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HEALTH, WEALTH, AND HAPPINESS

July 13, 2022

"The early Rockefellers made their wealth from being in certain businesses and remained personally very wealthy."

- Ratan Tata

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The GameStop NFT Marketplace is Now Live (nft.gamestop.com): Another brick-and-mortar business goes crypto. GameStop, the OG meme stock, is using its war chest to invest heavily in digital platforms and services, and now NFTs.

Built on Ethereum (L1) and Loopring (L2), the GameStop NFT marketplace looks similar to competitors like OpenSea. It's charging a flat 2.25% commission on sales and did about $2 million in total sales volume on its first day, earning about $45K in fees.

GameStop stock is trading at about half the price of its peak-2020 hype. This makes intuitive sense, as many of those "bored apes," flush with stimulus checks and stuck at home during the pandemic, have since had to sell GME stock to pay the bills.

Investor takeaway: GameStop's willingness to leap into crypto is impressive, but smart long-term investors always look at the underlying business, as that's what you're buying.

In GameStop's case, the company continues to lose money, is laying off staff, and is still reliant on brick-and-mortar stores even as the videogame industry now streams most games digitally.

It's hard to see why anyone would buy GME stock at these prices, even with their embrace of crypto... and the analysts would agree (see below).

Here's a look at analyst ratings of GME stock, from before the meme craze in 2019 (mildly pessimistic), to the "superstonk" era of 2020 (very pessimistic), to today (extremely pessimistic):

(Courtesy MarketBeat)

Of course, they didn't predict the price would 25x back in 2019, so take their analysis with a grain of salt.

Investor takeaway: Expect to see more traditional corporations hopping on the crypto bandwagon in the coming months. As smart, long-term investors, our question is always: "What is the state of the underlying business?"

Crypto adoption by a good business (like Stripe, PayPal, or Block) can be like rocket fuel. Crypto adoption by a weak business can be like a rocket failure.

The Bureau of Labor Statistics provides a detailed report with attachments that nerds like me can dive into when they want. 

Here is the TLDR:

• Consumer inflation rose 1.3% in June over May, the highest increase in over a year. 

• Annually, U.S. consumer inflation is now 9.1%, the highest since 1981.

• The biggest component is energy inflation, which is up 41% annually. 

• Breaking down inflation by targeted regional areas shows that inflation affects the South and Midwest more than the West and Northeast. New York City and San Francisco recorded 6.7% and 6.8% inflation, but Atlanta and Phoenix clocked in at 11.5% and 12.4%, respectively. 

• U.S. President Joe Biden was panned by critics on Twitter after he called the June report "out of date" and cited a recent $0.40 drop in gasoline prices over the past 30 days. He called inflation his top priority on Twitter, and he just landed in the Middle East, where he hopes to broker a deal with U.S. allies in OPEC to lower energy prices. 

• The Fed's next FOMC (Federal Open Market Committee) meeting is July 26-27, where they will likely raise the Fed's benchmark interest rate again in an effort to fight inflation.

HODLers are Going to HODL

To me, this is more of the same, and I have a feeling long-term bitcoin holders feel the same.

The drama, finger-pointing between parties, and outright negligence coming from central bankers and governments seems to have gotten worse over the past few years. This current cycle of inflation that is gripping the U.S. and the other developed nations in the world was created through the trillions in quantitative easing, not due to high employment levels. As they act to raise rates and break inflation, unemployment generally rises, bringing economies into recessions.

This week had worldwide unrest over inflation, with anger over the economy and government policies boiling over in places like Sri Lanka, Albania, and Holland.

While its USD price is volatile, I am going to continue to accumulate bitcoin at this price: 1 bitcoin = 1 bitcoin. 

Many see bitcoin as necessary on a personal level due to it being a hedge against the collapse of fiat currencies. Another high inflation reading has only steeled the resolve of these strong hands.

Sincerely,

Alexandre Lores

Market Analyst

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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