Notes

shared this in one of my crypto investor groups
re: advising your inner circle to buy crypto?

As I'm sure many of us experienced in 2017-18, I had a lot of friends, family and acquaintances message me asking if it's a good time to buy bitcoin or something similar. The higher BTC went, the more messages there was. Initially I felt fine about saying "buy a bit,<X% of your net worth, be prepared to lose all" but after things started getting way over extended, I just said "no, stay away, too late". A lot more people got the second message because of how much retail interest there was when prices were 10k+.

Now that BTC prices and public interest are at a low, I am planning to send my closer friends and family a message. Although I think the sum of outcomes is negative for me personally (on average I find that when people do poorly in these spots they resent your advice, when they do well, they think it was easy and under-appreciate the position the adviser put himself in. They will also hound you for additional advice as time goes on "BTC is 2k, should i sell?", "BTC is 1k above my entry price, should I cashout now?" etc. Still for my closest friends and family, I do not mind these inconveniences.

Here is a rough draft of the format I'm considering:

Disclaimers
- not financial adviser, this is not professional advice
- have big % of my personal net worth and business interests in BTC and crypto
- my experience in trading/investing is more related to shorter time frame strategies and I do not have any proven success in longer term strategies

Reasons to buy
Asymmetrical return potential - there are a few ways in which BTC price can go many multiples of it's current price:
1) bull/bear cycles - BTC has gone through multiple bubbles where it has gains of 100x+ from bottom to top, with each bubble, the BTC market and community becomes bigger and more sophisticated and the gains become smaller. We are currently somewhere in a bear cycle, it's impossible to tell where in the bear cycle we are but history would suggest we are in the middle/later stages of the bear market. The idea here is not to buy the bottom of the bear market and sell at the top of the bull market but to buy sometime during the bear market and sell sometime during the bull market. An additional note here is that in cryptocurrency, the bull/bear cycles are more pronounced since the market is unregulated and the powers that be have more leeway in how they influence/manipulate the market. A rough example: the last 2 US bear markets were -50%, the last 2 bull markets were roughly +100%/+300%, the last 2 BTC bear markets were -85%+ and the bull markets were +9000%+
2) New Asset Class / New Form of Money - BTC could potentially be the next iteration of how we store and exchange value. I would argue that this has already become the case, it's just still on a very small scale. The details of this are beyond the scope of this message but you can learn more about it -insert appropriate links to articles/documentaries here-. BTC total value right now is 60b, gold is 7.7t, that means that BTC is worth less than 1% of gold right now. Does that mean it will go up? No, it doesn't but it put's it into perspective how small BTC is right now and IF successful, how much more room it might have to grow.
3) Uncorrelated to other asset classes / diversification - So far BTC has shown itself to be uncorrelated to the mainstream markets. Some people even believe that BTC would thrive if the global economy went into a recession, I personally do not believe that to be the case but I do think the lack of correlation on top of the asymmetric growth potential make having a % of your portfolio in BTC the smart thing to do.

Also worth noting somewhere in here that BTC has withstood multiple bubbles and existential crises, by many professionals opinions, it was supposed to have died a long time ago.

"When an asset is supposed to die but does not, it's incredibly bullish" - George Soros (one of the most successful speculators of all time) (edited)