like, “Oh. Why did I do that? It was a terrible investment,” but then those in the current cycle, which is finished, and they came back because they noticed bitcoin. They knew about it; they knew how to invest. They were ready to put in more capital. So every cycle, the [amount of] people who are ready to enter are much larger. The number of people ready to come in the next cycle, especially institutions and high net worth individuals, is gigantic. Some of the things we saw, I think people got way too excited. They saw Michael Saylor come in, they saw El Salvador and they thought this cycle is the cycle when we’re going to have every single high net worth individual, every corporation, every nation state; they’re all going to pile in.
I actually think what you got was just a taste of what we’ll see in the next cycle. I was really surprised to see El Salvador come in. I didn’t think a nation-state would do what El Salvador did for a few cycles into the future, so what happened is what I expected, which is that most nation-states will stand back and do nothing, but now I think many more of them will be primed in the coming cycles to come in and do what El Salvador did. So I think there are many reasons to be bullish on bitcoin. None of the fundamentals have changed, none of the characteristics that make bitcoin superior to all its competitors, none of it has changed.
The number of people who have been exposed to Bitcoin is much, much larger. What you have, if you’ve been around for a while, or you listen to people who have been around for a while, is an incredible opportunity. The best time – if you’re one of those people around in a bear market – to invest is right now. The best time to gain exposure to learn more about Bitcoin, to do something for Bitcoin, to go and build a business in the Bitcoin space is right now. The people who are around now who are either building businesses, investing or learning about Bitcoin, they are the ones who are going to be the most successful in the coming cycle.
What you don’t want to be and what always disappoints me is the people, friends and family I talk to, they only get interested right at the end of the cycle. It is the same every single cycle; I’ve been through four of them now. People come to me at the end of the cycle and they say, “Tell me about Bitcoin. How do I invest in bitcoin?”
I’m like, “I’m really glad you’re interested in Bitcoin. Just be careful because Bitcoin is cyclical; it goes through cycles. Learn about investing in bitcoin; put a small percentage of your portfolio there.” I usually think about it since they are not ready. They come back the next cycle, and they’re going to be a little burned. I don’t want them to get too burnt so they never come back. But if you’re around now, if you’re listening, there’s a big opportunity. They don’t come that often; it is once every four years.
Eventually these cycles will stop when Bitcoin comes to complete, full adoption. And I think we’re maybe only three or four cycles away from that. So I’m very excited. I think this is the best time to be interested in Bitcoin. None of the fundamentals have changed, so get out there and learn about it.
Get out there and invest. Get out there and build it. Now is the time.
