Coronavirus, Financial Crisis, and the Epic Bitcoin Crash of March 2020

John Vallis, Guy Swann, Gigi, and Hass McCook joined Swan Bitcoin team members Cory Klipp­sten, Yan Pritzker, and Brady Swenson to sound off on the current epidemic chaos and how it will impact Bitcoin, the global finan­cial system, remote working, and more. (This conver­sa­tion occurred on March 13, 2020.) You can also listen to the full conver­sa­tion on the Swan Signal podcast or watch it on the Swan YouTube channel.

John Vallis (host of Bitcoin Rapid Fire Podcast Show): The biggest regret I feel is not having that much dry power because I’ve been bullish for so long. Such a big draw down makes me think, “What’s happening in the world? Are we turning a corner? Are we entering a new stage?”

Hass McCook (civil engineer with an MBA from Oxford who now focuses on Bitcoin): With Bitcoin, as in nature, every­thing goes back to the mean. The trick is auto DCA (Dollar Cost Averaging), that’s it. It crashed, that’s fine. Do you still believe in it though? Do you still believe in it today like you believed in it yesterday? A lot of people, especially newbies, are panicking because, psycho­log­i­cally, it’s not easy to be down such a big sum. Some people for example, lost 25 – 50% of their net worth. That’s pretty rough. If you’re somebody that hasn’t been around for six years, you could start thinking, “Maybe the world isn’t ready for this.” But if you still believe today what you believed yesterday, then believe it tomorrow, and just auto DCA.

The trick is auto DCA (Dollar Cost Averaging), that’s it. If you still believe today what you believed yesterday, then believe it tomorrow, and just auto DCA.

Hass McCook

Gigi (Bitcoin author and curator of bitcoin-resources.com): I whole­heart­edly agree with what Hass is saying: If you want to stay sane, just auto DCA. Don’t look at the price. I stopped looking at the price around two years ago. I just don’t care about the price movements that much. As far as I’m concerned, Bitcoin is still Bitcoin. Nothing has changed in cyber­space. It’s still producing blocks every 10 minutes, and it’s only in the finan­cial system that we’re experi­encing this tsunami. Obviously, it’s one of the biggest pandemics that we’ve seen so far and it’s a crazy, crazy time. But nothing happened in cyber­space, Bitcoin is still marching on as strong as ever.

Brady Swenson (Head of Educa­tion for Swan Bitcoin and host/creator of Citizen Bitcoin podcast): Tick tock, next block.

John Vallis: I’m almost envious of people that are going to be entering the space over the next 12 months. We’ve got the battle scars from being in the space for three or more years. We’ve made all the mistakes, lost money, went through the emotional roller­coaster. Someone that enters today should get educated, develop their convic­tion, under­stand what this is, what it could be, and just auto DCA. Don’t make it a big part of your life, just have it running in the background and keep accumu­lating. Have that zen perspec­tive and then it doesn’t have to be this crazy thing that you’re obsessed with all the time. It’s your bet on the future. Let it happen and you don’t need to worry too much about it. I wish that was my approach from the begin­ning, but I’ve made all the silly mistakes. 

Brady Swenson: Once you move past the price obses­sion, then you can just get obsessed by all the intel­lec­tual stimu­la­tion that Bitcoin’s about to drop on your ass.

Gigi: I’m not even sure if it’s going to be easier for the people that are entering now. I think Bitcoin still has the poten­tial to swing so insanely hard that I think it will be very hard to just stay calm and auto DCA once Bitcoin really takes off. We’re going to start hitting a new all-time high. On a longer time horizon, it’s kind of obvious that the fiat curren­cies are going to depre­ciate in Bitcoin terms. And I think we all believe that to a degree of virtual certainty. I think all surprises in Bitcoin will continue to be on the upside. 

Guy Swann (OG bitcoiner and host/creator of The Crypto­conomy podcast): I’m liter­ally all over the place. I went from panicked to exuberant to really, really panicked to just so jacked, like somebody was pushing me into the UFC ring. I haven’t had an auto DCA method before Swan Bitcoin.

Gigi: You haven’t experi­enced Bitcoin zen yet, that’s the problem.

Guy Swann: I searched quantum computing in Google and sorted by date, and I was just like, what was causing this? I basically came to the conclu­sion that tick tock, next block. None of that had changed. Monetary policy is the same. All that panic went away. I was like, “This shit’s on sale.” I went desper­ately hunting for fiat anywhere.

Cory Klipp­sten (founder of Swan Bitcoin and GiveBit­coin): I don’t think that you’re ever going to get away from the finan­cial­iza­tion of this asset. Humans do that because their incen­tive is to do so. So you have to build something that is anti-fragile, or at least robust through those actions.

Gigi: What I find fasci­nating is how quickly public opinion changed. Some of the Bitcoiners, they were sounding the alarm starting almost two months ago. And people that under­stand exponen­tials and how these things tend to grow, they saw it coming and they were sounding the alarm and nobody took them seriously. Everyone was like “you’re insane” and “why are you inciting panic?” Now suddenly everyone is panicked and a coron­avirus expert. It’s weird how quickly this happened. So in my opinion, it’s an applied exercise in exponen­tial growth as well. So that’s why I think it’s insanely inter­esting to watch all this.

John Vallis: The Bitcoin drop, I’m not fazed by it at all. It’s just what Bitcoin does, and yes, it can be an emotional roller­coaster, but my faith wasn’t tested. We’re turning a corner and the scenario that we’ve all been talking about for the last several years, basically since ’08, seems to be coming to fruition now, with the virus as a catalyst. It feels like we’re at the begin­ning of this crazy period of uncharted territory.

Guy Swann: I think we actually have an advan­tage with Bitcoin. The markets are going to bleed for a long time. The legacy markets are going to be hurting. It looks like we found our bottom in 24 hours. Knock on wood, knock on wood, knock on wood. There’s a huge swath of people that were just buying every­where. I know I was part of that. The whole legacy market is fluff on top of fluff on top of promises on top of liabilities. 

Hass McCook: People may not have jobs to stack stats. So I think every­one’s going to be in for a rough ride. Probably not to the point where we’re all selling apples, but this is probably going to be more like the Great Depres­sion than the Great Reces­sion, in my opinion. I think this could be the big unwinding. 

John Vallis: Every time this happens, Bitcoin’s anti-fragility is on display for those of us who really see what’s going on. Whereas the exact opposite thing seems to be happening in the legacy system. We’re in the numbers of trillions now and that much capital is getting injected into the markets and there’s not much of an effect. So the fragility of the legacy system is seemingly more and more apparent. The problems are becoming so apparent that they are becoming more top of mind for a lot of people. 

Every time this happens, Bitcoin’s anti-fragility is on display for those of us who really see what’s going on. Whereas the exact opposite thing seems to be happening in the legacy system. 

John Vallis

Cory Klipp­sten: I don’t care as much about the finan­cial markets because it effects so few people. Capital attracts capital and the US attracts help. The global system doesn’t want the US to go down. It seems like the world will rally to the cause, and save our asses, and that’s probably just because the world runs on the dollar.

Yan Pritzker (Co-founder & CTO of Swan Bitcoin and author of Inventing Bitcoin): Every­body’s going remote. That’s what I see in all my chats. Tech compa­nies, they’re going remote because it’s easy for them. If they’re not tech compa­nies, they’re coming up with all kinds of crazy last minute ways to go remote because it’s not native to them, It is a really inter­esting shift in our society happening very rapidly. Every­body’s forced to learn this new way of working. It may be a big produc­tivity hit in the short-term, but it also may be a big produc­tivity boost in the longterm as people do learn to work better remotely and see what they can accom­plish when they’re not distracted all day with other people in the office.

Cory Klipp­sten: What I love about remote working is it’s actually a lot like Bitcoin. You can mix and match the best people for the job on top of this remote work protocol. Why should we have to find some UX guy that happens to be in LA and can make it to the office in Santa Monica, or something like that, if the best guy for the job lives in a small town outside of Frank­furt? You can just search for this global talent pool and find people in your tribe. We know how impor­tant it is to find people in every role that actually speak Bitcoin and give a shit. Those people are not neces­sarily going to live in one location. That’s got to be true for everything.

Yan Pritzker: With Bitcoin, you are really in this global commu­nity. Around me locally, there aren’t that many Bitcoiners. Even in my group of friends, it’s hard to convince people. It’s great to be at a point where the technol­o­gy’s gotten good enough to easily do remote stuff. Clearly, we’re going to see more of it.

Cory Klipp­sten: It makes me think of how well attended these VR meetups we’re doing are right out of the gate. I spent a lot of time doing the VR thing 3 – 4 years ago and they were very sparsely attended. You might get 20 people to show up then. Now, these VR meetups have at least 100+ people. Bitcoin may be the best motivator for technology since porn.

Yan Pritzker: It’ll be inter­esting to see if this is the time that VR actually takes off because of all that’s going on with Bitcoin, corona, and all these other forces coming together that. It might actually create the impetus for people to really get on board with this stuff.

Guy Swann: I’m deeply curious to see what happens to educa­tion coming out of this. If people are going home and learning online, then future courses are going to be online. After they do it for a couple of weeks, why would they go back? Especially when they’re paying 100X the cost to be there when they could pay much less and learn the exact same thing. 

Cory Klipp­sten: We’re starting up a business (Swan Bitcoin) in this environ­ment and you really couldn’t time it any better. If you think about it, starting from such a low cost basis, when we show charts of people that start stacking on March 25^th, and we look back in six months or a year, it’s going to look really good. I think it’s going to help recruit a lot of people. From a compet­i­tive stand­point, Bitcoin going in the tank and looking shaky is going to stop a bunch of VC funding for competi­tors from happening which is nice since we’re already out of the gate. So in that respect it’s a great thing for us. It’s definitely got us thinking a little bit more conser­v­a­tively around some of the big, splashy things that might have cost money on the marketing side. We might not hire a bunch more people. I’m excited to roll out something that just works, is super simple, and under­cuts the fees of anybody else in the US. Set it and forget it, and just keep stacking.

I’m excited to roll out something that just works, is super simple, and under­cuts the fees of anybody else in the US. Set it and forget it, and just keep stacking.

Cory Klipp­sten

John Vallis: With the greater chaos that’s circling around us, the more I get excited by the fact that Bitcoin simply exists and continues to do what it always has done. I’m super inter­ested in all the devel­op­ments that are happening in the space, the compa­nies, the tech itself, Light­ning, and all that stuff, but also just the meat and potatoes that this thing is still here and there’s no reason for us to doubt it excites me. In fact my convic­tion and confi­dence in it continues to grow with each passing day. You can’t control the exterior environ­ment. We’ve expected a lot of the chaos, that’s why we’re in this space in the first place. It’s a tumul­tuous journey and you’ve got to be ready for that. But just roughly every 10 minutes, tick tock, next block.

Brady Swenson: Tick tock, next block.

Yan Pritzker: Now that we have this real flash crash, it’s going to be in all the media: “Bitcoin’s dead, it’s going to zero.” It’s inter­esting to see the reaction from both sides. On one side you have the “Bitcoin is dead” people, on the other side you have every­body in my Twitter feed that is buying. The next time Bitcoin does go higher, whether it be 10 or 20, or whatever the next milestone is, people will remember that it had “died” and then they will become very inter­ested in why it hadn’t actually died. So I think it’s impor­tant to have these events so that people have memory of them.

John Vallis: We had this massive blood­bath in the market, right? But more than ever, I got a number of messages from people that have never really expressed interest in Bitcoin. I got messages saying, “How can I get involved in this? How can I get some?” 

Yan Pritzker: Yeah, I had the same. There are people who were hesitant to buy for a long time, and I noted, “Hey, it’s on sale big time. This is a massive crash.” and people were inter­ested in it, and people were like, “Okay, how do I buy, how do I buy?” More people started thinking of it as a sale and I think that has to do with the overall market.

Cory Klipp­sten: And it’s because the narra­tive from the last 10 years is that it is a hedge when markets crash. They may not have been watching the Bitcoin price over the last few months, but then the stock market crashes and in the back of their head they’re like, “Oh, there was that Bitcoin thing which is what I was supposed to do when the market crashes.” And then they come over and take a look at it. I think that’s the reaction of the people outside the space. The reaction of the people inside the space was encour­aging because of how quickly we just got over this. This was just “Eh, Bitcoin is going to do what Bitcoin going to do. Whatever.” We had the biggest gaining day since 2011 a few months ago so we probably did deserve the biggest one day drop since 2013. That was in the cards.

Yan Pritzker: We were overdue. It pumped 300% over a year and that’s what nobody in the media would report. Bitcoin flash crash? Dude, it’s been on a massive bull run for a year, are you kidding me? 300% up. So of course, we just needed a trigger.

We were overdue. It pumped 300% over a year and that’s what nobody in the media would report. Bitcoin flash crash? Dude, it’s been on a massive bull run for a year, are you kidding me? 

Yan Pritzker

John Vallis: I love the people in this space. A lot of people have a big portion of their net worth wrapped up in this stuff and to see it go down by 30, 40, 50% in a night, and just be like, “Meh, we’re good. I’m still here, I ain’t going nowhere.” Man, that’s a unique mindset and I love it.

Cory Klipp­sten: Well how many BTC are in one BTC?

John Vallis: Yeah, exactly.

Yan Pritzker: Always one. I think when you hold Bitcoin and you get used to that volatility, you get used to believing in yourself rather than being led by what every­body else around you is doing. If every­body else is selling Bitcoin and it’s going down by 50%, then you still under­stand the longterm value propo­si­tion of Bitcoin as a freedom money, as a censor­ship resis­tant store of value. So you’re buying. Nothing has changed.

I think when you hold Bitcoin and you get used to that volatility, you get used to believing in yourself rather than being led by what every­body else around you is doing.

Yan Pritzker

John Vallis: That’s such a good point because I think the reason why a lot of us get emotional with these market things is because there’s nothing more truthful than a market. It’s just emergent collec­tive behavior. So when it’s tanking, it’s reality saying, “Hey, you’re on the wrong side of this. You’re not in reality.” To be able to have the convic­tion and the emotional stability to say, “No, I know what’s going on here more than what ‘reality’ is telling me.” To hold true to that, it’s tough to develop, but once you get there it’s such a zen, peaceful sort of place. Being in Bitcoin is kind of like a rite of passage. You either succumb to that emotional roller­coaster, and you end up just converting back to a herd mentality, or you make it through the challenges of that and you come out the other side trans­formed and more confi­dent in your ability to develop your own perspec­tive and have confi­dence in it. That’s such a gift of being in this space.

Gigi: Bitcoin is still Bitcoin. It’s still producing blocks. Nothing happened in cyber­space, nothing at all. It’s still smooth sailing for Bitcoin, and there is a very, very nice silver lining to the whole crypto crash and to the global market meltdown that’s going on right now. I think 99.99% of all the shitcoins won’t survive this. I think that’s a good thing to see as well. The Bitcoin narra­tive was right. Go for the sound money, go for the deep stability, build a stable system, go for robust­ness, go for maximum decen­tral­iza­tion so that you can actually survive a global catastrophe like this. Bitcoin is fine. The internet will be fine, the networks will be fine, and the miners will be fine. I think in terms of value, Bitcoin will recover surpris­ingly quickly. It’s not only retail investors now. A lot of people that have been in finance for a very long time, wealth managers and insti­tu­tional investors, are taking notice. It won’t be just individ­uals that are eyeing Bitcoin. In the next couple of months, we will see in hindsight that Bitcoin is uncor­re­lated to the rest of the finan­cial markets. Bitcoin won’t actually stay corre­lated in the next 6 – 12 months. 

Go for the sound money, go for the deep stability, build a stable system, go for robust­ness, go for maximum decen­tral­iza­tion so that you can actually survive a global catastrophe like this. Bitcoin is fine.

Gigi

Brady Swenson: I was so proud of my wife last night. I said Bitcoin went under $4,000 and she was like, “Wasn’t it $10,000 a few weeks ago or something?” That was the last time I told her about the price. I was like, “Yeah.” She goes, “Wow! Well how can we scrape together some money to buy more?”

Yan Pritzker: Nice. We’re all in this space because we believe Bitcoin needs to exist and it needs to be robust and it needs to have a good user experi­ence, good educa­tion, and these things need to exist to bring on the next wave of people. It’s going to take time for these things to feel like they’re comfort­able, normal, and trust­worthy. So I think we just have to wait.

Brady Swenson: It’s long-term thinking, strong hands.

Yan Pritzker: Strong hands.

Inter­view conducted on March 13, 2020 and edited for length and clarity.