I put my life’s savings into a new house months before the US housing market crashed in 2008. At one point, my net worth was minus-$100,000.
If you’re over your head in crypto, I recognize what you’re going through.
Crypto’s probably not as screwed up as the US real estate market was in the mid-2000s and unlike the bond market, which is also in rough shape, we don’t have robust guardrails or governments and government-sponsored entities that can bail us out when trouble hits.
The story of crypto since April?
Liquidity. Namely, a lack thereof. We don’t have enough buyers and sellers to absorb large movements in the market.
You’ve said that for months, Mark. It’s all a scam.
If I had to do a back-of-the-napkin estimate, I’d say probably only 50% of crypto is a scam. I’ll go as high as 60% if I’m feeling blue.
At the same time, the market saw a lot of speculative enthusiasm in 2021. It’s natural to feel let down—even by the most legit, well-intentioned projects.
I’m raising my allocations to altcoins. One purchase with each payday.
While this may sound silly to some, I’ll explain more in the coming weeks and months. For now, read my altcoin reports to learn about some projects that I like. They may or may not succeed, but they’re not scams.
Does that mean I’m out of bitcoin?
No. The US government’s working to make bitcoin an essential part of its financial system, and by extension, the world’s financial system. Bitcoin has buy-in from Wall Street and it’s the biggest brand in crypto. If you come at the king, you best not miss.
When people ask me about it, I tell them to buy some whenever its price is below $50,000. That’s not what I’m doing, but it’s a simple way to play this market.
Scroll down for some news and notes you may enjoy.
Morgan Stanley's co-president says expect 'fire and ice' as a massive shift in markets gets underway
Bottom line: a rich white guy expects to battle inflation and recession over the next few years.
My take: sounds reasonable. Part of me thinks this is the way Wall Street covers their rear ends. They don't know what comes next and don't want their clients to blame them for whatever happens. No matter how you prepare, a lot of people will suffer as the world returns to financial normalcy—whatever that means. Until then, there are no safe investments.
Why we care: this transition will make a lot of people mad at the traditional financial system. Some will seek an escape. Crypto offers an alternative. Who will take it?
Watch this Blockworks video with @fedguy12, a former trader and author of Central Banking 101. You may appreciate the perspective on risk assets and the way the US central bank manipulates markets and investor behaviors.
I’m still skimming out of USD into crypto while demand for dollars (and cash generally) continues to rise. If cash were crypto, they’d say I’m “taking profits” as the price of USD goes up, but it’s really just reallocating capital within a larger financial plan.
This is pretty much my game plan for the coming weeks and months unless my plan takes crypto prices out of the buying zone or the Fed stops pushing down asset prices.
U.S. SEC investigating Goldman Sachs over ESG funds
Bottom line: US regulators think Goldman Sachs sold ESG funds that didn’t contain ESG investments. In other words, they told clients their money went to businesses that meet environmental, social, and governance standards—but didn’t actually put their clients’ money into those investments.
My take: somehow I don’t think people will read this article and conclude “ESG investing is a scam.” Which is good, because probably only 50% of ESG is a scam. I’ll go as high as 60% if I’m feeling blue. But it’s ESG so people like it, and Goldman Sachs gets investigated for doing something shady a few times each year, so everybody will brush it off as normal.
Why we care: shady people do shady things in every market. In crypto, you see this up close, probably magnified to extremes. It’s more real because everybody seems to talk about it, prices are falling, and you suffer directly. Remember this when the market recovers and people say “it’s safe” again.
Nice article in In Bitcoin We Trust.
Michael Burry hates the stock market and expects it will suffer for a very long time, but he still invests in stocks. Make of that what you will.
Thanks for your questions about the US crypto bill, S. 4356. To be fair, I’m not the best person to analyze the legislation and I expect it will change quite a bit before it moves out of committee, if it does.
Gabriel Shapiro, Jake Chervinksy, and The Block can give you much better insights than I can. Start with Gabe’s tweet.
I’ll keep you posted as interesting thoughts come my way. Relax and enjoy the ride!
Weekly Rundown - June 12, 2022