Top of Bitcoin's Funnel

Sat down to fiat work today. The 'fintech & crypto' chat on bloomberg was abuzz with wall street guys who 'got into crypto.' They're shilling ETH, which is 'pumping hard' today. Most - nearly all - of these guys are predisposed to shitcoins because their job is to be better-than-average at picking winners. How much of the managed money business would exist if it were possible for any regular fellow to increase the value of his future consumption merely by foregoing some consumption today? So these guys are always going to start from the premise that it's a relative value game, and 'the next outperformer has gotta be out there somewhere (we just gotta find it)'.

Caught my attention because ETH has had very little mention in the chat during this cycle's recent run up. Until today, that is. During the past 8-12 months, we've had mostly bitcoiners (a few out-of-closet 'Freaks') paired with an on-again-off-again parade of new tickers, names, and ideas. There were, for instance, "yams" and "polkadots" on the menu at different times. There was mention of 'Link army,' which I can only assume is a reference to Zelda. Yada yada yada. But now suddenly there is shitcoiner gravity towards ETH.

And I think it goes something like this:

1. bitcoin comes back from the dead (again)
2. failure to die attracts the interest of new people and hardens OGs
3. new interest results in new demand as people discover the prospect of participating in the earliest decades of an emergent global money
4. ngu
5. 'smart money' notices and tries to figure out how to capture some of the money flow; these 'money managers' charge 'money havers' fees in exchange for picking the next big thing
6. money flows into shitcoin casino, from VCs and from your cousin on Robinhood; new shitcoins are minted and new shitcoiners line up to place their bets
7. the analysts get to work, everyone has a field day with short term pops, new offerings, hot VC deals, the new fund of funds, etc
8. those who do thorough research realize that most of the projects are obviously turds dressed up in tech; they either get bearish the entire premise of 'crypto' or they push into the projects whose tech is too complicated to understand, and therefore might still not be turds.

pause. imagine this brave stock-picker who has gone far enough to realize that most shitcoins are shitcoins but decides to continue learning about unfamiliar topics like tech hardware and code, github, development of consensus protocols, distributed development, open source computing, cryptography, the underlying math, etc. they drink from a fire hose. it's all very complicated, but now they can see that 'certain projects, like ETH, have a lot of value. as best as I understand the tech - which is not completely - this MIGHT NOT be a turd... therefore, it might be the next best thing.'

late cycle? beginning of cycle? we'll see. but i think this is where we are. what comes next is anyone's guess. here's mine:

1. market consensus forms among money managers that this is a race to be the next bitcoin and there are a few, well-known contenders; this generates interest in and outperformance by a handful of older shitcoins which reflexively confirms the consensus thesis (we are getting closer to base layer since they're finding ETH)
2. eventually, the interest fades. The money flows out. The money managers seek other adventures. None of the 'next best things' does anything we care about. Everyone loses interest (and paper gains).
3. some of the people who started as 'crypto guys' follow through until they arrive at an understanding of the base layer that started all of this in the first place, but only after a long, winding road. They stick around forever. They are why this whole process is probably going to repeat again (when the next halving gets priced in).

So rather than be annoyed by shitcoinery today, I am choosing to be grateful for the top of bitcoin's funnel.

Choose to be positive!