#1022 Adam Back On How To Get Through A Bitcoin Bear Market
6/27/2022 · 36 min · transcript via mlx
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Key topics
— Bitcoin's price has fallen 70%+ in recent months while underlying fundamentals like hash rate, Lightning capacity, and network metrics remain strong or near all-time highs.
— DeFi collapses (Luna, Terra, UST) and Three Arrows Capital's insolvency triggered cascading deleveraging and losses, but Bitcoin dominance actually increased during the drawdown, suggesting alts underperformed.
— Bitcoin mining is antifragile: when hash rate is pushed offline by policy, financial incentives increase, causing relocation and decentralization of mining activity.
— Collateralized stablecoins (Tether, Circle, Gemini) are fundamentally safer than algorithmic stablecoins, though concerns about term mismatch and audit transparency remain.
— Most altcoins (99.9% of ~20,000 coins) are speculative marketing chips with no meaningful R&D; only a tiny fraction offer genuine innovation like privacy or smart contracts.
— Lightning Network, Liquid sidechain, and Taro asset protocol serve different use cases and can coexist; Blockstream is active across all three layers.
Market & price signals
— Bitcoin's 200-week moving average currently sits around $22,000, a trailing indicator Adam Back uses as a baseline "value floor" with price above it being short-term volatility. The current price is below this level, an occurrence that has happened only a few times historically. The recent drawdown mirrors the Mt. Gox era ($200 for an extended period before spike to $1,300), though at a 100x larger price scale. Tether's commercial paper exposure has been reduced to approximately $8 billion of ~$65 billion total, with the remainder in cash equivalents; the stablecoin is overcollateralized due to retained earnings. Bitcoin dominance jumped ~20% during recent price adjustment, indicating altcoin baskets declined significantly more than Bitcoin.
Actionable insights
— Focus on long-term holding and dollar-cost averaging rather than short-term trading; removing just the 12 biggest price movement days from a Bitcoin investment statistic turns gains into losses, making market-timing extremely risky.
— Evaluate stablecoin and lending platform risk carefully—avoid algorithmic stablecoins and verify that lending platforms do not engage in unsecured rehypothecation of your collateral; consider self-custody and multi-sig solutions like HODL.
— Career opportunities in Bitcoin span non-technical roles (documentation, business development, accounting, finance) across growing startups; Bitcoin lacks a marketing department and attracts talented people organically, making it a decentralized hiring ecosystem.
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