Why a Crypto Skeptic Is Now Open to Buying the Bitcoin Dip

My initial purchase of bitcoin came in June 2020, when I invested $50 for about $9,300 per bitcoin. If I had held onto it, it would currently be worth $455. As bitcoin prices surged, I capitalized on the momentum and bought more, later venturing into dogecoin and ethereum, influenced by memes and tweets from Elon Musk.

I aimed for a reasonable return while enjoying the experience. However, lacking conviction as a believer in crypto, I cleared out my Robinhood account when the market collapsed in late 2022—or so I presumed.

I viewed the crypto space as populated with fraudsters like Sam Bankman-Fried and Alex Mashinsky. I had interviewed Mashinsky in 2021, well before his arrest and fraud conviction. He criticized the traditional financial system, asserting that people couldn’t articulate what was wrong but felt that something was amiss. Ironically, that perfectly encapsulated my feelings when I heard Mashinsky promoting enormous, guaranteed returns.

Although I haven’t reported on cryptocurrency for some time, I made an exception to attend Anthony Pompliano’s bitcoin conference on February 27. I engaged with numerous bitcoin enthusiasts, and while I’m still not fully persuaded, their enthusiasm has prompted me to reconsider my prior doubts.

Bitcoin enthusiasts remain resilient in a volatile market

Upon arriving at the conference, I was eager to learn and gauge the mood of the crypto community. Bitcoin had dropped around 25% from its peak of over $109,000, and I was curious to see if anyone had been shaken by this decline.

A clear agreement soon emerged: bitcoin supporters were largely unfazed by the dip. Throughout my discussions, bitcoin’s falling price was seldom mentioned unless I raised it myself.

One individual named Ryan, transitioning from tech to crypto, shared that he used to be fixated on bitcoin price fluctuations a few years back. Now, he claims to be unfazed by bear markets, even though he estimates that 50% to 60% of his net worth is invested in crypto. He also noted that the crypto job market remains strong.

Many others are flocking to the crypto sector, even while some investors are withdrawing. They’re coming from stable industries like finance, undeterred by potential risks. Their main objective at the conference was to network and perhaps meet the next Vitalik Buterin.

Some attendees came primarily to learn, including eager college students and retired educators. Hopefully, the cost of their tickets is a minor investment compared to their prospective bitcoin holdings.

Among the passionate attendees was Peter Giammanco, a cofounder of a crypto startup who was previously cautious about bitcoin advocates, whom he referred to as “libertarian types.” He changed his perspective in 2019 and now acts as a crypto evangelist. His immediate family is on board, and he is hopeful that his cousins will follow suit.

Why I’m becoming a near-believer in bitcoin

While some of my discussions paused for speakers to take the stage and highlight topics from crypto mining during Trump’s second term to bitcoin-supported life insurance plans, I learned the most from informal conversations in the foyer, where I spent much of the day. Occasionally, I would challenge the bitcoin enthusiasts with my questions: What is the value of bitcoin, and if it cannot be valued clearly, how can I be confident it is a sound investment?

For the majority of my career, I have focused on stocks. Investors often debate the worth of companies, which is why stock prices fluctuate. However, everyone in the stock market understands that the fundamental value of equities arises from the cash they generate now through dividends or future profits.

In contrast, bitcoin does not produce anything nor is it a tangible asset like gold or other commodities. Yet, this does not render it worthless; in fact, bitcoin possesses a number of distinct advantages compared to other cryptocurrencies and even traditional fiat currencies.

Bitcoin’s supply is capped and finite, unlike most cryptocurrencies and the US dollar, which has suffered from inflation and excessive money creation. It operates on an exceptionally secure, pseudonymous network that balances transaction transparency with privacy, as wallets are not linked to personal identities.

I grasp the significance of bitcoin’s network, especially for individuals lacking access to reliable banking systems, and I understand why its advocates regard it as an essential store of value as the dollar continues to lose purchasing power.

Nonetheless, as I mentioned to various bitcoin advocates, determining a purchase of bitcoin is difficult since it cannot be evaluated with traditional metrics. How do we decide if it is worth $5,000, $10,000, or even $510,000?

No one seemed bothered by my uncertainties, and one participant expressed gratitude for my willingness to learn. The bitcoin enthusiasts concurred that there isn’t a consistent intrinsic valuation for the asset, yet their faith is not rooted in any mathematical formula of fair value.

Rather, the bullish perspective of bitcoin advocates relies on basic economic principles of supply and demand.

Bitcoin’s supply is limited to 21 million coins. Nearly 20 million are already in circulation, with several million possibly lost forever. Meanwhile, demand continues to grow, fueled by major asset management firms like Fidelity and BlackRock, which have integrated a bitcoin ETF into their model portfolios for the first time. Additionally, companies are adding bitcoin to their balance sheets, even if not all are going to the lengths of MicroStrategy. Importantly, the Trump administration seems keen on crypto, with discussions around establishing a strategic bitcoin reserve.

The underlying belief is that bitcoin’s value will rise as supply dwindles, assuming demand remains steady. All indicators suggest that interest in bitcoin is expanding, particularly as significant entities begin to invest.

While I’m not fully convinced at this stage, I did activate my Robinhood account and placed a limit order for $300 worth of bitcoin at $81,000. If and when the transaction is executed, I plan to hold it for at least six months in alignment with our company trading policy.

James Faris

I had modest expectations when I arrived at the bitcoin conference. Even as an outsider with no crypto holdings or industry experience, I was met with kindness and respect from everyone. It’s clear why many within the community value their connections as much as they do the digital asset itself.

Upon my departure, I was grateful for more than just a couple of iced lattes and happy-hour drinks. I gained a deeper understanding of cryptocurrency and the rapidly evolving industry fostering its growth.

Whether or not I left with a clear investment strategy, I can only hope for the best.