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HEALTH, WEALTH, AND HAPPINESS |
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| “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” - John Bogle
“If you have trouble imagining a 50% loss in the crypto market, you shouldn’t be in crypto.” - John Hargrave |
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| This Car Comes with an NFT (And No, It's Not a Bored Ape) (Wall Street Journal): This is one of the coolest NFT ideas we've seen so far: all the driving data and service history of your car, seamlessly recorded on blockchain as an NFT. (The video explains it really well.)
Investor takeaway: As modern cars generate an incredible amount of data, the opportunity is to keep this data on the blockchain, where they will gradually render services like CarFax obsolete. Watch for the auto companies that successfully roll out this idea first; it shows they're making a big leap into blockchain. |
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The only other auto company that's seriously engaged with blockchain is Tesla Motors (TSLA), which has famously engaged with bitcoin as a payment mechanism (blue line): |
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| Investor takeaway: Cars are becoming computers. Tesla understands this; the legacy auto industry does not. This is one reason why TSLA has far outperformed the old-timers.
Watch for any of the legacy car companies adopting blockchain; it's a sign that the sleeping giants are finally waking up. |
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| Hi Everyone,
This past week, geopolitical tensions continued to escalate, and, for the most part, stocks and crypto continued to lose value.
As Mati Greenspan mentioned in Monday's newsletter, Russia has essentially invaded Ukraine, and the only thing the two countries apparently agree on is pushing to enact legislation that creates cryptocurrency regulation.
President Joe Biden is also looking to make progress in this area, reportedly preparing an executive order that would ask federal agencies to evaluate digital currencies and explore potential policies involving them.
In regards to the cannons roaring, instead of a simple invasion, Russian President Vladimir Putin chose a sneaky, backhanded way to create a justification for invading.
Using pro-Russian separatist calls for independence in the regions of Luhansk and Donetsk in eastern Ukraine, Putin acknowledged their independence on TV and sent in peacekeepers (a nice word for soldiers). In a public speech, he even attempted to blame the Soviet Union and Communism for making Ukraine a country.
As a side note, Ukraine did officially become independent from the Soviet Union, but Kiev (or Kyiv), the capital city of Ukraine, has been the hub of various nations, dynasties and empires since the 800s, long before Moscow.
Further, hackers working for Russia's government have reportedly waged a series of cyberattacks on critical Ukrainian infrastructure and government offices, U.S. intelligence claims.
The U.S. and its allies in NATO, to which Ukraine does not belong, have responded with financial sanctions against Russia.
To throw more complexity into the mix, last week China and Russia signed a new trade deal for Russian coal, in preparation for Western sanctions.
In the U.S., there seems to be a number of camps across political spectrums advocating 1) a more aggressive outright warlike approach to deter Russia, 2) the U.S. government's continued use of financial sanctions, and 3) a more pacifist approach, based on the view that the U.S. has nothing to do with this conflict and should leave Russia alone.
Whatever side you are on, one thing is for certain.
A war is coming. I don't know how it will unfold, and most people don't want it to happen, but cannons have fired. It is going to happen.
What should investors do about this? |
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| Sell, sell, sell!
Buy low and sell high, right? Easier said than done.
When assets are losing value, most investors tend to follow the pack and sell. And when markets go down more, investors become increasingly concerned and make additional sales. Economist John Maynard Keynes referred to this as "animal spirits."
Then when prices skyrocket, the herd of investors get excited and buy. How does one navigate these waters?
One way to go about this is to apply the mantra of contrarian investing:
"The time to buy is when there's blood in the streets, even if the blood is your own."
A similar wording was "Buy when you hear the cannons roar, sell when you hear trumpets."
The actual source of this quote is up for debate, with many attributing it to business magnates Henry Ford or John D. Rockefeller Sr.
The original source seems to be Baron Rothschild, an 18th-century British nobleman and banker who literally made a fortune buying in the panic that followed the Battle of Waterloo.
More recently Warren Buffet phrased it this way: "Be fearful when others are greedy, and greedy when others are fearful."
Buffet himself made a fortune investing in the Washington Post during the 1973-1975 bear market.
In the crypto world, I would argue that this has become overused. Boldly declaring oneself contrarian and saying you are "buying the dip" every time the market goes down sounds more like going with the grain than being contrarian.
This strategy of course has some caveats. One is the fact that no one can time the exact top and the exact bottom. Another is the fact one could be wrong and the market could keep going down.
And of course an investor can't buy the dip if they don't have any "powder" left to do so.
If one is right about their investment long-term, and they continue to hold through ups and downs, they will of course be a winner. And they could also simply be wrong. |
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| The end is near
Past performance does not determine future results. I have no crystal ball.
That being said, I am bullish on bitcoin and decentralized digital assets in the long-term. Recent events have only strengthened my view.
And I do believe we are getting close to the zone where "buying the dip" is not just an overworn phrase, but a good idea.
In January, I did predict certain factors would cause selling pressure, writing a blog about this subject. This piece mainly centered around the bull market running out of steam and actions I expected Federal Reserve policy makers would take to combat inflation.
What I did not predict was the Russia/Ukraine tensions, which have created selling pressure across global markets, which includes crypto, as well as the S&P 500, which has fallen more than 10% from the all-time closing high it reached Jan. 3, therefore entering correction territory.
I do believe the bleeding will continue, but I also think we are getting near the end. One thing I can safely say is that bitcoin is cheaper at $38,000 than it is at $69,000. It had dropped to under $34,000 a few weeks ago.
Again, if you are bullish on bitcoin long-term, which I am, this is a buying opportunity. The lower it gets, the better the opportunity. |
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| Investors' take
For those who have fiat cash or stablecoins sitting around, here are some ideas to consider:
1. Simple - Bitcoin Permabull Strategy
Bitcoin was up 9 of the last 11 years. From this perspective, one strategy would be to simply buy the dip. If it goes lower, buy more and hold until the price rises to your personal goal for gains. Or if you plan to HODL for 20 years, then just stay put.
2. Patient - Stablecoins and Wait
Since inflation is still here, the Fed wants to fight it, and both the Russia/Ukraine tensions and the China/U.S. trade tensions are not resolved, one strategy is to keep a stack of stablecoins and wait for an even deeper drop.
Instead of holding this money in a bank offering 0.01% per year, put the stablecoins in a DeFi platform like Celsius. There are more complex options, which offer higher percentages and more risk, but this is a simple one. As of this writing, they are offering 8.5% APY on USDC.
If one never buys, at least they are getting 8.5% APY for pretty low risk.
3. Speculate - Wait for the Bottom and Buy Risky Altcoins
This strategy offers the most risk and the most reward. Again, this is not a solicitation to purchase certain assets, and this is not an endorsement of any particular investment. These potential strategies are being used as examples.
When bitcoin reverses course, altcoins tend to outperform it. In December 2021, CoinDesk reported on the following projects that had massive returns. They have since had massive corrections. They have a better chance to get to $0 or generate a 100 times return.
Metaverse: The Sandbox, $SAND +16,265% Axie Infinity, $AXS +16,160%
DApp Layer Blockchains: Polygon, $MATIC +14,496% Terra, $LUNA +13,808% Solana, $SOL +9,374% Meme Coins: Dogecoin, $DOGE +2,943% Shiba Inu, $SHIB +1,608%
Make it a great day! |
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| Alexandre Lores Opportunity Analyst |
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Bitcoin City has secured funding. Looks like we're actually doing this. |
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That's just not how they roll. |
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| 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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