If Bitcoin really is a safe-haven asset,
is it behaving like one?

The title of today’s post is not intended to be a serious question as much as it is “gallows humour”, as they say.

Since the Russian invasion of the Ukraine in early 2022, it’s been speculated that future historians may look back on that event as the beginning of WWIII. I have privately wondered (and meant to write it up in the last monthly letter, but it slipped off the radar), whether the cascading military coups throughout the CFA (Central African Franc) nations were the slow opening of a second front in what was becoming a global conflict.

As the ruling, CFA-aligned governments are being deposed, in Niger, Ghana, Central African Republic and Burkina Faso (eight coups in the past two years, so far), Russian military advisors are appearing on scene, coaching the generals. Meanwhile China is ready with infrastructure incentives and loans. That front isn’t hot – yet – but it’s – “War By Other Means”, to quote the Robert Blackwell & Jennifer Harris book by that title…

“Today, nations increasingly carry out geopolitical combat through economic means. Policies governing everything from trade and investment to energy and exchange rates are wielded as tools to win diplomatic allies, punish adversaries, and coerce those in between.”

Except for the United States, the authors lament, both of whom belong to the Council on Foreign Relations. The USA is still somewhat retrograde in that it reflexively seeks to use its military stature to either threaten or force issues – an increasingly obsolete strategy.

I’ve mentioned 5th Generation Warfare before (5GW), which is all about “war by other means” – so much so that at least one of the combatants may not even realize that they’re embroiled in a war:

“In 5GW, violence is so dispersed that the losing side may never realize that it has been conquered. The very secrecy of 5GW makes it the hardest generation of war to study. Because 5GW attacks occur below the threshold of observation, COIN in 5GW is the preemptive, system-wide, automatic degeneration of 5GW forces into more primitive gradients of warfare. The 5GW warfighter hides in the static, and the most successful 5GWs are those that are never identified.”

Abbott, Daniel H.. The Handbook of 5GW: A Fifth Generation of War? (pp. 16-17). Nimble Books LLC. Kindle Edition.

I think this has been the case in the West for decades, with the rise of far-left ideologies and bat-shit wokery permeating (infiltrating?) our core institutions (basically, Fabianism writ large).

Yet as I type this, it is still early days in a new hot war in the Middle East, which is possibly – if you listen to Patrick Byrne’s theory on how it occurred – the side-effect of a geo-economic battle between the US and Israel of all things.

What REALLY Caused Israel’s Foggy Intel? Read it Here 1st.

The MSM has the what and the why, but not the how. Let me tell you what really caused this catastrophic failure in Israeli intelligence last Saturday.

As my regulars are aware, I have spent some time this year in… pic.twitter.com/8uR0QzSupB

— Patrick Byrne (@PatrickByrne) October 12, 2023

In any case, it’s another 9/11 moment and at some point I’ll explain why I use that comparison specifically, instead of the “Pearl Harbor” references we’ve seen a lot of since the Hamas surprise attack on Israel (possibly in the monthly macro Bitcoin Capitalist if I don’t get to it here).

The mid-month portfolio review issue is intended to be a more tactical focus on Bitcoin, cryptos and the companies we own, within the backdrop of whatever is going on that affects these spaces directly.

But the dial for geopolitical tension just got ratcheted up to 11, so we have to acknowledge here that something very bad has occurred, and like it or not, it stands to become a core driver of what unfolds from here on.

Hedge fund billionaire Paul Tudor Jones appeared on CNBC October 10th, saying that it was hard to own stocks amid such geopolitical uncertainty, and citing three flashpoints: Ukraine, the Middle-East, and sooner or later: Taiwan.

In a widely circulated quote, PTJ said he liked gold and Bitcoin although he said so within the context of the two performing well in recessions, which he predicted would occur by Q1 of 2024.

I don’t necessarily know if that’s true. Bitcoin has never been in an official recession, although when we were in a “technical” one earlier this year, it was coming off the lows of a bear market nadir with a good head of steam on it, so I don’t know how much we can infer from that.

Recall, Paul Tudor Jones was arguably one of the catalysts behind “the institutions are coming” mantra of the 2020 cycle when he disclosed holding a position in it within his hedge fund.

As I’ve observed since, that wave, which included Michael Saylor, Stanley Druckenmiller and (for a while) Elon Musk, wasn’t really an institutional wave, per se – more like a vanguard of maverick billionaires. But it was a start.

It’s the inevitable, perhaps even imminent arrival of spot Bitcoin ETFs in the USA (they’ve been around here in Canada for years) that will truly lay out a carpet for institutional investors.

But the geopolitical and macroeconomic environment today is very different from anything experienced since Bitcoin emerged as an asset class.

The great bond supercycle is over, as is The Everything Bubble and likewise is the (so-called) “unipolar world”.

We’re neck deep in The Jackpot now , or what Strauss and Howe called a “Fourth Turning”.

The End of The Unipolar World (as we know it).

All bets are off, and nobody really knows what happens next. When people use the phrase “the end of the unipolar world”, they are typically thinking in terms of nation states jockeying for primacy in a presumably multi-polar world. Russia, China, Brasil, India, Turkey, Saudi Arabia, Israel… Iran – I think this is a one-dimensional view and doesn’t fully capture the shift we are undergoing.

But for my own meaning of “multi-polar world”, the potpourri of nation states vying for geopolitical “Lebensraum” is only one layer of it. Add to that non-aligned, non-national, autonomous organizations …think supra-national Borgs like the WEF, and their polar opposite: Network States and crypto-anarchist enclaves.

Some countries may coagulate into the former (like the entire G-20) while others splinter out and morph into the latter (El Salvador).

Then factor in cartels, consortiums and corporations. Terrorist cells, organized crime, hacker networks, not to mention completely artificial entities with no human agency – like smart contracts, DAO’s, autonomous 3-D printers, weaponized drones or computer viruses.

Now imagine decentralized, anonymous (and autonomous) networks of 3-D printers cranking out kamikaze drones that take them out. pic.twitter.com/kaWClCBLQx

— Mark Jeftovic, The ₿itcoin Capitalist (@StuntPope) October 7, 2023

That’s the multi-polar world we are headed into, and we’re naive if we think we’re just dealing with a bunch of nationalist upstarts. In such a world, Bitcoin “the money of enemies” becomes necessity.

Where does it leave Bitcoin?

Until now it has only really had one long macro-economic cycle, with relative geopolitical stability, during which it was always theorized that Bitcoin was a safe haven asset, just like gold.

Couple problems.

One is that over the past fifteen years or so, not even gold traded like gold. It was supposed to be safe when everything else went to hell, but in the Global Financial Crisis and every other mini-crisis that tanked the stock market, gold usually tanked too.

Yes, gold took off like a rocket after the GFC bottomed, and did so a good six months before everything else. But for the most part, everything took off and highly correlated markets became the norm for the next ten or fifteen years, because “money printer go brrrr”.

That gave rise to the mantra, “it’s all one trade”. During that same cycle, Bitcoin tracked the Nasdaq for long chunks of it, and even traded like a meme stock – the right hand chart above showing correlations between BTC and Gold (top), the Nasdaq (middle) and AMC (bottom). The closer the line tracks along the top, the closer the correlation.

Now we’re in what seems like a global crisis for reals.

Bonds have had a somewhat under the radar implosion, owing to the fastest rate hike cycle in history. Stocks have done something barely recognizable, and gone down for a few months; debt is exploding at an accelerating pace, as if that was even possible; and that’s on top of: rolling energy crises, a hot war in Europe, escalating tensions between China and Taiwan and now, the Middle East erupting into war.

Gold has reacted vigorously to the Hamas attacks on Israel, and the anticipated reprisals and repercussions (a more than $60/oz move on Friday the 13th alone).

Bitcoin looked asleep, when a new hot war broke out in the Middle East. If it’s been reacting to anything since that happened it seems to be the ongoing breakdown of the bond markets. It may truly “be different this time” if the markets wake up to the reality that debt is well and truly out of control.

Granted, gold took a major dump in the weeks leading up to the Hamas attacks, and Bitcoin is still the best performing asset class of the year, so if we can infer anything, it feels like the “all one trade” correlation is starting to break down a bit.

Absent rampant money printing (on pause for the moment, to be sure), assets seem to be zig-zagging toward their own fundamental drivers and at the moment, it looks like this: fears of World War III are acting as a tailwind for gold while fears of the global financial system imploding (and possibly the inevitable arrival of CBDC’s) are what’s lifting Bitcoin.

My base case is that the latter is pretty well baked in. I’d like to hope that the former isn’t, but, as I noted earlier, we may already be past that.

My forthcoming ebook The CBDC Survival Guide will give you the tools and the knowledge to navigate coming era of Monetary Apartheid. Bombthrower subscribers will get free when it drops, sign up today.

Today’s post was an excerpt from The Bitcoin Capitalist Mid-Month Portfolio Review. TBC provides actionable intelligence on the macro forces shaping Late Stage Globalism and a tactical toolkit for growing your wealth as it plays out. Try it today here.

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Last night I made the mistake of putting Ben Hunt’s The Long Now Part 2 on a tablet and brought it to bed to read. My kid had an early morning soccer practice at school today and the plan was I’d read this before turning in early. By the end of it I couldn’t sleep.

It articulated something I’ve been grappling with for so long, so clearly and so lucidly that it got my mind racing. I’m sure you all know how it is when you’re galvanized by an idea at night. You lie there in bed with your brain completely overclocked, scribbling in a notebook beside the bed. I ended up padding over to my office and emailing Mr. Hunt around midnight and he gave me permission to attach a PDF of the The Long Now Part 2 with the email I’m sending my list. It’s also online at the EpsilonTheory website.

From the very opening line, I should have known I was in for a sleepless night….

Every three or four generations, humanity consumes itself with the fang and claw of fascism and collectivism. Every three or four generations, we eat our own.

This is that time. This is the Long Now.

As it so happens, I had just started listening to Strauss and Howe’s The Fourth Turning this week, a book I’ve owned probably since the third turning but never got around to reading/listening to until now. I knew the overall concept of the Fourth Turning, and that by Howe’s reckoning we had entered the Fourth Turning with the Global Financial Crisis of 2008-09.

The Fourth Turning is a crisis period, what Hunt calls The Long Now…

In politics it takes the form of a widening gyre, where the center cannot hold against the onslaught of polarizing political entrepreneurs who eliminate the political promise of the future, replacing it with the Long Now of constant political fear. In economics it takes the form of a market utility, where those same illiberal political entrepreneurs eliminate the economic risk of the future, replacing it with the Long Now of constant economic stimulus.

Hunt calls forth the analogy of the Rhinoceros, after the 1959 novel by Eugene Ionesco. In the story the villagers in a central European town begin, one by each, turning into rhinos, and then running on destructive rampages through the town. It is a metaphor, Hunt tells us, that describes how fascism rises within an otherwise normal community….

People are a little puzzled at first, what with their fellow citizens just turning into rampaging rhinos out of the blue, but even that slight puzzlement fades quickly enough.

Soon it’s just the New Normal. Soon it’s just the way things are … a good thing, even.

The key point Hunt makes in his essay is this:

It’s not just bad people who turn into rhinos

Everybody is susceptible, and the penalty for buttressing oneself against the trend of “going Rhino” is utter and profound aloneness. It almost seems not worth it.

Your typical MAGA zealot is a rhino. So is everybody in Antifa. Both Paul Krugman and Sean Hannity are rhinos. People who mean well become rhinos because in the prospective Rhino’s mind

…the danger at hand is so great, so existential, that NOTHING MATTERS other than combating that danger, that you must sacrifice your most precious possession – your autonomy of mind – to believe in the necessity of these political actions. You must not only think that it is possible for 2 + 2 = 5 if the political exigency is urgent enough, you must believe that it is necessary for 2 + 2 = 5. Orwell called this “collective solipsism”. I call it political nihilism. Either way, THIS is the politics of the Long Now.

We are all in danger of  “going Rhino”: Yesterday, in fact, I had just set up a new Twitter account, a parody that was to push a new blog I was spinning up whose intent was to be like the “F**kedCompany” of this generations’ forthcoming tech bubble implosion. It was cynical. Jaded. Biting. After reading The Long Now, I felt slightly ashamed of myself.  It wasn’t helping. Even if I managed to get it off the ground it wasn’t going to be productive. It would be yet another source of acerbic angst in your social media feed. Who really needs that?

So this morning I shut the entire thing down and started writing this instead. As Hunt tells us, we can’t do anything about the disruption that is baked-in to a Fourth Turning / Long Now style unraveling.  All we can do is to “refuse to become rhinoceros ourselves”, and in doing that, we take another tack:

Make, Protect, Teach

What resonated with me so much from reading this essay was because I’ve been trying to articulate something similar for a long time. It’s the basic premise behind “The Transition Overview: Building Companies That Matter” piece that kicked off Out Of The Cave back in 2017. In my last podcast with Charles Hugh Smith we talked about it (around the 38:19 mark):

MJ: when I look at  Pathfinding [Our Destiny] like part seven where where we’re talking about what the way forward looks like, that it’s outside of the control of the of the establishment, that it’s outside of the system I get this sense that for society to flourish and adapt around this and evolve. I guess that’s the key word, we’re going do this around the institutionalized hierarchies.

They’re not going to get religion one day, we’re not going to elect the right candidate, we’re not going to have the right party gain power that’s suddenly going to say “I read this great book by Charles Hugh Smith and this is how we’re going to do it”.

It’s going to be something like institutionalized hierarchies will just lose more and more relevance as these new social and business and financial configurations start gaining more and more relevance.

CHS: That’s an excellent point and I think if anything I didn’t emphasize that enough. That really what we’re talking about is kind of like hacking the system in in the old time sense that a hack was a workaround. It wasn’t like you were breaking into the system to steal something, you’d created a workaround for a kludgy system that just didn’t work anymore.

And so I think you’re absolutely right, it’s going to be working around us and and Bitcoin is one example of how workarounds are manifesting and of course the status quo is going try to suppress those and/or co-opt them but what we’re really talking about is when systems fail at a systemic level you can’t reform them. You’re not going to make a policy tweak that’s going to fix higher education or the health care system. It just isn’t going work.

People are going to start working around that and they’re going be starting to pay cash for for medical care from pop up providers or remote physicians. Or there’s lots of different solutions to that in education. What I see the model that’s going to emerge whether people like it or not and is that students are going to start taking control of their own education and they’re going start organizing their own education.

They don’t need this bloated structure that charges them $70,000 a year and so that’s where technology, the internet and networking has really enabled a whole suite of solutions that basically bypass all the institutions that now hold the wealth and power, that have all this as you say institutionalized lethargy as as their their model.

It’s actually quite an exciting time but for those who are dependent on the system within these institutions it’s a very disturbing time

The way through the Long Now is not to vote in the correct political party in or to cajole professional panderers into decreeing the correct policies. We’re beyond that now.

All of this to pave the way for the punch line in The Long Now, Part 2, which is that

“The way through the Long Now is a social movement, not a political party.”

That sentence was why I couldn’t sleep last night. That’s what people like Charles Hugh Smith and Chris Martenson and George Gilder and Tom Woods and numerous others have been converging on for the last decade or so. That’s the emerging theme and Ben Hunt, in this essay I think, finally nailed the three word ethos of what is emerging: Make Protect Teach.

I believe that a decentralized and service-oriented social movement at scale can thrive in the age of social media technology. I believe that a decentralized and service-oriented social movement can both inoculate our hearts from the top-down Nudges that push us into rhinocerosness, as well as fill us with a positive energy that reverses the pervasive alienation that creates the Neb Tnuhs of the world.

It’s a social movement for a revitalized foundation of citizenship. It’s Make – Protect – Teach.

There’s no primacy to these three rightful objects of political power and the citizenship which drives them. Put Teach at the top of the triangle. Spin everything 90 degrees. Marry two of them. Take them independently. Change the colors and the font size. I’m not trying to be symbolic here.

I’m trying to be Real.

I’m trying to provide an alternative to the abstracted world of narrative and cartoon that rules our mindfulness from the top down, in favor of a concreted world of actual human beings making things and protecting each other and teaching each other, where we act as Stewards of our children’s future rather than as Managers of our personal now.

If I’ve done Hunt’s essay any justice in this piece you’ll set aside 15 or 20 minutes and read it sometime in the next day or so. I’ll feel like I’ve accomplished something if you did that.

The Long Now Part 2: Make Protect Teach