Why Scarcity Will Win
Friday February 20th, 2026 - Issue # 127
(Any views expressed below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Good morning,
I’m back in Toronto, freezing. Picked up the flu on the flight home from Saint Lucia last weekend — a warm welcome back to winter and, I suppose, karma for being away so much. Thankfully I had already put a dent in this piece before leaving, because not much has changed in the world of Bitcoin. Everywhere else, however, everything seems to be happening all at once.
I’m going to take a step back from musing on the “SaaS-Pocalypse,” the Blue Owl Capital debacle and potential ramifications on the credit market, this US war with Iran that was supposed to start yesterday, the day before, and the day before that…the Epstein stuff. It is all way too much to keep track of but it seems like something big is brewing. Stay tuned to the end where I dish out some podcasts that I thought were at helpful, if not just entertaining, that I enjoyed on these various hot topics.
It’s not that I don’t care about this stuff, it’s more that bitcoin does not care about this stuff, at all, and that’s what we’re mostly here for.
I read this really interesting article by the eclectic, previous hedge fund manager Hugh Hendry the other day. And while I don’t necessarily agree with him on a lot of things, and since I’ve been tracking him over the last few years, he’s not been that accurate, he did have a cool way of describing things. You can find his essay here.
bitcoin is not here to save the world. its here because the world learned the hard way that modern money only works by cheating. cheating time. cheating pain. cheating death. we built systems that survive by bending, by socialising loss, by pretending tomorrow can always carry what today can’t. and it mostly worked. worked well enough that america never failed, markets never cleared, and catastrophe was deferred again and again.
but in doing so, we quietly erased something that used to matter. the idea that there should exist at least one asset that doesn’t bend. one thing that refuses discretion. one thing that doesn’t care who’s in power, who’s desperate, or who’s about to break. bitcoin is not an improvement on the system. it is a provocation aimed at it.
a hard object thrown into an elastic world to see what happens.
As of this morning, Bitcoin is trading in the $60Ks after briefly dipping toward $65K yesterday, roughly 48% below last year’s peak above $126K. The charts don’t look great. Sentiment is ugly. The “it’s over” crowd is back. If you’ve been here before, you know the rhythm: despair returns right on schedule. Classic cycle behavior. And yet beneath the volatility, something far more important is taking shape.
We are entering a period of genuine technological abundance. AI is collapsing marginal costs across entire industries in real time — software development, customer support, research, content generation, logistics, and even elements of consulting. Task-level productivity gains of 15–50% are no longer theoretical; they’re showing up inside actual workflows. This is a supply shock. Goods and services get cheaper. Output expands. Living standards, in theory, should rise.
But transitions like this are never smooth.
Take it from the host of the Moonshots podcast, Peter Diamandis. This article he published on X the other day was pretty eye opening and a good resource if you want to get caught up on the latest in AI.
This would be even more hilarious if AI wasn’t about to turn the world on its head.
Companies aren’t waiting for perfect automation to arrive. They’re acting in anticipation. Hiring freezes, headcount reductions, and workflow restructuring are happening now. Entry-level and mid-tier white-collar roles are already under pressure, and younger workers entering the workforce are feeling it first. Surveys increasingly show workers fearing permanent job displacement. And yet headline unemployment remains relatively tame. That mismatch is the key. Displacement happens quickly. New roles appear slowly. Demand doesn’t collapse because people stop wanting things — it collapses when paychecks disappear.
As Hendry pointed out, modern fiat systems are not designed to let this process play out naturally. They are designed to absorb shock. They bend to survive. In 1929, gold was abandoned. In 2008, losses were socialized. In 2020, money was printed while the global economy shut down. Elasticity isn’t a flaw in the system — it is the system.
As AI disruption continues to pressure employment and demand, the response will feel familiar: fiscal transfers (UBI, expanded social support, retraining programs, deficit spending. If social instability rises, support expands. This elasticity preserves stability and buys time. But it comes at a cost. This time around, it will not show up in the CPI number, it will show up in asset prices. The burden shifts toward those holding cash and wages, while asset holders float upward. The system maintains legitimacy. Fairness erodes.
I don’t even like the idea of a tsunami hitting but a supersonic one?
Thankfully, bitcoin stands apart as the hard object in an elastic world (H/T, Hugh). It does not bend under pressure. It does not expand when politically convenient. Its supply is fixed at 21 million. Issuance is programmatic. There is no discretion, no committee, no emergency lever to pull. Gold supply expands when prices rise and new deposits become economical. Fiat expands whenever stress appears. Bitcoin does neither. In a world built on elasticity, rigidity becomes an advantage.
Cycles exist to test conviction. Every drawdown feels final. Every downturn convinces participants it’s over. Lower prices don’t smooth pain, they concentrate it. Bitcoin compresses decades of traditional market suffering into violent four-year cycles. Most participants bleed out early. A smaller group studies, builds conviction, and becomes hardened. Smart capital accumulates quietly amid the wreckage. In the short term, markets price human temperament more than mathematics. The math, however, does not cheat: fixed supply meets expanding liquidity in a world increasingly dependent on monetary elasticity.
The real question isn’t whether scarcity matters. It’s who stays seated long enough for it to matter the most.
If you step back, the positioning becomes clearer. Bitcoin remains the asymmetric hedge against a system that must expand to survive. Around it, productive land and real estate, energy and power infrastructure, defense and security technologies, and robotics with genuine moats all sit downstream of the same forces. AI creates abundance. Abundance forces policy elasticity. Elasticity accelerates currency debasement. Debasement strengthens the case for scarce assets. The more the system bends, the more scarcity matters.
When the system bends, the scarce endure, and the patient inherits the future.
Weekly Podcast Recommendations
I also highly recommend you read The Price of Tomorrow - such a great read by our friend Jeff Booth.
This one is more fun than educational.
Nerd out on this one.
Really good.