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HEALTH, WEALTH, AND HAPPINESS

Feb 10, 2022

“The stock market is designed to transfer money from the active to the patient.”

- Warren Buffett

A Glimpse Into the Leading NFT Categories (Messari): For those who are considering NFTs as an investment, here are the top NFT categories by market capitalization.

Investor takeaway: Avatars (like Bored Ape Yacht Club) are in first place, followed by games (like Axie Infinity), and art (like Beeple).

Generally speaking, sticking to the bigger categories is a safer investing strategy. The more popular a category, the more liquidity, i.e., more buyers and sellers when you want to get in or out.

As always, treat NFTs like collectibles, and a tiny slice of your portfolio (no more than 1%). See our guide to NFTs here.

The real investing opportunity is in OpenSea, the leading NFT marketplace. Here's a look at OpenSea's revenue (green), as well as how much the company keeps for itself (blue).

OpenSea did over $460 million in NFT sales in January, of which about $120 million went back to the "company" (the rest goes to the NFT creators). Why buy NFTs when you can buy the NFT store?

Investor takeaway: OpenSea is still not easily available to investors (accredited investors can buy pre-IPO shares, but it's difficult). Stay subscribed to this newsletter; we'll let you know when you can invest, either through an IPO or token launch.

Now, normally we might take a look at the reactions of several markets and possibly make some inferences.

For example, the price of bitcoin plunged some 4% within the first 30 minutes of the announcement, only to make a full recovery within the following hour.

Here's how it looked on the chart. The purple circle is the precise time that the data was released.

Same, same but same

The sad truth is that ever since the great market reaction to the global pandemic back in March 2020, bitcoin hasn't exactly been doing its own thing, and price correlations with traditional markets remain elevated.

Here, we can see how four of the world's top markets reacted to this latest consumer price index data. 

As we can clearly see, bitcoin's movements are impossible to isolate as gold, crude oil, and the S&P 500 all had virtually identical reactions to the news.

The logic is fairly simple, and it's rather easy to explain in retrospect. Higher inflation means that the Federal Reserve will reduce its money printing and possibly raise interest rates at a faster pace in order to thwart said inflation.

With expectations of central bank stimulus reduced, assets fall in value, but only so far.

Investors quickly realized that the Fed's gonna do what the Fed's gonna do, and within only an hour, they have done what they've been conditioned to do over the last 13-year straight bull market, namely buy the dip.

But different

That said, this sort of micro analysis may not be particularly helpful at this juncture.

At the time of this writing, more than three hours after the data was released, bitcoin is up roughly 2%, whereas the S&P 500 is down about 0.8%. So what can we learn from all this?

We can learn the exact same thing we did back in March 2020, that at times of extreme volatility, all correlations go to 1. Over time, however, performance varies widely. 

Hope you all enjoy the Super Bowl this Sunday. Personally, I won't be watching, as it'll probably be the middle of the night here.

I will be watching the commercials, especially since for the first time ever, several crypto projects will be advertising. It's an exciting time to be alive, and without any kind of smooth transition, here's the last headline to ponder for today.

Clearly, our space is headed in the right direction.

Have an amazing weekend.

Mati Greenspan

Analysis, Advisory, Money Management

The money printer still goes brrrrrrrrr!

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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