Pulse Check on Crypto – OWTW

The EU pointy shoes are throwing lavish banquets in the metaverse (yes, it’s just as bizarre as it sounds).

So let’s use the opportunity to do a pulse check on the crypto market, shall we?

It was a year ago, in a November 2021 issue of Insider Newsletter, when we called “shullbit” on peddlers of meme coins, monkey JPEGs and the likes.

For months, our screens would be littered with headlines like this:

As we commented at the time (it was on 7 November 2021):

We’re rather ecstatic that such signs exist so that we can be positioned for this and patiently wait. The reality is that it is already starting to play out now.

We’re also “reasonably” confident that the recent upside in energy and related services stocks is just the beginning. There is some irony in the fact that in order to create a “Chaos Monkey” or any NFT what is required is electricity.

It turned out the crypto market literally topped the following day (on 8 November 2021).

Now, we had no idea the entire crypto space would blow up as spectacularly as it did in the following months (and for the record, we don’t think Sam Bankman Fried will ever serve time). As Chris likes to say, “I only have two balls and neither are crystal.

But all this stuff was (to us, anyway) indicative of the tail end of “growth” — garbage wrapped up in a fanciful terminology of the so-called “exponential age.”

Which brings us to today…

Right now, we have no particular interest in Bitcoin (or any other cryptocurrencies, for that matter).

For a long time, Bitcoin was a good speculation (and we saw it as such — like a VC deal in terms of sizing and weighting and treated it pretty much as a zero going in). We got in low, held, held, rode incredible volatility, and sold in chunks — at $42k, $55k, and — would you believe it — $60k.

But we’re not in a rush to jump back in.

Now, don’t get us wrong. We do think Bitcoin has utility. One of the main reasons to own it is that you can self custody the assets. It’s mind boggling that people continue to use third party custodians or even exchanges (looking at you, FTX). Crikey!

But as value investors, the crypto market today doesn’t get us excited (not yet, anyway). Despite the chaos we’ve seen so far — it still appears to be somewhere between:

  • Shell shocked (“WTF just happened?!”)
  • In disbelief (“it can’t be happening”)
  • In denial (“I’ll wait for it to come back and then I’m getting out”)

Case in point…

So where do we go from here?

The way we see it, the coming stages are anger (“damn that advisor/broker,” etc.) and then acceptance (“honey, it’s not coming back”). And only when we’ve reached the final stage of acceptance will we be ready to pounce.

Have a great week ahead!

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Peter S.
Peter S.
1 month ago

You were absolutely correct and called the top exactly. After following you for so many years I missed the call, believed I had a uncorrelated asset and continued to hold – all the way through Terra/Luna into June of this year – when it all had to be liquidated in extreme distress to maintain a core ETH position…

Had I listened and ACTED – our portfolio would be 1.25M richer today……

Damn you’re good Chris!