A Note On Price

Tomorrow is the second-to-last email. Today is for one final thought about price — the number that brought most people here and the one that has caused more irrational decisions in Bitcoin than any other single factor.

Price is a signal. It reflects what buyers and sellers collectively think Bitcoin is worth at a given moment. That signal contains real information — about supply and demand, about sentiment, about what flows are entering and leaving the asset.

Price is also noise. The short-term price is driven by leveraged traders, sentiment cycles, media narratives, broader market moves that have nothing to do with Bitcoin, and the panicking of people who bought without understanding what they were buying.

The mistake almost everyone makes is treating price as information about Bitcoin’s underlying value rather than about the current state of the market. A 30% drop in price tells you something about who is selling and why. It tells you very little about whether Bitcoin’s supply cap is still 21 million (it is), whether the network is still running (it is), or whether the monetary argument that made you interested in the first place has changed (it hasn’t, unless something fundamental has actually changed).

The investors who have done best in Bitcoin over its fifteen years are almost universally people who learned to separate the price signal from the network signal. They watched the network while others watched the price. They made decisions based on what was actually happening rather than what the market was temporarily pricing.

You have 365 days of framework for separating those two things. The price will keep doing what it does. Use what you’ve learned to decide when it’s signal and when it’s noise.

Tomorrow: the day before the last day.

— The Daily Bit