For four decades of making my living in the financial industry, I’ve watched plenty of fashions come and go. There’s always something new that’s about to make everyone rich, and there’s always someone selling that dream to people who worked hard for their money. Over time, I learned to spot one sign that keeps repeating: the moment someone tells you about an asset you can’t lose on, that only goes up, and that anyone who dares to sell it gets cast out of the community, you’re no longer looking at an investment. You’re looking at a bet. This week we got a small, useful reminder of exactly that.
Let’s start with what happened. For four weeks running, money has been flowing out of the big Bitcoin funds, the ones that let an ordinary person hold Bitcoin through a regular brokerage account, exactly the way they’d buy a stock. More than five billion dollars was pulled from them this month, the heaviest run of withdrawals in over a year. In the middle of all this came a small report that made a lot of noise: Michael Saylor, the man who built a company worth billions on a single principle, you buy Bitcoin and you never sell, ever, sold. Not much, 32 coins, a negligible drop against everything his company holds. His first sale since 2022.
Here I want to stop, because it’s easy to misread this. Saylor’s sale is not a prophecy. It heralds no end, and he didn’t “see something” that you can’t. It’s simply one more brick coming loose from a wall that’s been built stone by stone for years. The only difference is that when this particular brick slips, because it’s Saylor’s, you hear it louder. The wall started losing bricks long before the high priest himself removed one.
To understand why this wall was shaky from day one, you have to go back to the most basic question, the one everyone skipped on the way up: what is Bitcoin, really. Here I have to say something not everyone will want to hear, that it was never an investment but a bet, and that’s the single most important distinction I’ll make here today.
An investment, in the end, produces something. An apartment produces rent. A company produces profit. A deposit in the bank produces interest. You can sit down, do the math, and estimate what the asset is worth by what it generates, year after year, even if no one wants to buy it from you tomorrow morning. That’s what makes it an investment: there’s an engine in there working for you even while you sleep.
Bitcoin produces nothing. No rent, no profit, no interest. It sits in a digital wallet, and that’s it. The only way you’ll make money from it is if someone else, later, agrees to pay more for it than you did. That is not the definition of an investment. It’s the precise definition of a bet, a wager on who comes after you in line. You’re not holding an asset, you’re holding a guess about the next person.
I don’t want you to get me wrong: I take risks myself, and not small ones. More than once I’ve invested in a company that is really just a dream, a company without enough traditional financial data to justify it, with slim odds of success. But even then, behind the investment there’s always a rationale and a story in which someone is trying to create value, a product, a service, a business that might one day turn a profit. That’s still an investment, even a daring one. Bitcoin isn’t that case. It creates no value, and to be honest it mostly destroys it: every dollar of profit someone takes out of it comes straight from the pocket of whoever buys in after them, and along the way vast amounts of electricity get burned on nothing. That’s exactly where the trouble begins, when something that produces no value dresses up as an investment, and millions of people forget what they’re actually holding in their hands.
Now comes the part I think history will remember longest. Every bubble we’ve known before this one had a human ceiling: it stayed locked inside the room where it was born. The famous tulip mania in Holland reached the handful of people who could trade tulips at all. The internet bubble of the late 1990s reached whoever had a trading account and a financial paper in the morning. Some of them were enormous, far bigger in dollars than Bitcoin is today, but they were bounded, sealed inside their own group.
Bitcoin is different, and social media is the reason. For the first time in history, the speculative mania didn’t stay in the room. It went straight onto everyone’s phone. About one in five American adults now holds some crypto, and more than half a billion people around the world. It arrived wrapped in something no earlier bubble ever had: community, identity, belonging. You didn’t just buy a coin, you became “a Bitcoiner.” You joined something bigger than yourself. This club had one rule, the very principle we started with: never sell. Selling wasn’t a financial decision, it was a fast way to find yourself outside the community. This no longer sounds like a market. It sounds like a cult.
So I’d argue this isn’t the biggest bubble in history if you count it in dollars. It’s something far more interesting: it’s the most widely spread one the world has ever seen. It sits in more ordinary people’s pockets, in more countries, than any mania that came before it.
And here is the strange result. A bubble held by a handful of big players bursts in a single day: everyone runs for the same door at once, and that’s it, it’s over. But a bubble held by millions of believers, each one raised to think that selling means exile from the community, doesn’t burst. It leaks. Slowly. Month after month a little more air escapes, while most of the room keeps insisting nothing has happened. Even now, as the money drains out of the funds, the incorrigible believers keep buying and holding the floor up a little longer. That’s not a sign of strength. It’s exactly why this balloon takes so long to empty: there’s always one more believer ready to catch the next brick before it falls.
So what does this mean for your pocket?
If you hold crypto, understand what you’re holding. I’m not telling you to sell it today; I’m not in the business of telling people what to do with their money. But “never sell” is not a strategy, it’s an ideology, and ideologies are built to keep you sitting in your chair while someone else decides when to get up and leave. You’re allowed to take a profit. You’re allowed to walk out of the casino while you’re ahead. The trap was never the bet itself, it’s the belief that tells you the exit is reserved for the outcasts.
If you’re tempted by the next hot thing, and there will always be a next hot thing, carry one simple question with you, the same one we asked here: what does this thing produce? If the honest answer is “nothing, but someone will pay more for it later,” that’s perfectly fine. Just know that you’ve placed a bet, and treat it like a bet: with money you can afford to lose, not with your pension fund.
Back in Letter #13 we talked about being “rich on paper,” wealth that exists only as long as the last price holds. Bitcoin is the purest version of that idea ever built. With a company, at least there’s a business under the paper. Here, the paper is all there is.
The air will keep leaking out slowly, and I’m not sitting here predicting for you when, or whether at all, the balloon finally goes. I’m not a prophet yet. What I do know is that a new mania will always come along, with a new certainty and a new community that will swear that this time it’s real. The only question worth asking is whether, by then, we’ll finally learn to tell a bet from an investment.
We shall see.
See you in next week’s letter, or sometime during the week, if I can’t help myself until then...