Daily Ramble
Ever walked into a room and instantly knew its inhabitants had just paused mid-argument? Or felt the rush sweep through the stadium when the home team scored a touchdown? Chalk it up to emotional resonance. Just as bats and dolphins have invisible sonar and sharks have invisible electrical field sensors, we come equipped with invisible emotional detectors.
Now, before anyone wants to pick an argument with me, I’m sharing what I’ve learned from lived experience, not a sanctioned scientific study. If science refutes my words here, I’ll step away from the podium. Until then, I’ll let science catch up with emotional resonance in the same way it caught up to the idea of DNA — despite shamans in the jungle being aware of it for centuries ahead of its scientific discovery by high-on-LSD Francis Crick.
DNA aside, humans are emotional creatures first and foremost. You can see it in our development. A child comes into the world without rational capability but bursting with uncontrollable emotion from day one. Through the calm, nurturing emotional resonance of the mother, the baby finds comfort and safety. The first three years of a child’s life are mostly pre-rational, where the mother's emotional resonance lays the emotional foundation for the child's future. (Quick shout out to A General Theory of Love). Critically and little understood is how the mother's emotional resonance is transferred to the child on top of which the rational mind is built. That’s why the first few years of childhood development are critical to a life well-lived.
I could jump on my hobby-horse here and claim that all children deserve to be in a joyful environment their first three years as a basic human right, but instead, I want to pivot to adulthood. Because, by the time most of us have gone through the requisite 20 years of education, our rational minds have convinced us that they’re in charge, and emotions are to be controlled and managed. Unfortunately, that leaves us at a terrible disadvantage when mass hysteria washes over a population. Suddenly, we find ourselves acting “rationally” with the crowd, without realizing that we’re in the grip of emotional resonance. Think I’m off base? Consider how you felt when the COVID pandemic arrived on your doorstep — most everyone I know was acting in the psychosis of a collective of fear, myself included. Many haven’t left.
Now here’s what’s really fascinating. When it comes to trading the markets, those highly profitable and revered folks we call contrarians are typically aware of the mass psychosis of crowds. They can separate themselves from the crowd to make rational decisions. That’s their secret sauce. And it is the reason why, when Bitcoin was $3.5k one year ago, no one wanted to buy — fear gripped the market. And now, at $55k, there’s no supply of Bitcoin to buy because so many want to — greed has its arms around the market. (Quick shout out to Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds)
The moral of the story: the next time a crazy contrarian is shouting from the corner, make sure you’re not locked in a crowd psychosis before judging him/her.
Favorite Thing on the Interwebs Today
Stopped in my tracks by true words.
Bitcoin Price Prediction
Yesterday: $51k - $60k
Today: $53k - $60k
Tomorrow: $53k - $67k
The price action of Bitcoin has been nothing short of predictable here. Since yesterday’s newsletter, the price of Bitcoin has come up to $57.5k only to be rejected, pulling back as low as $54.2k. It’s tough to say if the intraday pullback is complete here or we have further to go. Ideally, we would spend a few days in the $53k - $58.5k region before rocketing up, but we’re one solid announcement away from taking that leap. It’s not if, but when we leg up, I’m anticipating the next leg up will melt minds and bring us into the $70k+ region. At that point, a large portion of no coiners will be screeching in envy about all the ways that Bitcoin is terrible. Another large portion of no coiners will let greed get the best of them and start buying into the market. Number Go Up technology gives the best seats in the house to human psychology on display.
Bitcoin Ed Bite
Q: Is Bitcoin’s price manipulated?
A: Absolutely — and so is every other market in the world.
Everyone that buys or sells changes the supply and demand characteristics of the market, i.e., manipulation. As with any market, Bitcoin has larger players and smaller players. When small players buy and sell, it does little to move the market, but big players buying and selling have a larger impact. What’s refreshing with Bitcoin is that there are multiple exchanges worldwide working independently and without oversight to discover the price of Bitcoin. Decentralized price discovery makes it much more difficult for larger players to move the market independently.
On the other hand, we have seen traditional markets manipulated in abhorrent ways this last year. First, the tremendous amount of money printing has led to a runaway stock market, i.e., the Federal Reserve manipulating the market. Second, the saga with Gamestop showed that the markets could be started and stopped at the whims of large, private players in the market. The ability to control the rules of the game is a clear manipulation.
The question is not if a market is manipulated but how fair it is. Bitcoin’s global, decentralized, and 100% transparent supply characteristics make it the fairest game in town.
Thanks for reading,
Kent
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I have often wondered if I were witnessing Jesus' actions first hand, would I have recognized him as that crazy contrarian?