September 8, 2023
Greg Cipolaro

Research Weekly - Burning Man and Bitcoin: What They Have in Common


  • Bitcoin and Burning Man: what they have in common.
  • What the lack of follow-through post the Grayscale decision tells us about markets.
  • ETFs keep gathering steam, but investors seem to care little.

Bitcoin and Burning Man: The Surprising Similarities

In the past week, there has been an intense focus from major media outlets and social media on the captivating events taking place at Burning Man. This annual week-long gathering brings together a diverse community of artists, makers, and organizers in a remote region of Nevada. However, this year's Burning Man experienced unusual weather conditions with unexpected rain in the typically hot and dusty Black Rock Desert. The result was a challenging situation with mud that trapped attendees and vehicles, making it difficult for people to depart. The New York Times even dedicated the front cover of its Monday edition to a cover story on the events of the past week. Burning Man has always been a controversial event, often criticized by both mainstream media and social media. NPR encapsulates this viewpoint by stating, "Once considered an underground gathering for bohemians and free spirits of all kinds, Burning Man has now transformed into a destination for social media influencers, celebrities, and the elite of Silicon Valley."

Regardless of one's perspective on Burning Man, it's fascinating to draw parallels between this event and Bitcoin, particularly in the realm of mainstream finance and investment. It's intriguing to consider if there has been a historical "Burning Man" effect on Bitcoin prices and exploring the commonalities between the two may uncover more similarities than differences.

Passionate Advocates, Stubborn Detractors

Public attitudes towards both Bitcoin and Burning Man can be described as polarizing. While Bitcoin's naysayers may struggle to deny the technological significance of its creation (Ray Dalio famously called it "one hell of an invention"), it hasn't stopped influential figures in the financial, investment, and political spheres from criticizing Bitcoin. The list of criticisms is too extensive to detail here (Warren Buffett’s "rat poison squared" remark stands out), but the same can be said for Burning Man. However, for those who are part of these communities, the perspective is entirely different, with supporters of both Bitcoin and Burning Man enthusiastically singing their praises.

A Small Group of Like-minded Individuals Were the First Advocates

Bitcoin was famously born on The Cryptography Mailing List, an email list populated by those dedicated to cryptographic technology and its political impact. These were individuals with technical skills and libertarian or even anarchistic economic and political viewpoints. And while the principles embodied by early and ardent supporters are now appreciated by a broader set, the initial group was small for sure. Burning Man started as a summer solstice party on Baker Beach in California in 1986 before merging with another event organized by anarchistic-leaning Cacophony Society members in 1990 in the Black Rock Desert, its present home, centered around sculptures and performance art. Like Bitcoin, the early set of Burning Man participants was small, about 20 in 1991, but has grown in size and recognition.

Everyone has a (Strong) Opinion

Even if someone has never participated in a Bitcoin transaction or attended Burning Man, it's highly likely that they hold a strong opinion about both. This is largely influenced by the way these subjects are sensationalized and exaggerated in the media, be it mainstream or social. While everyone is entitled to their own perspective, it is advisable to actually experience these phenomena firsthand before forming fervent beliefs. Reading about Bitcoin can only provide limited understanding, and it should not be considered a substitute for hands-on learning.

Outward Expressions of Social Affinity

It's clear to see that outward expressions play a significant role in the Burning Man experience - from the mesmerizing displays of fire, lasers, and art, to the captivating outfits that blend elements of Mad Max and Halloween. While "radical self-expression" is one of the core principles of Burning Man, the event also boasts a distinct visual identity that is both unique and defining. Similarly, Bitcoin enthusiasts and crypto supporters embrace their own tribalistic rituals, such as laser eyes profile pictures (who can forget #LaserRayUntil100K?), social media profile pictures featuring NFTs, handles with distinctive identifiers like emojis and 0x prefixes (and suffixes), an obsession with Tungsten cubes, a disdain for seed oils, and a focus on carnivorous diets. Although these may not have a direct correlation to Bitcoin itself, their adherence showcases a strong affinity to a larger community.

Influencers Abound

Social media influencers are a prominent presence at Burning Man, often drawing both criticism and fascination from attendees and critics alike. With its vibrant and extravagant atmosphere, the event provides the perfect backdrop for influencers to showcase the spectacle that is Burning Man. While some may view the actions of influencers as self-centered, it's important to recognize that much of what they share on social media serves as a form of advertising, promoting the incredible experience of the event through captivating visuals of drones, fireworks, music, art, and more. Similarly, Bitcoin also has its fair share of influencers who passionately advocate for its ideological, economic, or technical merits.

After considering the vital role that advocates play in promoting Bitcoin, a few key points come to mind. While some may believe that the network, its economic policies, and its technology are already fully developed and require no further work besides spreading the word, this is far from the truth. In fact, Bitcoin relies entirely on its community to act as advertisers for the protocol. Critics may compare these influencers to carnival barkers, enticing inexperienced investors to drive up the asset's price. However, it's important to recognize that Bitcoin offers more than just price appreciation. Advocates also emphasize the benefits of a payment network and store of value that operates independently of government influence, a transformative concept that has the potential to improve the lives of people worldwide. Influencers may be viewed as both necessary and uneasy companions for both Burning Man and Bitcoin.

Opt-In Communities

Both Bitcoin and Burning Man are opt-in communities where individuals have the freedom to choose whether or not to participate. Just as no one is forcing people to attend Burning Man, no one is forcing them to use Bitcoin. It's important to recognize that both experiences may come with their own challenges, but the benefits should outweigh any struggles. Using Bitcoin can be complex, especially for beginners, and making on-chain transactions may still cause some anxiety even for experienced users. However, just like the rewards of attending Burning Man, the benefits of using Bitcoin should be worth the effort. Opt-in communities hold immense power as they are driven by choice rather than coercion.

Principled Communities

Bitcoin operates on the principles of permissionless transactions, decentralization, trustlessness, and a fixed economic policy. While these principles are not explicitly written down, they form the foundation of the Bitcoin ethos. In contrast, Burning Man has a more explicit set of guidelines known as the 10 Principles of Burning Man, established by its founder Larry Harvey in 2004. These principles can be seen as a parallel to the Ten Commandments in Judaism and Christianity, serving as ethical guides for both the Burning Man and Bitcoin communities.

Stuck in the Mud

Lastly, both bitcoin and Burning Man participants have recently found themselves "stuck in the mud." For Burners, this was quite literal, with tens of thousands of people unable to navigate the muddy conditions caused by unexpected rain in the desert, making it impossible for them to leave. In the case of bitcoin, it's more of a metaphorical situation, as its price has remained stagnant for several months, leaving investors frustrated. However, it's important to note that bitcoin has still been one of the top-performing major assets this year, which should provide some comfort for investors. Perhaps, just like the desert, it will take a change in the macro environment for bitcoin to gain momentum and rise to new heights.

"Bart Simpson" Pattern Yields Market Insights

Last Tuesday, the Grayscale Bitcoin Trust (GBTC) received a major boost when the DC Circuit Court of Appeals ruled in favor of Grayscale in its appeal against the SEC's refusal to convert into an ETF. This groundbreaking decision was met with enthusiasm from the cryptocurrency industry and triggered a temporary surge in the price of bitcoin. However, the thrill was short-lived as prices reverted to their previous levels by Thursday.

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We were surprised by the temporary nature of the signal indicating that the industry was moving closer to the highly anticipated US spot ETF. However, this revelation highlights an intriguing aspect of the current bitcoin markets. It appears unlikely that new capital is entering the industry. Instead, traders are making quick bets and taking profits, rather than steadily investing capital. If sustained capital investment were to occur, we would expect to see upward price momentum, rather than a sudden surge followed by a retreat, which is humorously referred to as the "Bart Simpson" pattern due to its resemblance to the character's head and spiky hair. It may require the approval of an actual ETF or some other macroeconomic or idiosyncratic catalyst to encourage sustained capital investment. We continue to be confident that such a catalyst will emerge, but in the meantime, anticipate volatile and unpredictable trading.

ETFs: The Storm That Keeps Gathering

Last week, the SEC decided to extend their evaluation period for several spot bitcoin ETFs, indicating a continued cautious approach. This decision follows their recent loss in the Grayscale case at the DC Court of Appeals. The SEC now has until October 13, 2023 to potentially appeal the ruling. Interestingly, there seems to be a growing momentum in the ETF landscape, with significant developments beyond the surface-level price movements. We are seeing promising indications that a spot bitcoin ETF may be within reach, and there are even talks of launching ether ETFs based on CME futures in early October. Additionally, we have witnessed the filing of spot ether ETFs this week, something we do not remember seeing in the past. The convergence of these events could culminate in the first half of October, with multiple deadlines aligned during this period.

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Market Update

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Over the past week, the price of bitcoin has seen a slight decline of 1.1% amidst predominantly rangebound trading. Unfortunately, bitcoin has been unable to maintain any upward price momentum, resulting in subdued short-term sentiment. It seems that bitcoin may be influenced by the weakness observed in other risk markets, especially equities. The S&P 500 experienced a 1.2% decrease while the Nasdaq Composite declined by 2.0%. Gold also faced a setback, falling 1.2% as real yields rose. Oil emerged as the standout winner of the week with an impressive 3.9% increase, thanks to producers extending production cuts. Conversely, bonds experienced a decline, with investment grade corporate bonds down 1.1%, high-yield corporate bonds down 0.4%, and long-term US Treasuries down 2.4%.

Important News This Week


Six Bitcoin Billionaires in The World, New Crypto Super-Rich Report Says - CNBC

Nearly Half of Institutions Are Holding Digital Assets for Clients: Report - Decrypt

Regulation and Taxation:

CFTC Issues Orders Against Operators of Three DeFi Protocols for Offering Illegal Digital Asset Derivatives Trading - CFTC

New US Accounting Standard for Crypto To Be Finalized By Year-End - Blockworks

FBI Identifies Lazarus Group Cyber Actors as Responsible for Theft of $41 Million from - FBI

FCA Sets Expectations Ahead of Incoming Crypto Marketing Rules - FCA


Visa Expands Stablecoin Settlement Capabilities to Merchant Acquirers - Visa

London Stock Exchange Group Plans Blockchain-Powered Digital Markets Business - Decrypt

Genesis Global Capital Sues DCG Over Unpaid Bitcoin Loans - The Block

Circle Wanted to Create a Financial Revolution. Instead, It’s Losing the Stablecoin Wars to Tether - Fortune

JPMorgan Explores Blockchain Deposit Token for Payments, Settlements - Bloomberg

Chinese Fintech Giant Ant Group Launches Overseas Blockchain Brand ZAN - The Block

Nomura Crypto Chief Warns Market Rout May Delay Unit’s Profit, Breakeven Point - Bloomberg

Upcoming Events

Sept 13 - August CPI release

Sept 22 - FOMC interest rate decision

Sept 29 - CME expiry

Oct 3 - Valkyrie Bitcoin and Ether Strategy ETF effective date

Oct 16 - Next SEC response date for first (Bitwise) of the spot bitcoin ETFs

Oct 31 - Mt Gox claims payment date

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