Full Transcript
James:
What is up everybody? We are live and in the house on the Dentists Who Invest Facebook group once more for another exciting live and in the house Q&A and on that topic, well, what I want everybody to do this evening as I as I invite everybody to do every evening that we have a live Q&A is go ahead and throw any questions in the chat, say hello if you’re watching this on replay, put replay in the chat. So no one who we got a replay. If you’re here and in the house tonight, this Tuesday evening, feel free to throw going in the comment section. So we got a really good feel for how many people are here with us. There’ll be opportunities to ask questions as time goes on. We haven’t actually ever done a Facebook live on Bitcoin and crypto, so this is going to be the very first one, the premiere, so to speak, tonight, and I would.
James:
Fans of the podcast may remember, Mr Neel Saund from way back in the last crypto bull run, way back in the day. I want to say way back in the day. I mean 2020 slash 2021, so maybe not that long ago, but Bitcoin’s got a bit of a theme to it where this happens every four years. So doesn’t it, neil? The Bitcoin bull market, but more on that in just a minute. Anyway, neil, how are you?
Neel:
I’m good. Thanks, mate. Yeah, thanks very much for having me on Total pleasure.
James:
It’s been way too long and you know what I’m looking forward to more crypto content, man, because crypto is here to stay, if you ask me. But of course, my philosophy in crypto is don’t go all in, don’t spend too much time in Twitter and be like the flipping moon boys and all of that crazy stuff. You’re going to have it. If you’re going to have it, have it as part of a bounce portfolio. At least that’s my thesis anyway. But anyway, as I say, we’re going to get into all that juicy stuff about crypto. Once again, I’m going to invite everybody in the audience to, through their comments in the comment section, ask us any question you like about the world of crypto. Really great opportunity to avail of the knowledge that is on offer this evening on this live Q&A. Before we do that, neil, it’d be lovely if we could have a little bit of an intro for yourself, for those on the Dennis University audience who are yet to meet you, my friend.
Neel:
Of course, man, of course, yeah, no, great to be here again. Thanks so much for having me on, james. It’s an absolute pleasure. I got involved for the first time in 2013 in crypto quite early the bug, very early in fact, 2013. So, wow, over a decade now, 11 years Originally. Just just heard of it on the great vinas on Reddit saw someone posting about Bitcoin and then fell with a pretty dramatic fashion down the rabbit hole and hit every every possible obstacle in my way, as most do when they start their journey, I guess, down this incredibly deep rabbit hole.
James:
Everybody, every crypto investor, has got at least two or three stories where they just messed up massively it’s almost like it’s almost like it’s a ride a passage for you to actually success in the space.
Neel:
Yeah, yeah, I mean, everyone’s got their battle wins. If you’ve been, if you’ve been here for more than a full cycle, which is, as James mentioned is it oscillates around the Bitcoin halving everyone’s most people have heard that phrase by now the Bitcoin halving. It’s a programmatic halving of the output of supply every four years and each cycle oscillates around those four year halving cycles. So if you’ve been here for more than one halving cycle, which is four years, yeah, you probably got some, some war wounds to show, a couple black eyes, bloody nose, but you’re still here, you’re fighting and, yeah, you’re in the trenches with us.
James:
Well, you know what, those crypto fans? They just keep coming back for more, bro, you know, we’re still here. We’re still here, right?
James:
Not good enough yeah there must be something to it. Right, there must be something to it. But anyway, listen, the audience know about my opinion on those things because I am on the platform and I speak about it. I share my opinions and what have you, and that’s why I’m always super keen that whenever we get a guest on that, they do the majority of the talking so we can hear their slant and perspective. I should mention guys to anybody who’s watching. Neil has got his camera off this evening and the reason for that is because he’s having a bad hair day. No, I’m kidding. He’s actually currently living in a house which is under construction and, yeah, it’s not pretty in there. It’s not pretty in there, so Neil’s got his camera off but anyway, listen.
Neel:
Neil James said bad hair day is actually the make up today mate.
James:
Oh, I see. Okay, thanks for clarifying. Wonderful, alright. Well, neil, you know what I think probably the majority of people listening to this will be. From what I could see, there are people who are newish to the crypto world. So let’s keep a super high level. What the hell is the market what the heck actually is that? Because for a lot of people they don’t even know. They’ve yet to maybe have the opportunity to understand that.
Neel:
For sure. Yeah, no, again. Super high level. So a bull market naturally is where price on the macro time frame, on the high time frame, is trending upwards. A bear market is the complete opposite and inverse of that. So when price is trending downwards, these market cycles oscillate, with four year time frames, around this event known as the halving, as I mentioned just now. This halving occurs every four years and the daily issuance of Bitcoin to miners miners are used basically to control the network and to secure the network through donating their computing power to the network. This, this daily issuance, basically halves every four years.
Neel:
So if you’re comparing it to something that we know that we’re comfortable with, the physical equivalent, which is gold, it would be like guaranteeing the fixed supply of gold that’s in the earth’s crust and then every gold mine every four years having to half the amount they mine, guaranteeing that.
Neel:
So it’s a pretty dramatic supply and demand effect on price at the back end, obviously, where you get the demand forever increasing really, as people know about it and as we reach sort of a network effects with Metcast, lore, et cetera, and naturally, beyond that, you’ve got supply guaranteed to go down. When I say guaranteed to go down, obviously you’ve got a fixed supply. The actual supply and circulation isn’t going down, but the issuance is, so in terms of supply and demand dynamics, that’s what makes it such a compelling asset class to invest in, because we know the amount that’s in circulation and we know the amount that’s being mined, but we know that demand is also going to be going up as more and more countries now more and more governments obviously, with the Bitcoin ETF being approved look to add Bitcoin to their balance sheets as the digital equivalent to the physical or the analog, which is gold.
James:
Thank you for that high level synopsis, neil, and you know what? One of the coolest things about crypto here’s the thing you know not often there’s a guarantee in life, one of well, but one of the biggest guarantees that there is an investment is that there will always be inflation, like there literally has to be inflation for economies to function okay. There has to be that upward pressure on prices, so people keep buying assets, which is an outcome of inflation and why that is. That’s probably a 30 minute webinar in and of itself Really quickly.
Neel:
You could just say it’s just because GDPs need to increase, economies need to grow. As we have more populations, as there’s more births et cetera, there’s more people to feed. Economies need to grow to basically cover that increased demand and therefore we need to have an increasing inflationary monetary supply.
James:
There you go, so have you accept that that’s going to be a continuing thesis? There will always be more money, and even if demand doesn’t increase for crypto and other assets, even if it maintains exactly the same, well then, the value would still increase purely on that basis. Is it the strength, necessarily, of the asset or is it the weakness of the cash?
James:
That’s something to ponder something to ponder and what that means. That is probably a 30 minute webinar on and on and of itself. So let’s just leave that there. But you know what? Let’s go back into what you were saying A second ago. Neil, from the outside, looking into somebody who maybe kind of has like one eye on the crypto space, or like half an eye on the crypto space, and they kind of sort of hear about it here and there, but they’re a little unfamiliar with its intricacies. From their perspective it looks a little bit like this there’s this crazy bull run right, and then basically it starts out. No one cares. They’re like ah, it’s just a flash in the pan. It starts to grow, everybody jumps in just at the precise moment that they’re left like high and dry and then the market crashes again for another three years, right, and that’s like the bull and bust four year cycle.
Neel:
The bull and bust four year cycle and to the crypto veterans.
James:
they’re like yeah, well, that’s just how it works. But there’s people who are unfamiliar with that. Well, what it looks like is it’s just continuously in this huge volatile two-multra state and no one’s actually really making money, and it’s hard to make sense of it all right from the outside looking in. So what does that all apart? Where does that happen?
Neel:
Yeah, sure. So I mean with any market, especially markets where there’s a fixed supply, of which there aren’t many now cryptos is the main fixed supply market out there Essentially, an asset, whenever there is a supply shock, needs to be repriced because the amount in circulation or the amount currently being released in circulation doesn’t match that of the demand. So what you get basically with these four year cycles is we know that the supply, basically at the output of supplies, being halved, that the demand is staying the same or increasing now as we’re seeing. So you need every four years to see a repricing of the asset, basically to match that demand. That is a known entity, a known quantity. So every four years you get this repricing and then eventually it will get to the point where even the larger players, the venture capital players, the hedge funds, the banks, the institutional larger investors with deep pockets and deem it to be fair value and deem it to be potentially even overvalued, and then they start selling it and naturally de-risking their books. And then you get this sort of big crash, this big bust and a bear market. And then again, in four years time, you get the halving again and you get a repricing upwards, as obviously it needs to match that of the increased exponential demand.
Neel:
I think that the key real psychological light bulb moment for a lot of people is thinking in exponential terms with crypto. A lot of people are conditioned with the stock market and with traditional finance to think in linear terms because nothing’s ever been a guaranteed fixed supply. I mean a stock can split or there could be shared allusions at any real time, really depending on the specific company in questions, business plan or what’s going on in the wider sort of macro economy. That means obviously we think in linear terms, but exponential think is really rewarded here in crypto because of these fixed supply dynamics. I keep saying it, but it’s the underpinning thesis for investments in this space is the fixed supply. That is what drives that demand.
James:
Even partly drives the value appreciation of most assets over time. This is the thing that’s one of the main thesis, right? It’s just that with crypto, we’ve yet to reach how can we say peak market saturation as well we have with lots of assets. What I mean by that is this there’s still newbies, there’s still newcomers to the space, so it’s still growing in. How can we say utilization? It’s growing in people that are familiar with the space and it’s growing in terms of people that have invested in it. You look at the number of wallets and addresses that there are. There’s consistently upward trend and that’s part of the tailwinds that drive this overall effect.
James:
Of course, that’s the theory. No one quite knows where any asset is going to go with time. However, one of the guarantees that there is in the world of investment, one of the givens, is that there will always be inflation, and that’s one of the things that drives asset value. We’re certainly not saying go all in in crypto or any of the crazy stuff, where what we really like to promote is allowing people to understand how crypto can actually be potentially part of a balanced portfolio, where somebody’s risk tolerance permits it and where they’re willing to accept the potential downside that may come with that, Because to me, if you’ve got this asset or this opportunity to accelerate your financial journey, maybe shave 5, 10 years off your ability to achieve financial freedom, then to me, having some exposure to it is something that you might reasonably argue At least that’s my philosophy. Again, everybody might not agree with it. If you are going to do it well, we’ve got to understand it, which is basically what we’re here to talk about tonight.
James:
Anyway, let’s go back to the halving we were talking about just a second ago, Neil, the halving traditionally the crypto boom market doesn’t actually happen until after the halving. When we say boom market, how are we going to define it in this instance? Is Bitcoin reaches a new all-time high? Bitcoin in a minute is like over 7, well, actually so I’m not right now as I speak, but very recently it was over 70,000. So we saw that new all-time high, but before the halving this year. What’s up with that?
Neel:
It’s basically institutions front-running the halving event. They know that fixed supply and they know that we’re going to get a halving of the daily issuance onto the market, onto the live market, so they’re front-running that. And these institutional investors what we call in crypto circles, they’re what we call diamond hands, so these guys are in the long haul that they may not ever sell their Bitcoin a lot of them. So they’re long-term investors, whereas traditionally the average crypto investor has been a more sort of shorter-term kind of fair weather investor whereby you’re looking to sort of make a big return and get out where you can, or try and time the top.
Neel:
These deeper pockets, these much larger institutional investors that are now investing the likes of Fidelity, blackrock, et cetera through the ETF, really they’re going to be looking at a decade, two decades that’s their time horizon. So they don’t care if they’re getting at 45,000, 55,000, 65,000. They just care about the narrative, and the narrative currently is the halving and they’re front-running that known event. So that’s why we’re seeing this surge in price really ahead of where we should be, sort of around this timeframe pre-harving. Generally, what we’ve seen perseguing back to what you said, james, in terms of price history what we’ve seen is an all-time high, reached around sort of a month after each halving, and this time we obviously have seen it a month and a half beforehand. The halving is due in a month’s time, today, so that’s really the main reason. It’s just the participant and the level of sophistication and money now in the market pace.
James:
Okay, I know this is an annoying question, I’m going to ask it anyway. Is now a good time to buy Bitcoin? Neil?
Neel:
I don’t really think it’s ever not a good time if you have a mature time horizon. If you look at the stock market or any other investment, especially maybe even property, which I do dabble in as well you generally enter that investment with a quite sort of mature timeframe or time horizon or expectation. You’re looking at it for generally between sort of three to 10 years.
Neel:
A lot of the time maybe even more than that, but people seem to have this idea of crypto being a quick sort of short term almost gamble, really a bit of a casino. In reality, if you adjust your expectations and time horizon to mimic that of what you would deem a more stable and naturally much less volatile traditional investment, it’s never a bad time to buy Bitcoin. The longest most likely you’ll be waiting to make money is four years because of this fixed programmatic supply strain that we have. So I would say, really, if you’re looking at it from a mature time horizon, it’s not a bad time ever. If you’re looking at it from the perspective of a quick buck, then now’s a very, very good time to be looking at it, researching and learning more.
James:
And this is the thing you know when you apply traditional investing logic and wisdom, which is to buy and hold your assets in virtually indefinitely until you reach retirement age, so maybe a timeframe of 25 or 30 years. If you literally just take that logic, apply it to crypto, forget all the moonboys and all the insanity that goes on in Twitter and everybody talking about how they made a million overnight. Well, just as you say, even the people that have done buying hold from this point forward, from from you know, up to this point, hit the row until this point. I’ve actually done really quite well.
James:
I mean, apparently, if you take each year that Bitcoin has been in existence and you divided by its overall appreciation, you’ve got a rate of appreciation of 250% On average. It’s an actually crazy amount to compound. Of course, it’s not like let’s listen, let’s be rational about this is not likely that that’s going to continue at that rate. We saw the majority of that appreciation at the beginning, but it still reads very well, right, and, as you say, take that logic, apply it to the crypto world. If you simply buy and hold Bitcoin, no one, providing they can just keep their fingers off the sell button, has ever lost money on a four year timeframe and, by the way, that’s the very worst case scenario. Most people have made money sooner than that.
Neel:
No, 100%, and obviously we don’t want to delve into that sort of quagmire of financial advice etc. But these are just facts, just looking at it from the perspective of what has happened historically. What we know probabilistically will happen moving forward is if you buy the lowest risk asset right now in the market with the lowest volatility, which is Bitcoin, and you hold it with a mature timeframe, there’s a very good probability you’ll make money.
James:
But let’s just pour some cold water on that, because we definitely want to be responsible with the message. We definitely, definitely, definitely do, and we also want to throw another disclaimer in there and say actually, it’s maybe not necessarily for everybody, because emotional factors are something that’s present as well and something that are a factor in somebody’s investment style, and maybe not everybody out there wants to handle that level of volatility, in which case that’s totally cool as well. All we are saying is it should one wish to participate in the space. We’re simply reciting facts, and I’m not saying I’m actually even necessarily Bitcoin pro or Bitcoin anti Bitcoin. I’m kind of like trying to sit in the middle here. All I’m doing is is trying to give a balanced representation of what we’ve observed historically, some food for thought. Food for thought, you know, because what I actually often find is a lot of people who hate on the crypto space. It’s very rare that it comes from an educated perspective. Are you with me?
James:
I very I very yeah, it’s more just kind of this sort of I don’t know like a sort of like anger or confused rage or maybe it’s. Maybe it’s not always the most informed, and I feel that if there was more education on that front, that at least people could decide if it was for them or not, from them, from a perspective of education, which is what we’re here to talk about tonight, that’s it, it’s the volatility as well.
Neel:
I mean, with volatility you get an oscillation between the two main states of emotion, and that is fear and greed.
Neel:
So it kind of it galvanizes people around one or those two camps, various points in that four year cycle. So that’s why you get a lot of sort of aggro from people that don’t quite understand the asset, because they see the volatility and then on the back backside and then on the flip side of that, you see the headlines about people losing money the sinister underbelly of the space simply because they get in without doing their research and without being informed, which is the main thing to do when getting into this marketplace. But also it segues into sizing correctly. If you’re an investor and you’ve got a larger portfolio where you’re looking at different asset classes, don’t go 100% in crypto. Put an amount in crypto that you deem to be an appropriate amount which can weather the volatility. If you oversize, then you’re going to be emotional, but if you have an appropriate amount in it, then naturally you’ll be able to manage those emotions a lot better and make a more informed overall investment portfolio.
James:
D Y O R. Okay, cool. How about altcoins this year? What do you think is on the horizon for altcoins? Do you think we’re going to see an alt season again?
Neel:
So, by the way, yeah, and just to define all season.
James:
For people who are listening, all season is when the price of the alternative cryptos is in the cryptos outside of Bitcoin, and also possibly Ethereum, depending on how you define it see this massive volatile upsurge in price and traditionally the returns in that little window of time are even more magnificent than the returns on Bitcoin, which is really cool.
Neel:
So do you think that’s?
James:
going to happen this cycle, Neil?
Neel:
I mean we’ve had arguably one already this cycle. I would say the last sort of few months have been somewhat of an alt season. You’ve had a lot of alts, especially sort of blue chip alts, that are sort of a little bit more pioneering, have more utility behind them, outperforming even the performance of Bitcoin and Bitcoin still up significantly off the lows in the last few months. Yeah, we’ll see other alt seasons.
Neel:
Altcoins will significantly outperform Bitcoin, most likely based on historic data, but again there’s a lot more volatility. So it’s not for the faint of heart. They traditionally act as what’s known in finance terms as beta to Bitcoin. By beta, obviously, it means they’re correlated in the same direction, but they trade with significantly more volatility, and the reason for them being all acting as beta to Bitcoin is simply because of money flows within the crypto ecosystem. So when people make money in Bitcoin if it’s their first investment or first sort of toe dip into the space, they start to move out on the risk curve, they start to want to speculate more and take more risk. They get sort of eyes bigger than their stomach and they start getting greedy and they start speculating in the more speculative assets. Let’s say, and that’s what causes an alt season when you get more people getting more ballsy in the space. Basically, and that oscillates. It’s a micro cycle within a macro cycle, but that’s where the real, real big bucks are made here, amazing.
James:
Neil, we’ll listen. Thank you, as ever, for your wisdom. We like to keep these lives powerful, impactful and punchy and as value dense as possible and therefore we like to keep them to around the 20, 25 minute mark. So you know what that was a really, really, really beautiful way to round off this life tonight this short, fast, super sharp introduction to the crypto space. Obviously, as the crypto space continues to develop and this bull run continues to develop as well, it’ll be very, very, very fun to do more lives along these lines, which can act as a commentary for the crypto bull run. Let’s hope we get a juicy one, just like every other year. Of course, as you say, it’s a little bit unusual. Already is this bull run sooner than the halving? So let’s just see what’s the space. I guess really, on this front, predictions in the short term, or is that even possible?
Neel:
It’s very difficult to. I mean, we’re seeing a pullback at the moment which is, as we discussed briefly earlier, it’s healthy. We don’t want the market to go to bananas too quickly. Obviously, everyone knows the halving now and as we get more people more informed in the space, it means that the cycles likely are going to be faster and shorter, but it’s less sustainable. We want to see a longer cycle where, as we were joking earlier, you can kind of get some sleep and you’re not checking your phone every hour.
James:
Hell yeah, or set those trade alerts up. That’s what I used to say.
Neel:
That’s it, yeah set those down trade alerts up, but not on the flipping exchange because your stop loss is going to get triggered.
James:
That’s what always happened to me, anyway. But listen, this is the thing you can talk about, the theory and the philosophy of the space, and then there’s actually quite a lot to know when it comes to executing the technical side of things. Cold wallets, hot wallets, do you keep it on exchange limit order, market order, setting up a decentralized wallet versus a centralized wallet, all sorts of things. There’s all sorts of cool stuff, all sorts of fun stuff, and that’s why I’m sure there’s absolutely loads more we can talk about on these lives. Neil, we’re going to go ahead and wrap up right there Anything that you’d like to say in conclusion?
Neel:
No, that’s perfect mate. Yeah, we’ve covered, from a sort of broad perspective, most of the, I guess, the thesis for why people get involved in the first place and covered, I guess, why there is the value in investing here. But I think the number one thing I would say is do your research. A lot of people blindly sort of enter these markets, don’t really have a mature timeframe, as we alluded to earlier, and get burned, unfortunately because they’re not used to the volatility, they’re not used to the emotional swings that this market can bring. So, yeah, if you’re going to dip your toe in and you’ve never invested in crypto before, get reading, get researching. There’s a lot of resources out there. And obviously, james, you’ve got your education that you offer, which is pretty comprehensive as well. And yeah, if you’re going to get involved, yeah, get sort of read up first beforehand, because otherwise you’re swimming in a shark in festive waters.
James:
Do you know what? You’ve actually just made? A brilliant point just then, because when I look back on my journey, I actually did things the wrong way around. I was like, right, let me learn about crypto. And then I was like, okay, this isn’t going so well, let me just go right back to the basics, to the fundamentals. And whenever I learned how money work, work, that’s it. Crypto made so much more sense to me outside. Oh my god, it’s just intuitive that that’s the evolution. Because crypto is crazy. You think crypto is crazy. Actual money is just as crazy, if not good, given that we use it every day.
Neel:
Yes, it is. It is crazy. Yeah, I think, I think, yeah, when you fully understand that, you understand the thesis behind it and what we’ve normalized as the financial system in the banking system, it really sort of galvanize your conviction in investments in the space and it helps you to invest more responsibly in the space really and not get so emotional about the volatility.
James:
Can you leave everybody with a book, and that book is the creature from jack o’leil and it is quite dense. It’s like 500 pages read. I defy anybody to read that and then to not see the world and world history in a completely different way. It’s all about the bank of England and its origins, and also the federal reserve and its origins as well. It was originally conceived by a group of bankers and ultra high level american aristocrats on a little island called jack o’leil, and that’s where the name comes from, which is really cool. Fun fact for everybody. All right, guys. Well, anyway, listen, we’re gonna go ahead and wrap up right now. I’m gonna leave everybody with this beautiful shot of the city of rehab, which is right presently, out of the middle. Much you can see that. Pass my head. But yeah, anyway, super fun, super fun. Live tonight, neil, I’m already looking forward to the next one. My friend, hope you have a nice new smash in the evening and we shall speak soon.
Neel:
Cheers brother, take care of yourself.
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