Analysis of a Sick Market - Part 1 (The Virus)
Well – things ARE becoming interesting, aren’t they?
Let me not waste your time: this post is a broad market analysis and projections post, with the focus on areas of specific interest. Of course – being a Bit Brain post – the areas of interest lean heavily towards cryptocurrencies.
It’s also a VERY important post. Why? Because I wrote it, that’s why. My usual narcissistic egomania aside, what that means is that this post is a view of the future by a man who specialises in accurately predicting the aforementioned future.
Now any 2-cent analyst would claim that they also predict the future, but precious few analysts have as holistic a perspective of the markets as what Bit Brain does. Fewer still have his comprehensive understanding of geopolitics. And yet fewer still are actively tracking the Covid-19 virus – virus tracking being an amateur pastime of ol’ Uncle Bit Brain.
And if you DO manage to find another analyst who ticks all of those boxes, then chances are slim to none that he or she occupies the hallowed “middle ground”. You remember the middle ground, right? I spoke about it in my epic post “When Children Cry” - the real story of Greta Thunberg and Climate Change.
The middle ground in a virus pandemic is the area between the panicking masses who are buying up toilet rolls, hand sanitiser and face masks in bulk – and the complacent “cool guys” who are mocking those who panic, unfriending anyone who mentions Covid-19 and who think this is just a passing nuisance which “won’t happen to me”.
Mark my words: those “cool guys” who manage to dodge Covid-19 will become textbook examples of “survivor bias”. Damn I hate humans and their many biases!
To be precise, it’s not so much that I occupy the “middle ground”, but rather that I occupy the “correct ground”. To be absolutely clear (and free from my usual metaphors): I give you the accurate and realistic perspective that others can’t.
The Elephant in the Room
Damn it. I’ve gone back to metaphors already!
Let’s get Covid-19 out of the way first. It’s not a stock or a commodity, but as I’ve mentioned on Twitter before, it does behave like one in many ways. This isn’t a “virus analysis” post, but Covid-19 is having a major effect on both our lives and our markets. I’m not going into depth, but I do want to cover sentient points which I think are largely being missed in other people's articles. If you do have specific thoughts or queries about Covid-19, then feel free to message me on TIMM/Trybe/Twitter and we can chat about it. I‘m not a virologist, but I am the smartest person that you have a direct line of communication with.
I can sum up Covid-19 sentiment in two short lines. In fact, I already did so on Twitter earlier today:
With so much confusing and contradictory Covid information around, let me share some of my insights into the data with you:
Covid-19 is no joke and is not to be taken lightly. The mortality rate of flu is about 1 in 1000. Covid is FAR higher than that – by several orders of magnitude. By the rate of its expansion, we can assume that the attack rate (the percentage of the population who become infected) of Covid-19 will also be relatively high.
Many people are saying “what about cancer/road accidents/gun violence?” etc – those people are morons. Such reasoning is a logical fallacy; correction: logical fallacies. They are simultaneously creating a strawman as well as completely failing to take into account that Covid-19 is brand new and has only infected a minute portion of the population. Just wait...
We do not yet know the mortality rate of Covid-19. When we crossed the 100 000 (known) infections mark, we stood at around 3500 deaths globally – suggesting that the mortality rate was 3.5%. In fact, I’ve seen official health organisation information leaflets running with this figure. That figure is wrong. Once again, this virus is still brand new. Of those 100 000, about 40 000 had neither died nor recovered when that “3.5%” figure was derived. We do not yet know how many of those original 100 000 infected people will still die. We must assume that of that 40 000, most will live, but some will unfortunately succumb to the virus – pushing the mortality rate higher. What I did was to compare the number of deceased people to the number of recovered people as we crossed the 100 000 infections boundary. That gave me a mortality rate of 5.5% - significantly higher. Realise that my figure is still just a snapshot. It’s based on very early data and a statistically small and biased sample. (e.g. it’s predominantly Chinese biased, Northern Hemisphere (winter) biased, etc). I say again: we do not know the mortality rate of Covid-19 – not until we have a more mature and representative sample.
China is distorting the figures and charts. I think that the majority of people – at least those taking a passing interest in the virus – fail to appreciate how skewed the figures are, due solely to China. Thanks to China getting the disease under control, figures of infected Chinese are dropping – FAST! Since it was China that absolutely dominated the initial infections tally, these figures radically skew the graphs of global infections as a whole. A week ago it appeared as if global infection rates were dropping fast, technically true, yet irrelevant. Chinese infection rates were dropping fast, yet the rest of the world was climbing fast! We have now reached (at the start of the weekend just past) the point where infection rates are at their maximum (so far), and despite the number of cases in China still dropping rapidly, the number of cases globally is back on the rise.
Due to the previous point, I think this week is going to be a wake up call – at least for the intelligent. Numbers are going to sky-rocket this week! You can quote me on that. The nasty truth is that I worked out that the average doubling rate of infections (excluding China) is 3.5 to 4 days. That means: if your country has 500 infected people in it today, by Friday that will probably be around 1000 people. A week from now it will probably be around 2000... Note that that infection doubling rate will not stay constant and will vary from place to place! For example: national borders will slow it down later on, it will slow organically as the virus becomes saturated within the population, changes in human behaviour can slow it (as in China) etc.
Those who aren’t intelligent enough to wake up this week, will probably wake up the week thereafter. Few will be able to remain in denial for another month or more. I ran a few medium-term projections last night, and not to be alarmist, but by the end of May the numbers become really scary. If the current virus transmission trends hold true, we’re talking about infection rates of millions every day by that stage!
There is no precedent for this in living memory. It’s not SARS, it’s not Ebola, and it sure as hell isn’t the flu. Those drawing on past experience to benchmark Covid-19 are doomed to come up short. This is something that none of us have ever seen before. Once again, don’t panic but... this could be the next Spanish Flu, Black Plague etc...
In light of the above, it is disturbing to note how little money is being poured into the research of Covid-19 vaccines. A few million Euros is probably not going to cut it. I understand that markets are crashing and that money is now relatively "tight", but if the greedy super-rich aren’t going to open their wallets soon, then they may sorely regret that later when their own family members (or they themselves) succumb to the virus. Hopefully sanity will prevail sooner rather than later - but if sanity and critical thinking were traits of humanity, then Bitcoin would have replaced fiat already. Don’t get your hopes up too high...
I'm not panicking, not at all. I'm avoiding unnecessary travel and human contact in crowded areas, I'm slowly building up stocks of essentials such as food, medication and water, and I'm making sure that I keep my hands clean (which is fortunately already second-nature to compulsive hand-washers such as myself). I do worry about the elderly people I know, but I'm also a firm believer in not worrying about what you can't control. (Even if that only works in theory!)
In my time in the military I faced death on more occasions than I care to remember. I can proudly say that I never panicked - and here I am today - alive and well. Without trying to boast: I am certain that my ability to remain calm during a crisis situation saved not only my own life (on multiple occasions), but also the lives of my comrades-in-arms. You can do the same.
Don't panic guys, stay calm and take things step-by-step. If you can keep your head, you have a very good chance of being just fine - and maybe even helping a few others along the way.
End of Part 1
Luckily for you Part 2 has already been written and will be published within moments of Part 1. Part 2 deals with the markets. It's a very fine read!
See you then.
Yours in crypto
"The secret to success: find out where people are going and get there first"
~ Mark Twain
"Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful"
~ Bit Brain