I have done a few posts describing conversations I have had with my retired or soon to be retired friends about bitcoin. I can’t find those posts right now. This one is about another friend with whom I am at a loss to present arguments. Here’s the story:

Another Retired Guy

Mr. X was a very successful retail business owner. He accumulated a good deal of wealth and discovered the stock market at a young age. He had little formal education, but he is very intelligent, well read, and with a natural aptitude for numbers. He did well in stocks, bonds and real estate, and began managing his wife’s 401k years ago. He is disciplined. He would always set aside a portion of his brokerage assets for trading options, derivatives and stuff like that which I never really understood.

Down The Rabbit Hole

We became interested in bitcoin at around the same time, and we had endless conversations about it in 2017. We learned together. He became a typical hodler like me. He read the Bitcoin Standard, became obsessed, and has been steadily buying and holding bitcoin in cold wallets since. I assume he has a substantial stack now, although of course we don’t talk about it. We also don’t talk as much as we did, since we no longer live near each other.

Our Paths Diverge

We caught up with each other on the phone the other night. When the conversation naturally turned to bitcoin, he said that he was having fun with “bitcoin shitcoins.” I didn’t know where this was going. He told me that he was using his brokerage accounts to trade shitcoins like microstrategy, all the ETFs, and even stocks like Semler Scientific. He said he didn’t feel bad about selling them since they weren’t real bitcoin anyway. He loved Saylor’s strategy of leveraging bitcoin with fiat. He was very excited talking about the availability of etf options.
I asked him what his end strategy was. He said he was trying to accumulate as much fiat as he could in the next year or so, then sink it into real bitcoin when the next bear market came around. He would also use some of his fiat to spend on his grand kids if they needed something.
I had trouble formulating arguments against him. I tried, but he would accuse me of acting like what he was doing was a sin. He wondered if I hadn’t embraced bitcoin as a religion.
I’m curious to know how other stackers would handle this? Is he right?
He might win in the short run but in the long run he'll lose. However he seems to be fiat affluent and using it to his advantage. He might have more bitcoin by doing so, he knows the game better.
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I don't think you have to convince him of anything. He is clearly a successful guy and made some money so if he gets rekt (as the kids say) on Bitcoin shitcoins, as long as he still has his stack in cold storage and it is not at risk, he will be ok.
The only thing I might suggest is what Jack Mallers said about his bitcoin hurdle rate being 55% and if you don't think another investment can exceed a 55% annual return, why bother.
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Remember, though, all his "bitcoin shitcoins" will appreciate at bitcoin's hurdle rate, unless Saylor blows himself up. The ETFs are tracking bitcoin's price.
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Not necessarily if you are trading them. Most traders don't outperform simply holding. Especially after paying cap gains tax.
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Also with MSTR, I don't know what the market cap to Bitcoin holdings is now but it was something absurd like 3x a few weeks ago. So MSTR can definitely underperform.
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Handy.
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nav premium is 2.668 right now
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A bit less than I thought. I thought it was around 3 but I will stick with 70k bitcoin instead of buying 186k Bitcoin via MSTR
Yeah, that's right. I don't have the trader mindset. He seems to be completely confident in bitcoin 4 year cycles, and expects another long bear in a year and a half or so.
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Tigers don't change their stripes. Your friend sounds like someone who enjoys the trading game and is pretty good at it.
Ultimately, his eyes are on the prize and there's nothing about bitcoin that says it must be your only investment vehicle. If he bets on himself and wins, then more bitcoin for him. If he loses, then more for us.
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Kind of my thoughts too. I think my frustration is that I subconsciously hope the four year cycles will disappear, and they probably won't. I have to remember that bear markets are when you really get to fill your bags anyway.
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I think the four year cycles are becoming less dramatic, but the entire global economy seems to have four year cycles, so they probably aren't going away.
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We are still in year 1 of this cycle. Halving date was April 20?
Edit: miners will not be immune from a 4 year cycle.
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Halving affects miner profitability, hash rate and hash price
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If you don't trade your bitcoin and just hodl it you know you'll have it. There's always the risk if you're not holding any bitcoin that the price will spike and not come down again. If he's willing to take that risk then fine but I'd advise him to keep at least a portion of his capital in assets like bitcoin and gold. That way he can be sure he will always have that portion. How big that part is depends on risk tolerance and one's confidence in one's ability to predict price movements.
edited to add: Another factor would be how much you mind actively managing your portfolio and keeping up with trends, news etc. Some people enjoy doing that. He seems like he might fit in that category. It may not feel like a chore to him.
I'd rather keep open the option to be able to use that time and attention for other things. Sure I may miss out on some gains (then again I may miss out on some losses too...) but I gain free time and attention. I also gain certainty and with that a sense of tranquility. I don't have to worry about my speculation bets checking out. To each his own.
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The argument I'd bring up would be about risk, What he is doing is a fundamentally more risky strategy. If you keep the bitcoin you know you'll have that amount of bitcoin as long as you don't lose the keys , get hacked etc. What you're not exposed to is price risk. What he is doing may get him more bitcoin in the end, or less. We don't know. He does not know. If he is okay with that, fine. But that's the argument: the lack of certainty.
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Good point about enjoying keeping up with investments versus it being a chore. I think he does enjoy it. Once again I'll add that he does hodl a significant stack of bitcoin that he doesn't touch. He saves his gambling for his "have fun" money.
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to be honest, having some fiat to spend on his grandkids isn't a bad thing and if he's planning on saving up and doing a big btc buy , that's also not terrible IMO
trying to time a bear market is stupid, sure, better to just get in now or dca, but if he has a tradfi mindset, it's not surprising.
i mean, it's not like he;s aping into dodge or has become a solana maxi or something
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"Play stupid games win stupid prizes"
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I had trouble formulating arguments against him. I tried, but he would accuse me of acting like what he was doing was a sin. He wondered if I hadn’t embraced bitcoin as a religion.
This part is very interesting. I'm guessing you didn't bring up the word "sin"? Looks like he brought it up.
Maybe he has a guilty conscience.
He probably understands that what he's doing amounts to nothing more than gambling/speculation. But it's working for him and he's having some fun doing it, so it reminds me of people who are slightly guilty about their indulgence in mindless entertainments, but not guilty enough to stop.
For people on that edge, it's enough for me that they have a bit of a conscience about it. When trading gets boring, or he hits a rough streak, he'll think back to your words.
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I think your take is most likely the most accurate.
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64 sats \ 0 replies \ @Roll 1 Nov
Sometimes, we just have to listen and be silent. We have to make our own experience and learn from there...
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64 sats \ 0 replies \ @ek 1 Nov
He said he was trying to accumulate as much fiat as he could in the next year or so, then sink it into real bitcoin when the next bear market came around. He would also use some of his fiat to spend on his grand kids if they needed something.
Time in the market beats timing the market
But I guess he should know that already?
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After the first paragraph, I was going to recommend he dabble with MSTR since he has experience with stocks, options and derivatives. Sounds like he is already doing this and that he has done his homework with Saylor strategy.
I wouldn't try to argue with him because he already has a plan or strategy.
Some or most people view bitcoin as a vehicle for huge capital gains, short and long term.
Think of it this way, you and your friend will have a lot to talk about (friendly and civil discourse)! On X or Twitter there is a huge community called Irresponsible MSTR. Your friend should follow a user named Punter Jeff.
Disclosure: I own btc and MSTR
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53 sats \ 0 replies \ @Aeiou 2 Nov
He is free to do whatever he wants.
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Why would you trade an asset that has gone up 92 million times and is the fastest asset to a trillion dollar market cap? It’s super volatile and I’m not aware of anyone who has outperformed it by trading it
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You could present this to him not as a moral argument, but as a risk and reward analysis….
Is the additional complexity and risk worth the potential upside, especially when simple bitcoin accumulation has historically performed so well?
Idk, it’s worth a try
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He already told you he wants to dive into bitcoin, you are on the same side of the argument, there is no conflict here (that is see) you just diverge which road to take... that is a personal choice, as long as you end up at the same place (lotsa real BTC in your private wallet), who really cares...?
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That's true. It's his business.
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43 sats \ 0 replies \ @jgbtc 2 Nov
Waiting for the next bear market to come around doesn't always work out.
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I'd certainly try to learn as much as possible if it turns out he also is a natural talent for trading basically anything!
Some are natural talents for that as well, and I'd guess they often are ultra cynical, talking the way you described.
If that is the case and he never sold any Bitcoin he's got in cold storage that is, and if so he might actually be a genius...
The opposite is likely if he sold to fund this, but also then ask him about his total PnL a bit into the next bear market!
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Play stupid games, win stupid prices. He has counterparty risk, you don't. You can hide your money from gov, send money wherever you want, he can't. The only thing you have in common is the price action. Just leave him trade, he either learns through pain or actually reaches his goal for more fiat which would also be great for him.
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IMO the primary strategy engaged by the legacy fiat powers- ir governments and bankers, to capture and control Bitcoin is very clear to anyone with open eyes. In the west it is not an outright ban- that would simply force it underground and out of control. No- the strategy is the classic one for any cartel/monopoly faced with a new asymmetric competitor- capture and control. How has this been orchestrated- in open sight? Simple- 1- bring trading into regulated centralised CEXes- not any CEX but a few carefully selected CEXes who are and will remain close to the banks who very selectively grant them banking service. 2- Impose KYC ownership tracking and tracing- gain control of ownership data. 3- Gain custody of a significant part of the entire market capital - via CEX custody and any other institutional form of custody- ie ETFs and even Microstrategy. 4- Subtly but effectively obstruct use of Bitcoin as a p2p payments protocol- designate Bitcoin as a commodity that will be taxed upon every transaction- making it quasi impractical to use legally as a MoE.
All of this has been achieved- the perception and use of Bitcoin as a speculative commodity, not a P2P payments protocol has been successfully achieved. At the same time the amount of Bitcoin that is not now KYCed is probably a relatively small ratio of the total. A growing ratio is held under the custody of institutional holders ETFs, CEXes and Microstrategy.
This all prepares the ground very nicely for a ban on private custody. With most Bitcoin already held by institutions who can still hold post ban and most privately held individual Bitcoin already identified a ban which might include an offer to acquire at market price could mop up most of the rest of the Bitcoin held in private hands.
Even if this final killer step of a ban on private Bitcoin custody is not taken Bitcoins use and perception has been substantially shifted away from that of a P2P Payment protocol to a much less threatening speculative commodity- a taxed and tracked and traced one.
Buying into ETFs and other institutional custody models is to be part of this process that undermines the original purpose of the protocol...and makes it easier for the legacy fiat power brokers to maintain their monopoly hold upon monetary payments channels.
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It's his strategy, it's his decision. Nothing to advise. If he thinks he'll be successful, then he should follow his world of the stock market and the risks. There is no ideology in Bitcoin, there are ideas, each one with his own. If he takes risks and wins and also has fun, well, good. If he does badly, well, he has the experience. If he leaves some Bitcoin coins behind in the race, I will try to buy them as soon as possible. The next bear market may be, there is still a lot of fluctuation left, if he manages to accumulate more BTC in his stash, then congratulations.
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43 sats \ 0 replies \ @crrdlx 1 Nov
It's his coin, his choices, his freedom to do what he wants with each. We all have different goals and places in life, stacking forever is really not the goal. Its stacking and then at some point spending or even cashing out BTC to USD if that's what one wants to do. He seems to have good reasons: family and buying back into BTC if the price goes low. Everyone's finish line is not the same
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He's taking a rather clever approach that requires a certain level of foresight. By experimenting with Fiat, he's positioning himself to acquire genuine Bitcoin. I believe that each person should follow their own investment path, as what suits one may not suit another.
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You could always push him in this direction and make him write an honest bio. Can you imagine the shitstorm he will cause? Then he might rethink his ways, and invest in bitcoin while it is still around 70k, before it goes higher and he regrets it.
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Remember, he holds bitcoin in a cold wallet, and probably a substantial amount. He buys daily and moves it to a cold wallet. What I'm describing is what he calls his "play money."
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Yes, but he is wasting time with his play money. Maybe he xan waste some time on here and flesh out his thoughts on fiat?
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I'll ask, but he isn't on ANY social media. It's funny how much he hates it. He barely texts. All he does is visit brokerage web sites.
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It never hurts to try. Would love to hear his thoughts on the economy and everything.
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I'll try
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Challenge him to make it on top of the leadership board. He might accept the challenge, and learn a lot about bitcoin while he tries.
I had trouble formulating arguments against him
Don't. Simply do not engage in a useless debate to convince him. Just walk away and say: Do as you please... more sats for me.
No further explanation.
Later you will be like this:
There's no reason to debate or trying to convince traders, shitcoiners, nocoiners, gov agents, politicians.
FUCK'EM'ALL
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sure, it's a great strategy -- PROVIDED there will, indeed, be more and lower bear markets.
But if the thesis is, bitcoin will go up forever (...Laura), then there's no guarantee he'll ever hit a good moment to enter. Maybe the low of the next bear market is 100k+?
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As I just replied to @grayruby, he is absolutely wedded to the 4 year cycle continuing.
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He might win in the short run but in the long run he'll lose. However he seems to be fiat affluent and using it to his advantage. He might have more bitcoin by doing so, he knows the game better.
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