SURVIVAL

 This game has always been one of personal responsibility and survival. Nobody will take care of us, we have to take care of ourselves.

 In bitcoin bull markets reckless gamblers look extremely successful. This has always been the case. Leveraged high risk bets do extremely well during bulls, but most gamblers cannot help themselves, rather than take profits and reduce risk, they double down. When the bear hits most are caught off guard and blow up. This is something we have seen in previous cycles and this cycle has proved no different.

 There are two main differences this cycle. The first is the scale in absolute terms that these gamblers have lost. Billions of dollars of commingled risk between institutions, traders, and venture firms was built up throughout the last few years. The second is the macro environment this is unfolding within. Bitcoin has had the luxury of existing amid one of the greatest macro bull markets of all time but is still a small industry existing within a greater global recession that is unfolding all around us. After over a decade of cheap money due to low rates fueled by the Fed, many large participants in this space clearly expected that trend to continue forever. Their lack of humility and the insane expectation of cheap money forever encouraged them to make increasingly larger bets. Participants that survived previous bitcoin bear markets due to easy access to external capital markets no longer have that luxury, their lack of proper risk management is finally catching up to them.

 One such participant is Digital Currency Group. They are the parent company of troubled lender Genesis which has already halted withdrawals. They are also the parent company of Grayscale, which controls the GBTC closed end fund. Word on the street is that they are trying to raise over a billion dollars to fill a massive hole in their balance sheet. For a better or for worse, I do not expect them to be able to raise that amount in this climate, maybe at pennies for the dollar. For years they have used their access to cheap capital to extend their reach throughout the space (archive), but with capital dried up this reach will turn on us all. Hard to even comprehend what contagion from their potential collapse could bring. DCG's pitch is "if you do not save us we will take you down with us." That is not the case though. There will be a lot of short term pain, a lot of people will get rekt, some companies that did not properly manage risk will go under, but bitcoin will emerge stronger. You would have to be absolutely crazy to bail out Barry and DCG for their reckless lack of risk management. It is what it is. In the end, this all could have been avoided if they simply stayed humble and stacked sats.

 The unfortunate reality is that these reckless individuals are not only hurting themselves but also the many honest hard working participants in this industry. This is why personal responsibility is an absolute requirement, as this contagion tsunami continues, only the strong will survive.

"Bear Markets are for Building"

 If you have been in bitcoin for awhile you have probably heard this phrase. Some of the most successful projects and individuals in bitcoin have emerged after enduring long bear markets. That said, what many miss is the fact that a massive amount of participants get wiped out during the bear. It is not enough to simply build, you must both survive and build.

 I say all this as someone who is all-in on bitcoin, who has been all-in for awhile now, and continues to push forward. Bitcoin represents hope, a money that is independent of governments and corporations is absolutely necessary if we do not want our children to grow up in a surveilled and controlled dystopia. Bitcoin also gives us all the ability to opt out of a system that has massive layers of counterparty risk built in, years of cheap money and broken incentives have layered risk on top of risk throughout the entire global economy. If you thought the FTX bank run was painful to watch, I have bad news for you: every major bank in the world is also fractional reserve. Bitcoin held in self custody is unique in its lack of counterparty risk, as global market chaos unwinds this will become much more obvious to people, and as adoption increases so should the purchasing power of bitcoin.

 All of this said, a long bear market here is not a guaranteed outcome. In the wake of FTX, it seems obvious that the price of bitcoin has been suppressed by fractional reserve exchanges selling bitcoin they do not actually own. As long as people continue to withdraw bitcoin to their own wallets any entities playing these games will get rekt eventually. The absolute scarcity of bitcoin combined with the fractional reserve games played by major banks, exchanges, and 'stablecoins,' in a macro environment primed for major currency inflation, means every person on this planet is unintentionally short bitcoin. At some point this will become a reality, nobody knows when, but we must remain humble enough to assume it will happen when we all least expect it.

 The prudent plan here is relatively simple although execution on it not so much. Every bitcoiner should have a plan in place to survive a long bear market, at the very least a three year plan to mid-2025, while also maximizing the amount of bitcoin we are able to acquire and hold long term. Increase cash flow wherever possible, reduce expenses wherever possible, do it now.

 This game has always been one of personal responsibility and survival. Nobody will take care of us, we have to take care of ourselves.

 Stay humble. Stack sats. Hold our own keys. Use our own node. Learn privacy best practices. SURVIVE SO WE CAN THRIVE.

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