It’s been a long and brutal Bear Market in Stocks and Crypto. The only actual trade has been that Inflation is going higher, and The U.S. Dollar is driving everything lower except Gas Prices. The Canadian dollar has been crushed, there has been crushed, and the British Pound has been destroyed. It’s been hard to find alpha, and most rallies have been short-lived. This never-ending narrative is really what has caused my burnout in producing Podcasts and doing interviews. Not because I don’t like talking about it, but because there’s nothing to talk about!
I never owned LUNA, I didn't have an FTT. I only used FTX a handful of times but didn't have money there. Sam and anyone else involved should be in jail. How about we build a new system that's actually better for people and not just a shine a new turd. #BTC
— Scott🍁Trades (@Scottrades) November 9, 2022
We’ve all been t the mercy of Central Banks, jacking up the cost of borrowing at the fastest rate of change in human history, trying to cover up their last mistake of pouring Trillions of dollars into the market and making everything more expensive. When interest rates are high, Risk assets suffer. It doesn’t matter if it’s a Tech stock like Apple or Bitcoin. When there’s a “safer yield” available, that sorta, kinda, almost keeps up with Inflation by way of a Treasury Yield instrument instead of a High Beta (expensive) growth leader.
So it’s been boring, to be honest, as we wait for something to happen. We saw a significant drop in the volatility of Crypto, and BTC rust chopped around the 20K levels for months. In fact, at one point, Bitcoin was less volatile than the S&P 500.
Then this week happened. We saw one of the biggest blowups in history with the insolvency of the crypto exchange FTX.
Today FTX and their over 100+ subsidiaries filed for Chapter 11 Bankruptcy, and the CEO, Sam Brokeman-Fried, will most likely go to jail for mishandling users’ funds and accounts to cover up losses in other areas of his business.
To all the “See, I told you Crypto is a Scam..” people: This is not because of the technology of Bitcoin or key tokens that have natural communities and actual use cases. These are the actions of one person, trying to take control of an industry by lobbying against competitors, creating a token and collateralizing loans against it, lying to investors, users, and the public, agreeing to harmful regulations to gain favor, and using his money to gain influence over politicians. (SBF is one of Joe Biden’s Biggest Donors)
The dark cloud over the Crypto space is enormous and will be long-lasting. I can’t state enough that taking your assets off exchanges is essential and use caution when investing in this space. This is not a game, it’s real money, and while wagmi -Lambo-moon-boys, like the one in Ontario, go to jail, this is an excellent reminder that fundamental investing takes time and hard work. That’s why I’ve never shilled any shitcoins and just said, it’s a space I want to be part of, and you should do your research.
I’ll leave you with one more note about “the industry.””In 2007-2008 we saw one of the biggest financial frauds in our lifetime when a lot of the central banks and institutions packaged up dog shit loans and mortgages and sold them as gold to anyone they could (watch The Big Short movie for the full story). After it was all said and done, Taxpayers were on the hook for almost 1 Trillion Dollars, and basically, no one went to jail. In Crypto, there is no safety net. There’s no bailout coming from the government, and the free market is playing out in real time. Some might say it’s better that way. Let the market flush out the garbage so the cream can rise to the top.
Balaji says it perfectly:
The US government-regulated system spent $787 billion of taxpayer money bailing out the banks. Connected bankers weren’t prosecuted. And that’s before they printed trillions.
We’re now exploring the alternative timeline. What if no bailouts? https://t.co/K0UN2BuQPo
— Balaji (@balajis) November 11, 2022
Here’s the story of what happened with FTX; stay safe out there.
This story will continue to evolve, and more hell will likely come. Even after all this, I’ll be honest; it’s still super exciting and way more interesting than the traditional stock market. Strap in; it’s going to be a ride!