The Very Rational and Healthy Bitcoin and Cryptocurrency Market Pullback

It's kinda funny because had this general market NOT done what it has been doing since after the first week of January, about a month, and instead continued on as it did throughout the entire holiday season since Thanksgiving, then I might be inclined to believe the Tulip Mania schtick.

Of course, for the naysayers, it's always heads I win, tails you lose; when the markets are briskly up, it's a bubble and when it rationally retracts, it's a seeItoldyouso crash!

Over on the Facebook Group this morning, patron Ben Davison posted a nifty little Twitter thread by Emin Gün Sirer. I'll reproduce it, below:

For most people, this is their first big crypto market downturn. First, I'm sorry, but this high variance is why everyone loves these assets. They're not Union Pacific, not Stores of Value. They move. Just as much down as up.
The question you're asking is: Why?
Be wary of anyone who has an explanation. Disregard everyone who finds easy answers in charts. Ignore idiots with undergrad econ degrees who try to pass themselves as experts. And definitely let the trader/loser crowd inhabit basements, where they periodically get wiped/rekt.
Even if someone were to present you with a plausible explanation, **as well as definitive proof for that explanation**, it wouldn't be useful, because markets are very complex and the chances of us encountering this condition again are zero.
Almost the entirety of all prices are based on speculation. It's all those idiots who rushed in at the same time, who are rushing out at the same time. We have seen the problem, and it's us.
What matters now is what your reaction ought to be.
Should you sell everything? Or HODL like all the daytraders told you to do (while they dumped their holdings onto you)?
Don't do either of these things. I know many of you are doing both, as we can see it in the price. They are all equally dumb.
You should only invest in and hold coins which you believe will be used, extensively, in the long run. If you bought coins on a whim, without an investment thesis, based on hype, well, they are pure speculation.
When the entire field is red, we have an information flow problem. Not all of these coins share the same fate. They are not all on the same trajectory. If their prices are moving in tandem, there's something wrong with how people equate them to each other.
This is a time to revisit your investment theses. If you cannot answer the question of "who would desperately want to acquire this coin in the future, and for what purpose," then it's worth re-thinking your position.
If the coin isn't fully operational, if there's a gap between the coin as it is now and how it is supposed to operate in the future, you should ask many more questions, like a VC. Can the team take it there? Is there a feasibility study? Are there technical or UX problems? etc
At the end of the day, cryptoassets are just like every other asset. You need to have a firm investment thesis, and you should reevaluate it as more information becomes available.

OK, so, when I read this I thought this is about as good as anything in terms of countering both the irrational exuberance and FUD (fear, uncertainty, doubt) that gets in the way of going about this rationally, which is rule number one.

When I began my patreon portfolio and this community in early September, the market actually retracted a bit then held pretty flat for the first two months.

But I had a general hunch that this was the beginning of something big and that has certainly been the case. Never have I see such gains in non-leveraged trading, so rapidly.

But I also think that level of rapid gain is unsustainable. Consequently, I firmly believe that this pullback, correction—whatever one chooses to call it—is perfectly rational and healthy and I would not mind one little bit if it persists throughout the first quarter of this year while at the same time, I would not be surprised if we start seeing things move up pretty soon.

Anything can happen.

I do have one disagreement with the Twitter thread and that disagreement was perfectly by patron Bret Robbins in a comment.

Insightful and level. I don’t quite agree on his altcoin position. I think the mitigation there is to put in small amounts of money onto alts that seem to have any potential, and wait for an explosion. Similar to how a $15 purchase of BTC when it was priced at $0.05 would be worth $2.4M today.
I own over 20 alts, and because I simply waited too long to get in (late Dec, early Jan), most of them are down, some by over 50%. I’m not worried in the least. I expect most to bounce back and turn a decent profit, and hoping a handful will turn a truly outsized profit.
Speculating into a small, strict pool of assets I think limits your exposure in a negative way. We humans with our imperfect brains just do not have the crystal ball we need to know exactly what invention is going to catch on en masse, and what wows us is not always what wows the market.
I’m still saying hodl. But, an important underpinning: don’t sink big money into the alts. Maybe not until they’re truly butting into ETH and LTC territory of market cap.

Indeed.

So, keep it rational, folks. Sit tight and don't worry that you may have entered this market at the "wrong time" like Bret did. My first Bitcoin purchase was in early 2014 after it had reached $1,000. I bought 0.5 BTC for $309, then promptly watched it lose 50% and languish there for over two years while Bitcoin was nearly forgotten about on the world stage.

I always ask myself two questions in times like these:

What's the best camera? The one you brought with you. And, what's the best price to buy gold? The price you bought it at. So this is my general approach to Bitcoin, Etherium, and Litecoin for the larger stakes. For the alts and ICOs, my approch is different, just as Bret relayed, above. I don't have more than a $100 stake in any of them and a significant number in the portfolio are much less, like $20-50.

Here's a funny video for your entertainment. Note that it contains some "language."

Finally, an admin note. I have this side hobby of getting temporarily blocked on Facebook. Over the last two years I've been blocked 10 times, my last "jail sentence" beginning just a few days ago. The first three were of short duration, like a day, a week, then two weeks. The last seven have been for 30 days each. I can still see everything, I just can't interact in any way.

At any rate, I made provisions for this and John Christiansen, a long time friend and blog reader, is an admin for the Patron-Only group. So all marches along as normal and if I have anything to add as to what you all post there, I'll just post it here, and John will be sharing it there as well.

More to come...

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