It is time to betray destiny and make your own way. - xh3b4sd
Markets are full of asymmetries in perception and reality. You hear about memecoin millionaires every day, but you never hear about all the people who lost everything gambling the pension away. This is called survivorship bias. Our perception is bombarded with success, until we are made to believe that success is all there is in this world. And nothing could be further from the truth. And why is that? Because everything that does not survive simply dies and vanishes. So you won't hear about all the dead bodies typically, unless somebody tells the stories of all those fallen soldiers. Everyone around you is so full of themselves. So full of all those broken stories that our minds keep telling us to be true, whether they are in fact true or not. Understanding the little circus monkey in our heads, acknowledging that it exists, and realizing when it is talking some nonsense into us again, are all vital aspects of survival, as human beings, and as capital allocators. In dating, everyone seems to have children but you. The illusion here is that everyone with children is outside all the time, which means you can see those kind of people on a regular basis. That regular perception creates the belief that everyone around you has children, because that is all you can see. The reality is, what you see is not all there is. And so, all the people that do not have children, are not always visible, creating an unrepresented cohort of individuals for which we do not naturally know how large and therefore representative it truly is. That is a form of sampling bias, because we are only observing those samples that are visible to us, which creates an unrealistic and thus unrepresentative data set. It is like people wondering why everyone around them is reproducing, except they themselves. The truth is that there are always large amounts of individuals who get naturally selected against by an evolutionary process. People die early, from disease or calamity. Or people are simply undesirable. This is in fact normal for a subset of the population. And I guess our perception these days has been so manipulated by social media, making everyone believe that it is normal to be happy, beautiful and successful. As a matter of fact, if all you want to be in life is happy, then you shall suffer like no other. The philosophy of systemic therapy is what I would call "people aren't, people behave". And when you act like you deserve to be happy, then you start looking for all kinds of examples and people for which that very idea appears to be true. That is then called confirmation bias, because we are only looking for the evidence that we truly want to believe. The sooner we learn that we are not entitled to anything, the sooner we become responsible for ourselves, and in turn become better at what we are doing. The world does not just bend to your will. And so you have to take the world for what it is, whether you trade the markets, or look for the love of your life.
Every other day the market does something weird, and all kinds of people come up with all kinds of explanations for why something happened the way it did. Not to spoil the story here, but most of the people out there get the market entirely wrong, probably every single time. So much so that misinformation spreads up to a point at which we get unwarranted market panics and bank runs, for actually no reason at all. We just witnessed such an incident allegedly based on the BTC that got once seized by the FBI in October 2013 throughout the Silk Road case. This seizure process started almost 12 years ago. So why panic now? The many lengthy legal processes during asset forfeitures go through various stages, which may be misinterpreted by outsiders. Such a misinterpretation did now just happen once again with a court ruling that the Silk Road BTC forfeiture process can proceed. The proceeding of this forfeiture was by some now interpreted as the immediate selling of billions of Dollars of BTC, which is absolutely false. All that was ruled now, was that the legal process to forfeit those assets may continue. And the attentive reader may notice that the continuation of a legal process is not exactly equal to the selling of coins. In fact the selling of those Silk Road BTC may not conclude for another year. And the market impact itself will be minuscule in any event, given that BTC does a daily trading volume of 60 billion USD today, and given there are only 6 billion USD of Silk Road BTC to sell. The only thing that happened in the markets was the heard, the compounding of human emotion. And if there is one force to lose in any market, then it is of emotional nature. Pull it together man.
One thing that every person should know about in our day and age is how to read a chart. Understanding a thing or two about statistics, how charts ought to look like, and what a chart tries to convey, may even be recognized as superpowers at times. Everyday people fall victim to chart crimes, committed more or less deliberately. A chart crime is the misrepresentation of data, period, full stop. This misrepresentation may be of varying nature. You may see a line chart of various categories, and the goal was to get a sense of categorial distributions. You may come across a histogram showing only the timeframe of an asset price increase, and the goal was to inform about past performance. Or you may be shown a bar chart in which the y-axis does not start at zero, and the goal was to compare the growth of various sectors visually. All those are different forms of chart crimes, maybe caused by incompetence, or worse, because of the intention to deceive. If you want to show the categorial distribution of something compared to the whole, then you should not use a line chart, but maybe a pie chart. If you want to show past performance, then you cannot leave out the timeframe in which an asset underperforms. And if you want to reflect the real growth difference between certain sectors, then you should anchor the quantity axis at zero, because otherwise you may visualize some minuscule growth difference as if one sector grew twice as much as its contender. Know thy chart milady.
The influencer talking points to FUD on ETH these days concern the so called fragmentation of L2s. Today L2 rollups are not very interoperable. Working across those networks is not easy. So the argument is that ETH is bad because L2s are not seamlessly connected with one another. Technically this is true today. But what is also true, is that half of the ecosystem is focussing on solving those interoperability issues rather sooner than later. So what will eventually be true, is one seamless Ethereum experience. And my bet is that once this is true, another fact will also still be true. And that fact will be, that L1s will then still be fragmented across each other, just like they are today. The Ethereum community is actively working on alleviating certain composability problems across the L2 ecosystem. Nobody is credibly working on doing the same for L1s as far as I know. The real challenge for blockchain networks to overcome is not to integrate L2s with one another, because this challenge will be solved within the next 5 years. The real challenge for blockchain networks to overcome today and in the future, is to convince any user of your monolithic benefits, given the cryptographic economy unfolds almost entirely on Ethereum.
This week's number turns out to be almost 13%, which is the share of all blobspace that the World Chain L2 uses today. I found that interesting because World Chain shows a steady pace in growing blobspace demand. And even though World Chain isn't a regular talking point on Crypto Twitter, this L2 rollup is likely to continue its growth trajectory for months and years to come. Funny enough, the difference in long term holder percentage between ETH and BTC is also 13% at this point. ETH long term holders stand at 75%, whereas BTC long term holders stand at 62% at the time of writing. Long term here implies the holding of coins for longer than one year. My sense is that this spread will widen further towards the end of this cycle. I am not sure how meaningful this metric ought to be by itself. Though I found it interesting to see that ETH is leading over BTC in another relevant category. I would be curious to hear what people think about the long term holder metric and what it possibly means for the trend of asset price appreciation and network decentralization. If you are reading this, feel free to reach out and share your thoughts with us. Until then, onwards!