Cryptomania – OWTW


We highlighted the curious case of Dogecoin last week. Just $1,000 into what started as a joke cryptocurrency at the start of the year would now be enough to buy a Tesla.

Have you ever seen a chart like this before which ended well? We haven’t.

As Chris put it in his last note to Insider members:

Folks, this is a mania. Like all manias before it this one has been spurred on by enthusiastic promoters. I get it. Heck, I’m in the business of publishing. I can tell you this, if I launched a “crypto” something or the other it would absolutely 100% sell like hotcakes.

There is nothing better than selling something to a credulent and excited market who have had their worlds turned upside down and, for most middle class citizens, the last year has seen them lose wealth. That they see crypto as a saviour is not only rational but also entirely consistent with the human response to “get back to even.”

And for those of you who’ve been with us for over a decade now, you’ll know that I’ve been a supporter of bitcoin ever since that event way back in 2014 in Singapore when we decided it was worth some risk capital. So yes, it’s been loving us to an extent I couldn’t have imagined at the time. But I cannot ignore the risks that now present themselves to us. The chorus of crypto bulls is deafening and we are in far riskier territory now. We are typically far too early on exits and we’ll likely be too early here too, but once again, the signs are all there if you care to look.

Now, don’t get us wrong. The world of money is absolutely 100% going into digital currency and things like credit contracts, insurance contracts, etc. are all going onto blockchain. DeFi is the future of finance and it will completely change how we operate.

But that doesn’t discount the fact that we are in a mania. Back in the late 90’s intelligent investors could have seen that the internet was going to be a gamechanger. But that didn’t change the fact that it was a spectacular bubble.


How about a company that doesn’t even produce EVs yet… but sports a market cap about the same as Daimler and GM?

Take a look at Evergrande New Energy Vehicle…

On a second thought, it makes little sense to compare it to other carmakers. Evergrande’s revenue today comes almost entirely from — wait for it — health management. You know, this sort of stuff:

And we thought we had seen it all during the dot-com bubble 20 odd years ago…


Almost every week, we hear of Shell, BP, or other Western oil and gas majors exiting a project or dumping assets to “reduce carbon footprint” or whatever bullshit they would have us believe.

But has anyone stopped to think what actually happens to those assets? This Bloomberg article provides some interesting insights:

The chief executive officer of BP Plc had ­something ­exciting to tell investors in September 2019. The fifth-­largest multinational oil producer in the West had just inked a deal to sell everything it owned in Alaska, marking a sudden exit from a region the company had prized since the birth of the state 60 years earlier. The $5.6 billion sale would help reduce corporate debt, but that wasn’t the only boon. BP would be proudly shedding unwanted greenhouse gases, paving the way toward what would soon become its signature goal: zeroing out emissions by midcentury.

For a fossil fuel behemoth such as BP to undergo a sustainable transformation, smaller entities like Hilcorp must sit on the other side of the transaction. Owned by Houston billionaire Jeff Hildebrand, the privately held company has made a name buying oil and gas assets no one else wants.

BP’s sale to Hilcorp is a harbinger of what’s coming to the wider world of divested fossil fuel assets. By the end of this decade, Royal Dutch Shell, Total, Chevron, Exxon Mobil, and the rest of the top eight oil and gas companies will sell a combined $111 billion worth of assets “to adjust to the energy transition,” Oslo-based consultant Rystad Energy predicted last year. BP alone plans to cut oil and gas output by 40% in the next 10 years.

Oil and gas is probably the most toxic, unloved sector in the world, probably even more hated than coal (if that is possible). You would probably be more popular if you’d been friends with Jeffrey Epstein than investing in oil and gas. But we’re quite content to do so.


Speaking of oil and gas and other commodities… Chris recently joined Frank Curzio on his Wall Street Unplugged podcast.

He shared his 10,000-foot view of the global financial system and laid out his case for a new commodities supercycle. He also touched on bitcoin and broke down the risks he sees for bitcoin.

You can listen to the entire episode right here.


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…And you can sign up for free to Hedgies Uncut here.


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