Short rundown this week because life got in the way. The next rundown will come from a new newsletter service, Beehiiv.

Nothing should change for you and you shouldn’t need to do anything! You might notice a new look and feel for future posts and issues of this newsletter, but the content will stay the same.

Make sure you caught my most recent update.

Look for another update soon, plus the monthly issue toward the end of the week. Sorry for not having much content this time, just me and some job listings.

I’ll try to make up for it over time!

QAs

A brief video to answer questions you might have.

Timestamps:

* 0:16 - why move the newsletter from Substack to Beehiiv

* 2:35 - altseason

* 7:37 - Binance

Jobs Corner

* Solana | Head of Staking Ecosystem | Link to position

* Ethereum Foundation | Grant Analyst & Liaison | Link to position

* Chainlink | Blockchain Data Analyst | Link to position

* Mysten Labs | Partner Manager | Link to position

* Paradigm | Business Operations Analyst | Link to position

* Ledger | QA Automation Engineer | Link to position

* Safe | Protocol Designer | Link to position

* Fireblocks | HR Generalist | Link to position

* Animoca Brands | Summer Internship | Link to position

* ConsenSys | Senior Backend Java Developer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Sorry for the extra note but I needed to let you know that I am looking to finalize my list of sponsors. Put your brand in front of over 20,000+ active crypto investors by reaching out through the button below!

Do it now before I run out of space.

👉 Apply To Become A Sponsor

Big week for the US. Inflation data and earnings reports come out. What does this mean for crypto?

We’ll see.

No matter what happens, we still have only two realistic scenarios, with only one action to take. For more on that and some notes about stablecoins, Binance, Ethereum’s Shanghai pump or dump, and altseason, catch my most recent update.

Also, make sure you read my latest altcoin report. It hit the inboxes of all the premium subscribers on April 6.  

This altcoin has massive potential whether or not we ever get an altseason. It’s hard to find 100x opportunities nowadays, but this one could do it.

The sooner you get your hands on this report, the better. Once altseason starts, you’re too late.

If you’re on the free plan, this is your last reminder to upgrade your subscription to premium so you can get the report.

Scroll down for some news, job postings, and other content you may enjoy.

Every now and then, I write a short post about crypto, “two minutes” long. I posted one last week.

Nothing you haven’t heard before. It’s basically a nutshell of what I’ve talked about for years: crypto will make people realize that money doesn’t have to be “backed” by anything, it just needs to do things people want it to do.

U.S. Diplomat to Washington: You’re Becoming Obsolete in One Big Area of Tech Policy

While we’re on the topic of the US, read this open letter from a US diplomat in Politico, a DC-politics trade magazine.

Frankly, I have nothing to add and generally don’t see why crypto needs the US, its institutions, or its permission. If this technology can do what we think it can do, it will unlock tremendous value for everybody on earth. The US will lose and everybody else will win.

(And US money will find its way in.)

This diplomat’s letter won’t change many minds, but if we get a few more of these over the course of months and years you can start to change the minds of policymakers and the people who they work for.

Maybe an extra talking point or a seed planted in the ear of a Congressional staffer? A bit of ammunition for our lobbyists and advocates as they build relationships with people who can protect (ideally promote) cryptocurrency?

Having worked in Congress, I can assure you, the people representing us and advocating for us know far better than we do about how to maneuver the political system. Let them.

At the end of the day, the results will not reflect substantive analysis and deep reflection, but rather the wants and needs of the people involved in making these decisions.

Jobs Corner

* Solana | Associate Analyst | Link to position

* Pantera Capital | Research Intern | Link to position

* Rarible | Social Media Manager | Link to position

* Ripple | Senior Software Engineer | Link to position

* Moonpay | Recruiting Coordinator | Link to position

* DRW | DeFi Trader | Link to position

* Chainalysis | Senior Data Engineer | Link to position

* Magic Labs | Senior Manager, Finance | Link to position

* OpenSea | Senior Software Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

I plan to move this newsletter to a different hosting platform, Beehiiv. You shouldn’t need to do anything, it all happens in the background. I’m not even involved! I’ll tell you before the switch goes live.

As always, you can email me at mark@markhelfman.com with your questions.

Hei!

Make sure you caught my most recent update.

In last week’s poll, I asked “How low will bitcoin's price go after today?”

44% said $25,000, 28% said $14,000, and 22% said “only up.” Less than 5% said $8,000 or less.

When I asked this question a few months ago, most people said $8,000 or $14,000. Either the bears didn’t take this poll or people generally feel more optimistic about the market now.

What do I think?

I would keep $14,000 on your radar, but if you wait for that price, you could be waiting forever.

Unless big exchanges are still dumping your crypto without your permission, a lot of sellers have gone away. So, while we still don’t see a lot of buying, we might not need that much.

Miners have started selling more bitcoins at a faster pace in recent weeks, but they hold the smallest percent of supply ever, as shown in the Miner Supply Ratio, a metric that calculates what percentage of bitcoins sit in known miner wallets.

Of course, miners sell all the time, in bull and bear markets, but the impact of their selling is the lowest it’s ever been. Also, we know from on-chain data that they’re mostly selling to people who HODL and stack sats.

On top of that, only about $30-40 billion worth of bitcoin exchange hands each day. You don’t need $400 billion in new money to double bitcoin’s price, you need a lot less. Maybe as little as $30-40 billion once you wipe out the sellers. 

Certainly, that can change. If it does, we’ll see those changes in real time and adjust the analysis as needed. Premium subscribers, I’ll keep you posted on everything.

If you’re not on the premium plan, don’t wait! This market’s more difficult to navigate now than it’s been for a while. My insight and commentary will help you make the most of it.

Scroll down for some articles, a podcast, a video, a meme, and job listings.

Do you ever think about what the Web3 experience will look like once it’s built?

Gaby Goldberg has some ideas. Read her take on what Web3 interfaces might look like. It’s not what you think!

Why the CFTC Case Against Binance Will Have Very Important Consequences for Crypto

In a recent episode of the Unchained podcast, a lawyer explains why the US lawsuit against Binance matters. Listen to the podcast.

For us, the US charges against Binance change nothing about crypto prices, BNB, Binance Smart Chain, or anything else.

Unless Binance settles this case, it’ll take years to sort this out. The US government served Ripple in December 2020 and its case is still in court. XRP’s price is higher now than it was then, even after dropping 70% from its 2021 high.

Even if Binance (and XRP) fail, US money will enter crypto. Don’t overthink it.

Andreas Antonopoulos offers some some great perspective in his latest video.

On an unrelated note, I’m no lawyer but US law seems pretty clear. Cryptocurrencies are commodities, securities, and property.

Why doesn't that make any sense?

Because the US has one set of rules for commodities, another set of rules for property, and a different set of rules for securities. As a result, it’s impossible to apply these rules in any comprehensive way.

zkSync

If you read my Airdrop Report, you’ve been fooling around with zkSync for the past two months. The project’s evolved since then—crypto moves quickly!—and I can’t keep up. I’ll continue updating the instructions but can’t catch all of the changes. Too many developments!

Airdrop hunters, read through get this Miles Deutscher thread for some great tips.

Check out my airdrop reports for a few other projects to discover.

Jobs Corner

* Outlier Ventures | Portfolio Management Associate | Link to position

* Polygon | Technical Writer | Link to position

* OpenSea | On Chain Analytics Engineer | Link to position

* QuickNode | Software Engineer | Link to position

* OKX | Head of People | Link to position

* Alchemy | SEO Content Manager | Link to position

* Aptos Labs | Marketing Manager | Link to position

* Ava Labs | Senior UI/UX Designer | Link to position

* Brave | Web3 Development Intern | Link to position

* DappRadar | Product Owner | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

If so, I’m happy to announce that there are spots left to partner with this newsletter. If you want to get your brand in front of 20,000 active crypto builders and investors, then Crypto is Easy is your answer!

👉 Apply To Become A SponsorDon’t wait until the last moment or you might miss your chance!

Salam! سلام

Did you read the March monthly issue? I’ll bet you didn’t! I can see the performance metrics 😀.

Here’s a second chance:

As you may have heard, Fed Chairman Powell said bank failures might wreck the US banking system enough that the Fed won’t have to raise rates anymore.

Is that good because it gives everybody the “pivot” they’ve wanted for so long, or bad because it means the Fed will finally accomplish its goal of making you poorer, taking away your job, and making your business less profitable?

We’ll see.

Catch my most recent update, where I recap the four approaches I’ve talked about over the past few months, check on some market behaviors you probably want to know about, and look at an unsettling pattern for stablecoins.

If you took any of the approaches I’ve talked about over these past few months, you’re set. Let the market do its thing.

If you didn’t take any of those approaches or don’t know what I’m talking about, catch the update or watch the video that goes with it.

Scroll down for a poll, a meme, some articles, and job listings.

Also note, I may move this newsletter to a new service provider, Beehiiv. My team’s exploring the option. Nothing will change on your end and I’ll let you know before I switch! I’m sharing this just for transparency.

(I love Substack and it’s the easiest way to start a newsletter, but once you get big enough, other platforms start to make more sense.)

Poll

Nasdaq Aiming to Debut Crypto Custody Service by Q2 End: Bloomberg

Nasdaq still plans to launch its crypto custody service.

While US regulators zap crypto-native businesses like Coinbase and Kraken, they let Wall Street entities like Nasdaq, Fidelity, Blackrock, BNY Mellon, and others move ahead.

It’s almost like US regulators are clearing the path for Wall Street’s regulatory capture under the guise of “keeping us safe.”

If that sounds familiar, you might remember reading my thoughts in Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency.

(Premium subscribers get the book for free.)

Wall Street has a deep connection to the US government. It’s a familiar face, you might say—one that should have no problems meeting custody, AML, and registration requirements.

Let’s hope Nasdaq can do crypto better than the London Metals Exchange does nickel!

Although, the conspiracy theorist side of me can’t help but wonder if this has something to do with USDT . . .

On that note, did you read Nic Carter’s latest on the “sophisticated, widespread crackdown against the crypto industry?”

If not, here’s your chance:

As a government employee and former Congressional aide, I can assure you that the US government is not good at “sophisticated, widespread” anything, certainly not crackdowns. And you can see that in its haphazard approach to crypto in recent weeks.

But, sometimes “good enough” is good enough. You get a so-called “chilling effect” because banks get the message and decide that banking crypto companies isn’t worth the money.

When that happens, you can bumble and stumble all you want. You don’t need coordination and savvy. The message does your work for you.

It sucks that crypto businesses will need to move overseas or change their partners and service providers. Too many good people suffer!

If there’s any silver lining, this might give crypto more motivation to double down on building a new financial system where banks are no longer necessary. For more on that, read my article, Silvergate’s Loss is Crypto’s Gain.

Jobs Corner

* MetaMask | Data Analyst | Link to position

* Circle | Senior Software Engineer | Link to position

* Foundation | Sales & Partnerships Lead | Link to position

* Chainlink | Web Designer | Link to position

* Gemini | Social Media Intern | Link to position

* Archimedes Finance | Product Manager | Link to position

* ZORA | Senior Accountant | Link to position

* Uniswap Labs | Senior Frontend Engineer | Link to position

* Ethereum Foundation | Rust Engineer | Link to position

* Web3Auth | Senior DevOps Engineer | Link to position

* Chainalysis | Staff Software Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

In this month’s issue, I reflect on cryptocurrency’s relationship with the legacy financial system.

If you want to hear an auto-narration instead of my voice, head over to the Medium version of this post.

What if modern finance is just an exercise in risk management and our financial leaders don’t have nearly as much control as they—or we—think they do?

Economic research does not have any experimental controls. It all works in theory, but once you go beyond very basic, broad principles, it always seems to fall apart without some government program or intervention.

No monetary policy can account for all of the variables that make markets. Nobody can account for all the changes, disruptions, vagaries, known unknowns, and unknown unknowns.

Why worry about having all the right answers? Why try to predict the future? Appreciate the circumstances and act accordingly.

If you’re on the paid plan, you know what the situation is now and what scenarios we can expect. We win no matter what happens next.

For that reason, I’m still following my plan.

If you’re following the plan, you’re up as much as 400% or down as much as 45%, but probably sitting on 10% gains with cash to spare. If you’ve dollar cost averaged that whole time, you’re down 7% on your investment. Most traders are doing worse.

Mark, seriously? Echo bubble, macro, Credit Suisse, US banks, China real estate! Get out of crypto!!!

Yea. Good luck picking your winners and losers!

You can also do well with a nice balance of assets, not just cryptocurrency. If you’re curious about my approach, read my portfolio strategy.

Choose your facts wisely

As people in the US discovered this month, even the safest assets and most trustworthy institutions can fail. Risk abounds—sometimes, in the most unlikely places.

Today, it’s US banks and Credit Suisse. Next month, maybe CLOs? Commercial real estate? Japanese bonds?

Yet, we still have money. What shall we do with it? 

For the past six months, I’ve done cash, crypto, and bonds. 

I figure it’s better to win sometimes than risk your fortune on a “strong conviction loosely held.”

You can make up for bad timing. Complacency kills.

US equities are still high against historical benchmarks. People are looking for an earnings recession, a real recession, a big crash, or at least a drop in earnings-per-share or P/E ratio back to something more in line with historical norms. 

Can you trust conventional metrics like EPS and P/E? Wall Street did record amounts of buybacks in 2021 and 2022. Those buybacks artificially boosted share prices. Did those buybacks artificially elevate those metrics, too? Do these metrics seem elevated because they fail to incorporate changes in how businesses reward shareholders?

Does that even matter? Most companies issue more new shares than they buy back each year. Even after the buybacks, your equity is usually getting diluted (though you benefit in other ways). 

This should skew the metrics in the opposite direction, right? Does that mean EPS and P/E might actually understate the value of a stock?

Man, this stuff is confusing! 

You find only what you look for

No wonder it’s so hard to predict the future. We don’t even know what’s happening in the present! 

The point is not about stocks, but about using data as a basis for your decisions. Or, more generally, what you select as your facts.

Are you sure your chosen metric still says what you think it does? As circumstances change, can you still apply it in the same way that you did before? 

What about unemployment? Are we measuring that correctly?

Since 2020, we’ve seen a boom in people using the Internet and the gig economy to make extra money on top of their day jobs. Does that skew the employment data?

What about demographics? 

The US population is shrinking and we’re getting older, sicker, and less productive—until you include immigration. 

Once you do that, US demographics look great. Our population is growing and we’re getting younger, healthier, and more productive. 

Do you include immigration because it reflects our present reality or do you strip that out because immigration policy can change in an instant? 

What about inflation data? A few months ago, the US Bureau of Labor Statistics changed how it calculates some of the inflation metrics.

What does that mean for the Fed’s analysis and their decisions? Can we still compare today’s changes with the changes that happened in the past under a different calculation?

The National Bureau of Economic Research changed its definition of recession a few years ago. Under the old definition, the US had a recession in 2022. Under the new definition, the US may never have another recession again.

By one measure, Western banks are strong and resilient. By another measure, Western banks are on the verge of collapse.

And you think you’re going to find somebody who can figure everything out? 

Go with what you got

With all that uncertainty in the data, its construction, and its significance, how can anybody make heads or tails of anything?

The Fed says it’s going to follow the data. What does that even mean? Economics is not a science. Data only tells you one part of the story. 

Still, it’s better than nothing. Would you prefer to get your information from whatever the social media algorithms decide you should see?

With crypto, you can find lots of data. Way beyond whatever fractal or on-chain metric just crossed your screen.

I’ll continue to use that data to go beyond the day-to-day and look at the market from many dimensions so that we can put together a picture of what’s really going on and what we need to look out for. 

We will never have all the pieces of the puzzle. Only in hindsight will we know what to do, and by that time, we won’t have a chance to do anything about it. 

That’s the beauty of this asset class and this investment opportunity: the uncertainty. 

It’s the only reason we can take a small amount of money and turn it into an outsized stake in the financial networks of the future. Once the market decides who wins and loses, that opportunity is gone.

Embrace uncertainty. Treasure doubt. Act with conviction, not in the belief in any one outcome, but in the belief that you have a sound strategy and realistic expectations.

They’re on to us

At the rate that cryptocurrency is growing, we may only have a few more years to get ahead of everybody else. 

Billy the Neighbor ditched his trading career for his old day job but he’ll be back after BTC hits a new all-time high. Aunt Sally and Uncle Morton pushed off their retirement “until the stock market recovers” but they’ll be back, too, once their financial advisor suggests a 1% allocation to bitcoin “because it’s safe now.” 

Even the International Monetary Fund knows what’s coming. Did you read its report on cryptocurrency?

In that report, the IMF said it has no standards for how to define, classify, regulate, and assess risks related to cryptocurrencies. Its nine-point framework proposes ways for its members to, in their words, “effectively mitigate the risks posed by these assets while also harnessing the potential benefits of technological innovation.”

You may be wondering, how can the IMF put out a framework for something that it can’t define, classify, regulate, or assess risks for?

The framework itself should accomplish all those things, but until somebody actually does what the IMF proposes, we can only guess. 

No matter. They get it. They see what we see. 

In their report, they acknowledge how quickly crypto technology is evolving, how poorly governments have adapted to its usage, and how significantly it will change modern finance and the way that money moves. They worry about what it will mean for their members.

Institutions like the IMF are modern-day versions of the priests I mentioned in the January monthly issue.

They’re aware that they will lose their authority and credibility if crypto can serve people’s needs better than they can.

At least they’re trying to do something constructive about it.

Their report doesn’t say anything about you, your needs, or your welfare. It’s all about their needs. They have a job to do. You are not important.

It’s dawning on them

While frauds and FOMO can make you forget about crypto’s true purpose, I won’t. Cryptocurrency is money for you, not the elites.

As such, you can understand their disdain for cryptocurrency. 

Put yourself in their shoes.

You engineered a whole financial system that works better than any other. You already know everything you need to know to manage it properly. You conquer crisis after crisis. How could anything useful possibly come from any approach other than your own? 

Our financial authorities have only just started coming to terms with an uncomfortable realization:

Cryptocurrency gives people choices and opportunities that the legacy financial system can’t provide.

Ten years ago, it was a funny little concept. “It’s useless except for blockchain,” they said.

Then smart contracts came along and they said it’s useless except for blockchain and fundraising. 

Then they said it’s useless except for blockchain, fundraising, and stablecoins. 

Then they said it’s useless except for blockchain, fundraising, stablecoins, and swapping assets.

How long until they say cryptocurrencies are useless except for blockchain, fundraising, stablecoins, swapping assets, and monetizing ownership rights? Incentivizing global data storage and distribution platforms? Fractionalizing the value of real-world objects? Securing massive, global pools of capital that anybody can tap into for whatever purposes they want at any time?

The stories we tell each other . . .

We need cryptocurrency to be useful. After all, our narratives have failed.

Bitcoin as an inflation hedge?

Failed. Its price is up only 500% since the pandemic stimulus. US real estate is up 50%, manufactured products are up 40%, gas is up 60%, the S&P 500 is up 70%, and gold is up 25%.

Obviously, you should’ve bought a house, car, gas, index funds, or gold to protect yourself from inflation.  

Bitcoin as a store of value?

Failed. Its price is higher now than it was in 2017, 2018, 2019, 2020, most of 2022, and almost every day of its existence. Obviously, you can’t protect your purchasing power with bitcoin.

Bitcoin as money?

Failed. Nobody spends it, saves it, or trades with it. You can’t even take out a loan against your bitcoin! Obviously, nobody exchanges bitcoin for things.

If that makes no sense, shame on us for believing in narratives based on facts. Never works, does it?

Not Intrinsic

At a Congressional hearing earlier this month, Federal Reserve Chairman Jay Powell wondered why any cryptocurrency has a price higher than zero because none of them have any intrinsic value.

What is intrinsic value?

US car prices went up 40% since 2020. Did their intrinsic value suddenly go up 40%? If not, then what does intrinsic value have to do with price?

US bond prices crashed last year. Did their intrinsic value collapse? If not, then why do financial assets need intrinsic value?

Maybe cars cost more and bonds cost less because they have no intrinsic value, only the price that people will pay for them.

I don’t know, I’m just a bitmoji. 

While I don’t believe in the concept of intrinsic value, if I did believe in it, bitcoin’s intrinsic value would be clear:

Bitcoin allows you to send money electronically to anybody, anywhere, anytime, in any amount, without restriction, without giving away your sensitive personal information, without putting your assets in another person’s control, with certainty that your transaction will go through and every payment you receive is authentic and valid. 

Nothing else does all of those things.

Whether it’s worth $28,000? 

I’ll let the market decide. I’m convinced that my properties are worth way less than what I could sell them for, but the real estate market says otherwise. Who am I to judge? 

Anyway, why would the financial elites care what I think? I don’t even have a master’s degree. 

But these are all facts, not reality. Reality is only what people believe. Crypto hasn’t done enough to make people believe in it.

Yet. 

You are the change that you seek

That will change once we have applications and interfaces that common people can use. Developers and engineers have made a lot of progress over the past few years and their work hasn’t stopped just because token prices went down.

Read Web3 Academy and ToolsForCrypto newsletters to learn about some of the things they’re working on.

* Web3 Academy

* ToolsForCrypto

While they work, we also need to play our part. 

The rest of the world sees cryptocurrency as a monolithic technology. It does one thing, but nobody really knows what that thing is. 

Maybe we can stop talking about principles, innovations, and esoteric economic concepts. Maybe we can cut down on the infighting, too.

Bitcoin is great money, but that doesn’t mean somebody else can’t have a better one. Ethereum has a lot going for it, but that doesn’t mean somebody else doesn’t have a better way to do smart contracts.

Let’s embrace the diversity of thought and initiative around cryptocurrency. 

Yes, you know better than everybody else, but let them figure that out on their own.

It’s possible along the way, they discover something that you never thought of—a concept, approach, design, or application that you never would have discovered if you had shut them down, yelled at them, or tried to belittle and curtail their work.

Not everything is a scam or a fraud just because it fails. 

Not everything is great just because you believe in it. 

Live and let live

Surely, with all the intellectual capacity floating around the cryptosphere, we can venture to find refined and nuanced opinions. 

Cryptocurrency unlocks financial innovation and experimentation in a way that was never possible before. Concepts that were once wildly experimental and purely hypothetical can now be tested in the real world. Monetary theories can be applied in something other than a textbook or a dissertation. 

Let people experiment, ideate, create, test, bend, mold, break, hack, attack, stress, screw up, and do all the things that make humans amazing creatures. 

The markets will figure out what works and what doesn’t.

It’s not our job to tell people what they can use cryptocurrency for. It’s cryptocurrency’s job to give people something they can use it for.

Does that mean you’ll get rich from a 100x moonshot on “the next bitcoin?”

Maybe, though that window is closing. 

Start with the altcoins I have in my Altcoin Reports. They’re all legit projects doing interesting things. The sky is the limit.

Also, make sure you read my list of Top 100 Altcoins—Which Will Survive Through the Bull Market.

Still above $0

I wonder how Chairman Powell calculates an “intrinsic value.”

What’s the intrinsic value of the $300 billion the Fed created “just in case” banks need it? Can you put a price on the full faith and credit of the US government? Is it more than what you get from waving a magic wand?

With so much of the stock market’s behavior linked to government policies and central bank actions, can we truly assess the actual value of stocks? Or anything else?

So many of our modern monetary concepts revolve around the actions of governments or central banks. Do we know if they would work in the absence of governments and central banks?

Operating in a vacuum

Once removed from a world where a single entity controls the value of money, do these institutions matter anymore? Does their expertise still apply? Are those decades of research and analysis still relevant? 

Much like scientists needed to re-examine the laws of physics once Einstein published his theory of relativity, perhaps economists need to re-examine the laws of money now that we have monetary systems that do not involve centralized entities. 

Imagine you spent a lifetime developing the skills and knowledge to run the world’s largest economies and manage crises that threaten the safety and prosperity of entire nations.

You work hard and do your job well. Then a whole bunch of people tell you that you suck. They go off and create a new technology that will make you obsolete and undermine everything you are trying to do.

You and your peers gave them 13 years of economic growth. After the world’s economies shut down for COVID, your strong actions won back millions of lost jobs and saved thousands of businesses from collapse. Your leadership steered the economy to unprecedented prosperity, navigating a European debt crisis, Chinese currency meltdown, pandemic outbreak, and whatever’s going on now.

Deep down inside, wouldn’t you ask yourself, “why don’t they appreciate me?”

Wouldn’t you feel hurt and threatened? Wouldn’t you feel the need to defend yourself or prove that your way is better?

Your reaction might be to lash out, belittle, or patronize them. It’s not your fault they don't appreciate the good things that you’re doing. It's not your fault that they don't understand how things work. They’re foolish and dumb. So ungrateful!

Especially when you’ve been taught for years that money must be backed by government decree. Your government requires everybody in the country to use your money to pay their debts and taxes, therefore it is backed.

Now somebody comes along with a new kind of money that’s backed by immutable properties, functional utility, and massive social networks—but all you see are scams, frauds, and misfits spouting debunked economic theories.  

Wouldn’t you feel a little insulted? Wouldn’t you worry about the tragedy they’ll encounter when they discover they’re wrong?

If you read my book, Consensusland, recall the latter part of the book, when Quentin talks to the governor. I wrote the governor's character to capture the mixture of arrogance, conviction, indignation, and condescension that you see from today’s financial authorities. 

Are those financial authorities much different from the Catholic priests of Renaissance Europe who worried people would never get into heaven without doing what the Church said they should do? What good is the Church if anybody can get into heaven just by being a good Christian? How can the Church stay relevant if people start their own congregations anywhere they want and worship god on their own terms?

What if they find faith in a religion other than Christianity?

Give to Powell what belongs to Powell

If the legacy financial system is really good as they think it is, then they should not feel threatened or insulted.

They have no need to worry about cryptocurrency. They can have the full faith and credit of the US government. We can have the network effects and computational certainty of decentralized, permissionless financial protocols.

Crypto’s growth doesn’t have to undermine their authority. Their credibility doesn’t need to suffer as a result of our success.

Why do we have to pit one against the other? Why can’t we have one financial system that does not have any of the constraints of the legacy financial system, and a separate financial system that does not have any of the constraints of cryptocurrency?

Then we can collaborate wherever they overlap or complement each other.

Think about all the amazing ways that partnership could transform modern finance for the better. 

You don’t think crypto could use people with decades of real-world expertise, a wealth of practical knowledge, and an insider’s perspective?  

Isn’t it possible that we could learn a lot of really great things about how money works? How cryptocurrency can create more durable, stable monetary systems that do a better job of pooling capital, distributing it to where it’s most useful, and enabling all of us to have better lives, cheaper goods, more productive services, more profitable businesses, and more secure finances?

Why not bring in experts from the central banks to work on cryptocurrency projects? Let them share their knowledge and expertise.

Why not offer to work for the European Central Bank? Let us share our knowledge and expertise.

What about a non-governmental organization for cryptocurrency development?

At the very least, a forum to exchange ideas, publish papers, and collaborate on new projects that combine the best elements of cryptocurrency and the best elements of the legacy financial system.

Surely we can learn something from each other, if we try.

Good luck with that

Unfortunately, I don’t think anybody will try. 

The establishment sees cryptocurrency as a threat to its authority. Cryptocurrency advocates see the establishment as a threat to their integrity. 

Maybe the next step is not proving, validating, and demonstrating use cases.

Maybe the next step is finding shared goals that everybody can rally behind.  

These are things I am mulling over. What do you think?

While it would be nice if the legacy financial system and cryptocurrency industry found common ground, let’s not get ahead of ourselves. We’re beneath them. We’re barely worthy of their acknowledgment, much less their respect.

When Martin Luther posted his 95 Theses, the Pope didn’t say, “oh, great ideas, I’ll take that under advisement. Maybe there’s an opportunity to reflect on what I’ve done to cause your frustration and work together to bring greater spiritual fulfillment to the people of this Earth.”

No. He had Luther arrested, banned his works, and kicked him out of the church.

I don’t think the world’s financial pope, Chairman Powell, will do anything as drastic. At the same time, we can’t expect him to reflect on why cryptocurrency might offer an appealing alternative to the legacy financial system. He’s certainly not going to read this newsletter.

As Max Planck wrote:

Truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.

Keep those legs moving

As a result, we need to continue what we’re doing. Let the lobbyists advocate for us. Let the developers build. Let the entrepreneurs and community leaders lead. We’ll support them with our time, money, and encouragement.

Stake your tokens. Participate in governance decisions. Run a node. Validate transactions. Mine crypto. Contribute to liquidity pools. Buy it. Sell it. Use it.

If you’re not on the premium subscription, upgrade now. You’ll get:

* 🔍 My crypto market analysis

* 🧐 Altcoin reports

* 📚 My plan and strategy for acquiring bitcoin and altcoins during bull and bear markets

* 📈 Technical and fundamental analysis

* 👀 Regular updates on what’s going on in the market

Look for a new altcoin report for premium subscribers within the next few weeks.

No matter what happens in the legacy financial system, I will continue to share my observations, strategies, and analysis. We’re all in this together. 

Relax and enjoy the ride!

In last week’s rundown, I said there were two ways to resolve Silicon Valley Bank’s collapse. My government didn’t like either option, so Sunday evening, it waved its magic wand and created a third way—guarantee all deposits.

You’re trying to predict “macro” when your government can wave a magic wand and change everything?

Credit Suisse is one of the most important financial institutions on earth and just got a $54 billion line of credit from the Swiss government. It’s not enough. As of this update, everybody’s scrambling to save it (they may have done that before you get this rundown).

If you’re wondering what this means for crypto, the market’s given us a very clear picture of what’s going on. This week’s pump changes nothing, we’ve prepared for this for a while.

Catch my most recent update so you can see what I see and plan accordingly.

I still believe the “macro” is too complicated and dynamic for any one person to assess. We know things will get worse before they get better, but we don’t know how much worse, for how long, and with what consequences.

At least nobody’s talking about Genesis, Grayscale, and Digital Currency Group anymore!

If you take the same approach with your finances as I do with my portfolio strategy, you’ll end up doing ok no matter which way the “macro” goes.

For crypto, let’s stick to the situation at hand. Look for the monthly issue within the next day or two. Premium subscribers, expect my next update will come closer to the end of this week.

Scroll down for more news, videos, and content you may enjoy!

US and China pumping the markets?

This week, the US central bank created $300 billion in new money and China cut its lending rates. Some people think these actions will put more money into the financial markets.

We’ll see.

The Fed still wants you to make less money, lose your job, and go out of business.

That $300 billion doesn’t actually go into the economy, it’s there to ease banks into failure and doesn’t keep the Fed from raising interest rates. In fact, it probably gives them a little more latitude because they can backstop some of the negative consequences of monetary tightening.

Watch this video from 2 Gray Beards explaining the situation.

China’s stimulus sounds good but you have to ask yourself why they need the stimulus in the first place. China’s economy is still held together with gum wads and rubber bands.

Fortunately for us, financial assets don’t necessarily reflect anything that’s going on in the real economy. As long as our governments hold magic wands, asset prices are meaningless.

Arbitrum airdrop FU

It’s official. Arbitrum will have an airdrop.

The airdrop snapshot took place on February 3, 2023 and the airdrop criteria favored early users and people who have lots of money. Almost like you had to be an insider to qualify…

Congratulations to everybody who qualified.

I included Arbitrum in my Airdrop Report—in hindsight, too late to qualify, but nobody knew that when I published it last month. Let’s hope for better luck with the other six airdrops.

Roblox Is Being Handed $150 Million By Government After Bank Collapse, Money Isn't Real

Bottom line: a huge gaming company, Roblox, got money from the US government to cover the deposits they lost when Silicon Valley Bank failed.

My take: the US government gave real money to a company that makes money selling fake money after that company’s bank gave its current money to the government in return for future money that they sold at a loss. That’s how a legitimate money system works, but your altcoin is a scam?

Why we care: if a gaming news website realizes your money is a meme, so does everybody else. Both the US government and Roblox can print their own money at will and give it to whoever they want. Whose money is fake?

Time to Worry About Altcoins?

Are you wondering why your altcoin isn’t pumping like bitcoin?

Probably natural volatility. Vagaries of the market. Most of the altcoins on my list of Altcoin Reports beat bitcoin over the past 24 hours.

At the same time, bitcoin beat most of them over the past seven days.

These things happen sometimes.

Just wait until people start saying “nobody cares about altcoins, people only want bitcoin, altcoins are dead, US regulators are banning altcoins, etc.”

I’ve been in this situation a few times, it’s always the same. This two-minute video explains.

If we get an altseason, you’ll feel silly about worrying.

Of course, we’re not there yet. One week does not a rally make. We may never get another altseason. But at least you know what kind of things people will say and why you can ignore them. 

Cybercriminals' crypto platform ChipMixer seized in international operation

Bottom line: Western governments shut down ChipMixer, a money laundering website.

My take: Tornado Cash, anybody? If only the authorities had shut down Tornado Cash during a banking crisis, we never would’ve heard about it. The social media algorithms and SEO strategists would have put something else in front of our faces.

Why we care: we can’t worry so much about the daily news that we forget about real, practical matters like privacy and financial liberty that skip our news feed and don’t move prices.

Jobs Corner

* Messari | Sr. Backend Engineer, API | Link to position

* Ripple | Marketing Analyst Intern (Summer 2023) | Link to position

* RabbitHole | Senior Product Designer | Link to position

* Gelato Network | Senior Partnership Manager | Link to position

* Bebop | Front-End Engineer | Link to position

* Wintermute | C++ Trading Platform Developer | Link to position

* Phantom Wallet | Data Scientist | Link to position

* Nethermind | UI/UX Developer | Link to position

* Biconomy | VP Engineering | Link to position

* Alchemy | Treasurer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Did you hear?

Silicon Valley Bank failed. This is terrible for any business that held deposits or used their banking services.

Also, its failure has nothing to do with crypto but its management of a particular risk related to US treasuries, the “safest” asset on earth.

SVB had an A1 credit rating, a top 20 rank on the Forbes list of America’s Best Banks, and its CEO served on the board of directors of the Federal Reserve Board of San Fransisco, one of the branches of the US central bank. It’s also the second largest bank failure ever recorded in the US and it happened virtually overnight.

Another bank, First Republic, now seems destined to the same fate, with a few other names floating around the rumor mill. 

So you can understand why people in the US are worried about contagion and wondering what other banks the regulators missed.

The US government took over SVB on Friday. On Monday (tomorrow), one of two things will happen:

* Regulators will find a new owner, the bank will open, and everything will continue to operate normally.

* Regulators will close the bank, give all customers their money back up to $250,000, and probably return most (maybe all) of their customers’ other deposits at a later date (but as soon as possible).

At least, that’s how it’s supposed to work.

Why do we care?

Because Circle had 6% of its USDC reserves at SVB. Since it can’t access those reserves, people worry about the solvency of USDC. As a result, some people sold USDC on the secondary markets, driving its price down (redemptions still 1-to-1).

Bank failures suck. In the US, we haven’t had any since 2020. On average, 33 banks failed each year from 2010-2020.

Is this the start of another 2008 global financial crisis? Or simply a return to normalcy—things get bad for a bit as we go back to an economy that looks more like the ones we had for decades before the COVID crisis?

We’ll see. Fortunately, we have some bitcoin.

Are you worried about what will happen to crypto prices now?

If you’re following my plan, you don’t need to worry unless you want to. We’ve talked about this for weeks. If anything, you’re getting antsy about sitting on your hands while we wait for the next opportunity.

We bought into the market for most of last year and the beginning of this year, often at lower prices than today’s. You’ve been setting aside cash since January 12. You can take it easy.

Anybody who took the trade I mentioned in February, you just got a “retest of the trendline.” So, you’re covered in that side, too. Just mind your stop-loss!

Premium subscribers, look for a market update this week and make sure you caught my most recent update from March 8, 2023.

Scroll down for some notes, a meme, and useful info.

Bitcoin Crash - Like 2022 All Over Again? (A Fractal)

Crypto always goes through bubble cycles on small and large time frames in bull and bear markets (if those terms even mean anything anymore).

Did you know that we just completed another bubble cycle?

This one’s a picture perfect mirror image of the 2021-2022 cycle, shrunk down to two months and a tiny price range. Watch this video for details:

Does that mean you should worry?

Watch the video, then you can decide for yourself.

What is NFT Finance?

Wealth Mastery published a brief, easy report on platforms you can use to monetize or generate income off of your NFTs. “NFT-Fi,” as they say.

With these platforms, you can rent NFTs and borrow NFTs or post them as collateral for loans.

In other words, you can make money on NFTs without having to flip them or speculate.

While some people think NFTs are dead, I assure you they’re not. In fact, they’re one of cryptocurrency’s killer apps but most people only know about the JPEG version of the technology.

Learn about NFTs now before the next wave of innovation demonstrates their true potential. This report’s a good place to start.

I’ve tinkered with NFTs for my business, e.g., NFT subscription models or perks. I haven’t yet found the right NFT partner for this newsletter and I’m worried that my government will zap me if I use NFTs in any way that gives you a stake in my success or any way to benefit from the success of my brand, platform, or content.

That said, I do post articles on Mirror for purchase as collectibles. It’s the only type of NFT that seems legal in the US without registering with the SEC.

SVB is not crypto

Some people are mixing up SVB with Silvergate Bank, the crypto-focused bank that failed earlier this week. They’re totally different businesses with a few overlapping customers.

SVB was a large bank that served lots of mainstream businesses and many household names. Silvergate was a small bank that specialized in banking solutions tailored to the unique needs of crypto businesses. Don’t lump them together!

As you know from reading my books and posts for years, I’m cautious about VCs and “institutions” in crypto. It’s great to have their enthusiasm, support, engagement, and money. At the same time, crypto will destroy their business models. That’s a big conflict of interest.

While that doesn’t have to be a conflict of interest, it’s an issue that not enough people talk about. But I do!

Read my latest post, Silvergate’s Loss is Crypto’s Gain.

Demand for Blockchain Devs Is Soaring—But Not Just in Crypto

Bottom line: non-crypto companies are hiring for developers with industry experience.

My take: all is not so bad! People still think this technology is useful. Sometimes, you can’t tell what something’s worth by looking at its price.

Why we care: nobody kicks a dead dog.

Jobs Corner

* APY.vision | Principle Senior Developer | Link to position

* Slingshot Finance | Community Manager | Link to position

* Safe | Product Marketing Manager | Link to position

* Crypto.com | Accounting Associate | Link to position

* Enjin | DevOps Engineer | Link to position

* Magic Eden | Communications Lead | Link to position

* Chorus One | Platforms Engineer | Link to position

* Aldrin Labs | Head of Engineering | Link to position

* Kraken | Sales & Business Development Lead | Link to position

* Coinshift | Data Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Who’s worried about Silvergate Bank’s imminent failure?

As the Average Joe newsletter puts it:

Crypto folks: Just another day in crypto.

Non-crypto folks: Enjoying the chaos from afar.

While Silvergate’s a big deal, it doesn’t touch the spot market, it provides specialized banking services to crypto businesses. What is Silvergate and Why Does it Matter?

Binance, on the other hand, is a big deal and touches the spot market.

In my most recent update, I included a section called “Bad stablecoin news and Binance’s $1.8 billion shortfall: a conspiracy theory.”

You might want to read it, along with the metrics, strategy, and analysis I provided in that update.

We know Binance is monkeying around behind the scenes, the only question is whether they’re doing anything that puts your crypto at risk. What have you heard lately?

Scroll down for poll results, some news, articles, and job listings.

In last week’s poll, I asked “Will bitcoin's price ever go lower than $15,600?”

The results split 50/50.

What do I think?

I’ll let the market decide. $14,000 bitcoin is realistic, but if you’re waiting for that price, you might be waiting forever.

With every passing day, $14,000 feels more like $100,000 felt towards the end of 2021—realistic, reasonable, easy to do, and within the range of normal volatility, but it doesn’t happen.

I wrote about this a January 2023 post, Is $14k Bitcoin the New $100k Bitcoin?

Mt. Gox update!

Distribution moved to September at the earliest and only for those who chose to take an early payment in bitcoin rather than wait for the legal process to settle (which could take years).

Bitcoinica and MtGox Investment Funds (MGIF), two entities that account for 20% of the bitcoin, already said they’ll take the bitcoin, not the cash. That’s almost 30,000 bitcoins going to two entities, combined.

If they intended to sell, why take the BTC instead of the cash option? Will they skim a little off the top? HODL it all?

What about the other 80% of bitcoins due to hit the market? That’s found money and worth way more today than when they lost it.

I guess we’ll find out in September.

That tweet comes from the great Sylvain Saurel. If you’re not reading his newsletter, In Bitcoin We Trust, you’re missing out!

Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem

One of the US Congressional subcommittees will yell at Biden officials and other people on March 9 during a hearing titled Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem.

One of the more bizarre titles for a hearing. No political bias there!

March 9 is the same day as the 3rd anniversary of Crypto is Easy, but I’ll bet you nobody will say anything about it. Kinda rude, don’t you think?

Tap this button to watch the hearing live.

If you do that, you might hear people say things that make you mad. Fear not! Congressional hearings don’t matter, they’re all for show.

When I worked on Capitol Hill, we called them Kabuki Theater. They’re opportunities for Congressmembers to get witnesses to say the things they want them to say or make whatever point they want them to make. All the important work happens in private conversations that we will never know about unless somebody tells us. 

Let’s hope we get some people to say positive things about crypto.

Jobs Corner

* Ethereum Foundation | Rust Engineer | Link to position

* Nansen | Customer Success Manager | Link to position

* Ankr | Sales Development Representative | Link to position

* Celestia Labs | Security Engineer | Link to position

* Opensea | Senior Full Stack Engineer | Link to position

* Kraken | US Strategy Director | Link to position

* Wintermute | Algorithmic Trader | Link to position

* Moonpay | Lead Product Manager | Link to position

* Web3Auth | Developer Relations | Link to position

* Certik | Security Research Internship | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

This week, bitcoin’s price reached a confluence of “technical resistance” levels. That’s bearish. I sense a lot of people are getting antsy.

“I’ll buy at $8k” already turned into “I’ll buy at $14k.” How long until it turns into “I’ll buy at $20k?”

There are only two realistic scenarios for the market and if you’re following my plan, you’re doing the same thing no matter which way the market goes. I’ve talked about this for a while, most recently in my market update from February 21, 2023.

I’ll have more on that and some interesting observations in another update this week. Before then, make sure you got the February monthly issue.

Scroll down for a poll, video, articles, meme, and job listings.

For Tealfeed readers, I added an option to connect directly with me. Take a look at my options on the Tealfeed “Connect” Dashboard.

Poll

The Bitcoin Chart Nobody is Watching (Except You, Now)

People love data models, fractals, and projections. I do, too! Fun food for thought. You may even like my U2R model.

Alessio Rastani talked to two of his YouTube trader friends about some charting relationships and potential price targets for bitcoin.

If you like that kind of content, watch this video. Note, this is not an endorsement of any product, service, or class.

Why Coinbase Launched an L2

After beating revenue projections by 10%, Coinbase announced its own smart contract platform, Base.

Builders gonna build.

I don’t know what this means for crypto. We have a lot of smart contract platforms already!

Web3 Academy highlighted the rationale and implications in its most recent issue. Read their take!

Generally speaking, I support Coinbase’s vision. We need something like AOL for crypto, and Coinbase wants to deliver a similar experience.

A lot of things have to go right though, as Coinbase already knows. Let’s hope everything works out for all of us!

IMF lays out crypto action plan

The International Monetary Fund, a nongovernmental organization that helps countries run their financial systems and serves as the world’s lender of last resort, published a report, Elements of Effective Policies for Crypto Assets.

Bottom line

IMF acknowledges that it has no standards for how to define, classify, regulate, and assess risks related to cryptocurrencies. Its nine-point framework proposes ways for IMF’s members to, in their words, “effectively mitigate the risks posed by these assets while also harnessing the potential benefits of technological innovation.”

My take

They get it. They acknowledge how quickly crypto technology is evolving, how poorly governments have adapted to its usage, and how significantly it will change modern finance and the way that money moves from one country to another. They worry about what it will mean for their members.

Sounds like responsible, proactive leadership—an urgency that all governments should feel (but too many don’t).

Whether the framework is actionable or workable?

Until somebody actually does the things IMF proposes, we can only guess. I found the report informative, perceptive, and well thought out. IMF directors ain’t no dummies, even if your favorite bitcoiner says they’re evil.

Institutions like the IMF have only their authority and credibility to bank on (pun intended). They’re modern-day versions of the priests I mentioned in the January monthly issue—so stuck in their ways that they can’t see any alternative to what they already know, but aware that they will lose their authority and credibility if crypto can serve people’s needs better than they can.

At least they’re trying to do something constructive.

Though it is interesting to note that nowhere in their report does it say anything about you, your needs, or your welfare . . .

Why we care

IMF directors agree that crypto will grow. They pointed out legitimate risks and put forward a plan to head off those risks. Let’s not read anything more into it. Some of their suggestions might not be so bad.

Jobs Corner

* Bitgo | Director of Design | Link to position

* Binance | Blockchain Engineer | Link to position

* Phantom Wallet | Software Engineer - Mobile | Link to position

* Alchemy | Recruiter | Link to position

* Lido | Marketing Research Lead | Link to position

* Glassnode | Product Manager | Link to position

* Opensea | Communications Lead | Link to position

* Solana Mobile | Growth Lead | Link to position

* Stacks Foundation | Core Blockchain Engineer | Link to position

* Magic Eden | Senior Full Stack Engineer | Link to position

* Den | Software Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

In this month’s issue, I’ll look at narratives and why reality matters more than facts, charts, and projections.

If you want to hear an auto-narration instead of my voice, head to the Medium version of this post!

First, let me address a thought you may have on your mind.

Why u so dumb, Mark?

Mark, in one of your weekly rundowns in January, you said that college is a Ponzi scheme and student loans are really bad investments. Are you an idiot?

Are you talking about this one?

That’s not what I said. I said anybody can make that case. The facts give you all the support you need to believe whatever you want to believe.

Even the most casual observer can see that college is a government-subsidized multi-level marketing scheme backed by trillions of dollars of entrenched interests and a whole cultural apparatus around it. 

Only half of the graduates get jobs in their chosen fields of study. Some of them give up a half decade’s worth of income or more to get entry-level jobs that barely cover their basic expenses and a little bit of fun (if that).  

Predatory lenders take government money to foist unaffordable debt products on young people who don’t know any better while preying on parents who so desperately want their children to have a better life, that they are willing to sacrifice their wealth and financial security so their children can make somebody else richer.

Is there any way to sustain this system other than for new people to buy into it at higher prices? Without massive government support and affinity marketing programs, how can this system survive?

What value does it serve now that we have YouTube, online academies, internships, chatGPT, the Internet, real-world life experiences, and myriad opportunities for young people to start their own businesses?

Think out of both sides of your head

That would be a cynical take that tells only half of the story.  

For many people, college opens up a world of opportunities, friendships, worldviews, and real skills that can get them good jobs, strong business connections, and more fulfilling life experiences. 

Colleges offer mentorship and career development opportunities that AI can’t replace and most people could never afford.

Some students can’t get these opportunities from where they live or who they know. For them, college is not only worth the cost, it’s the only way to gain access to privileged social, financial, and vocational networks.

Student loans offer better terms than anything they can get from a bank and government subsidies help lenders accept the risks and hassles that come with lending to kids. 

Marginalized families and communities often have little access to credit and rarely on reasonable terms. When you don’t “know somebody who knows somebody” or you don’t look/speak/act a certain way, strangers don’t often give you money. Banks are generally no different.

Of course, if you like college, you pick one set of facts. If you don’t like college, you pick another set of facts. Whatever you want to believe, you can!

When that’s all you see, all you know, and all people tell you about, that becomes reality.

Such is the challenge we face today with cryptocurrency. A whole bunch of people got so burned and appalled by our greed, fraud, and nonsense that they chose to see a different reality than the one we see.

(And, if we’re honest with ourselves, the crypto market hasn’t exactly rewarded the most noble and aspirational behaviors.)

Let it roll off of your back

During this litigation and regulation phase of cryptocurrency’s evolution, you will hear people say things that will make you very mad.

They may make you worry that your government will do really bad things to you, your crypto, and the industry in general. They may even make you feel like you have to sell or leave the market.

Don’t argue. Don’t try to change their minds or bestow some gift of knowledge or wealth on them. Let crypto speak for itself. If it’s as good as we think it is, the message will come through. Crypto will earn its keep.

Accept other people’s skepticism. Embrace their apathy. Listen and try to understand why people can’t see the things that we see. You may find some valid points.

In any event, we need entrance liquidity to buy into the market at these low prices.

Once crypto goes “mainstream” and everybody else figures out what it’s useful for, all of the best opportunities will go to somebody richer, smarter, or better connected than we are.

Now’s our only chance to get ahead of them.

Let the lobbyists advocate for us. They know far better than you or anybody on Twitter how best to influence the political system.

Let the builders and developers show the world what good things this technology can do.

We need only to give them our time, attention, enthusiasm, and support so that they can continue to ideate, innovate, and create the financial networks of the future. They will build the reality that others will see.

Facts vs. reality

Some say this can’t happen without the US onboard. Everything depends on the US economy, financial system, stock market, and dollar.

They take this as a matter of fact.

Sometimes, facts do not reflect reality.

After Trump was elected, gun sales went down while abortions went up. Wasn’t Trump supposed to be pro-gun, anti-abortion?

After Biden was elected, oil boomed while new wind and solar projects fell (sometimes, literally). Wasn’t Biden supposed to be pro-ESG, anti-oil?

Perhaps these matters are more complicated than we think. Maybe a chart, dot plot, or political decision does not have as much predictive value as we think.

Facts are clear. Reality is messy. But that's the world we live in.

* Fact: SEC says Kraken misrepresented its staking program.

* Fact: Kraken decided to settle instead of contesting the charges.

* Fact: Kraken can offer its staking program with proper disclosures, a structure that fits into US rules, and transparency about what it does with people’s tokens.

* Fact: Kraken still offers its staking program to non-US users.

* Fact: anybody in the US can stake their own crypto or another person’s crypto on their behalf.

What’s the reality?

You get to choose!

Do you want the reality where the US government hates staking and wants to destroy crypto? You can have it!

Do you want the reality where US laws suck but businesses need to comply anyway? You can have it!

Do you want the reality where staking is evil, crypto’s a scam, and Kraken runs a fraudulent business? You can have it!

Whatever you want to believe, you can believe. Better yet, you’ll always have the facts on your side!

What do I think?

Sometimes, people do whatever they want, regardless of who’s in power and what the authorities say.

We are motivated by our own needs and the needs of those around us. Often, those needs matter more than the needs of the authorities making decisions on our behalf.

Where the rules are bad, we see time, talent, money, and energy move to places where the rules are good.

Where there’s a will, there’s a way

If some other country gives people a better option for crypto, crypto will flourish in that country. The US will lose. Everybody else will win.

Why is that bad?

With crypto, we have financial systems that don’t depend on the goodwill or competence of banks and governments. We can replace their closed systems of control with free financial networks that are more secure, private, and efficient.

Shouldn’t we celebrate that?

In 2017, most US banks wouldn’t let customers deposit onto crypto exchanges. Somehow, massive amounts of money moved into crypto, anyway. China banned crypto a bunch of times, yet Chinese miners still account for as much as 20% of the hash power and Chinese accounts still move a lot of money in and out of crypto.

You may worry about what will happen if crypto loses its“fiat on-ramps” and “money super-highways.”

Those ramps and highways allow people to get money out of crypto just as quickly as they get money into it. “Fiat” rails seem like an obstacle when you want prices to go up, but they also give people a way to pull money out of crypto when prices go down.

An on-ramp makes a great entrance. Also, a great escape route.

Money for them and money for us

Frankly, I don’t mind the speculative enthusiasm. We need it! You want people to get excited and engaged. Some of them will stick around and see the reality that they’ll never find on Twitter, Reddit, or Bloomberg.

Cryptocurrency is money for the people, not the institutions. It’s money for you and me, not governments and investment funds.

Maybe we should keep crypto separate from the wider world.

Let others use the technology for permissioned gatekeeping, CBCDs, and private blockchains. They can figure out lots of ways to squeeze profits from the technology.

Let us have DeFi, NFTs, distributed data storage platforms, and all the things that are being built with cryptocurrency that are impossible to deliver using legacy financial technology.

These networks will make finance more accessible and affordable for the poor and disenfranchised. On top of that, they will enrich users with a share of transaction fees, staking rewards, token delegations, and other benefits that grow their networks for the good of everybody who participates.

Let hackers and frauds assault our protocols until they’re robust and resilient. Our gains will be more durable. Our wealth will be more difficult for others to confiscate or dilute. Our money will be more resistant to attack and manipulation.

Bureaucrats and corporations can have their money. We’ll have ours. Capital will flow to whichever system can best serve the needs of those who use them.

The forever bear market

Mark, that can’t happen in a bear market. Macro, bro!

As long as bitcoin’s price stays above $15,600, we’re in a literal bull market, even if it doesn't feel that way.

* Fact: since May 2022, we have seen the market show the same behaviors as it did in 2011, 2015, and 2018-2019.

* Fact: premium subscribers saw this play out in real-time through regular market updates and analysis from this newsletter.

* Fact: in 2011, 2015, and 2018-2019, we had “macro” problems. European debt crisis in 2011. Chinese stock market and currency crisis in 2015. Technical bear market for the S&P 500 and signs of stress in the US banking system in 2018-2019.

* Fact: many countries show strong economic growth and favorable demographics (just maybe not your country).

Reality?

There is always something to worry about.

Bitcoin acts the same way at market bottoms, regardless of the “macro” or “liquidity.” Altcoins follow wherever bitcoin goes.

You can debate bull and bear markets. You can choose your reality as you choose your facts. But you can’t deny the circumstances.

You are here:

For the past nine months, we’ve seen the evidence get more compelling. We put together more pieces of the puzzle with each passing week.

The market always knows better than you do

There are only two realistic scenarios for this market. It’s not worth getting into now, but I touched on this in my February 21, 2023 update.

What should you do about it?

For me, that means following my plan.

Three lines on a chart tell you when to buy and two signals tell you when to sell. Ride prices up and down, sell only when the market forces you to do so, and buy only when the markets give you a great opportunity.

If you're following the plan, you're up as much as 325% or down as much as 55% but probably about even on your investment. Now, you're saving money for the next opportunity, which could come before you even read this issue.

Do you want a simple way to get free money while you wait, for the same risk you take holding cash? Some ideas:

* Get free crypto with Rodeo Money for buying things you already buy. Use my page—I pass all of my commissions to you.

* Stack sats with the Fold card. Use my referral link—you get some free bitcoin and chances to win more.

* Stake or delegate your altcoins for free tokens. Start with CoinGecko and StakingRewards.com for more information.

* Work for any of the businesses that you see in the “Jobs Corner” of my weekly rundowns.

* Fool around with the platforms I mentioned in my airdrop reports. Some are easy, some are hard, and all come from legitimate and experimental projects. While I can't guarantee you'll get an airdrop from any of these, you can follow my step-by-step instructions so you’re the most likely to qualify if they do.

For paid subscribers, I'll keep looking at the on-chain data, technical patterns, order books, macro, and changes in behavior and metrics so you can make the most of this market.

Mark, don’t look at charts and data, that’s just astrology for men!

Sure, if you use them in that way.

You can choose to jump to conclusions from bad on-chain analysis, arbitrary fractals, dubious data models, and the squiggles some traders draw on a price chart.

You could also look at human behavior, which you'll find reflected in data and technical analysis, if you try not to read too much into it.

Also, consider listening to guidance and commentary from people like me and others in this space. Start with the publications on my recommendations list.

They’re all going to laugh at you

Experts may laugh at our technical indicators, on-chain metrics, and observations of human behaviors.

Are they really doing anything different when they cite the Case-Shiller index, CPI reports, FRED charts, and their own proprietary analysis?

US Federal Reserve Chairman Jay Powell has decades of experience and access to the best data on earth, and still people doubt and second-guess him.

If you listen closely, even he admits he does not have enough information for a strong conviction, no matter how it's held.

The US spent over a decade with the loosest monetary policy ever recorded and barely got any inflation in the real economy. Now, with the tightest monetary policy in at least 15 years, it can’t get inflation back to where it was.

The Fed wants 2% inflation to match that of the 2010s, a decade of sluggish growth.

Why choose that target? During the 1990s, the US had its greatest economy ever—and spent only one year below that 2% inflation level (it averaged +3% for the decade).

Is it any wonder the brightest economic minds of our generation can’t make sense of what’s going on?

If you’re listening to the macro analysts, what makes you think they know any better than any of these financial experts? Are you certain that you want to put so much faith in any of these people?  

You want to know what happens next, but you might not need to. Maybe you can do ok in crypto without the certainty of “calls,” theories, and predictions? Who knows what you might learn from analysis, reflection, insights, and commentary, or an honest and ambivalent reading of market data?

Not today, my friend

I know so many people with cash on the sidelines, waiting for “the macro” to improve, Tether to implode, Binance to collapse, the US to finish cracking down on crypto, or some other reason to get into the market.

Aunt Sally and Uncle Morton sold in October 2021. They’ll buy some from their financial advisor in 2025, but that doesn’t help you now.

Samantha Down the Street decided to stop her monthly auto-buy because her boyfriend said “Fed is raising rates and there’s too much resistance at the 200-week moving average, whatever that means.”

At the end of December, Billy the Neighbor sold his Tesla stock at a 60% loss to “avoid the crash.” Tesla stock is up 80% since then but he’s still out of the market because “it’ll go back down. Macro, bro!”

Priya in the Park says we’re going to have a recession. Now, Tony on the TV is interviewing gold bugs and crypto haters, nary a laser eye in sight.

I know people who rearranged their portfolios last year to lock in 30% losses. They expect financial assets will drop.

They’re all correct. But when? What price? How high will the market go before it crashes? How far will it fall once it does? What will you lose while you wait for that to happen? How will you know when it’s “safe” to buy again?

Safe as in “good” or safe as in “normal?”

Whether or not we get a recession and stock market crash, we can expect to see better deals on pretty much anything that is traditionally financed—e.g., cars, houses, large appliances, construction bids, and other purchases that people usually make with borrowed money.

Over the next six months, this will become more obvious. We know things will get worse before they get better.

The question is how much worse and for how long?

We’ll see. Markets are not that simple.

Recent history is spotty about how this plays out for investors:

* For most of the 1970s, we had multi-year Yo-Yos in the prices of commodities, goods, and financial assets.

* In 1982, we had a steep, short recession without much of a drop in the stock market (it was already in a big downtrend after a harsh 1970s).

* In 1990, we got a correction in the housing market along with a big rise in unemployment, but the stock market went up (minus a hiccup from an oil crisis).

* In 1995, we got a mild lull for unemployment, inflation, and GDP within a larger expansion.

* In 2001, we got a brief, mild recession with a big drop in the stock market.

* In 2007, we got a deep, long recession punctuated by a global financial crisis.

It’s hard to unwind a 20-year monetary pump with a 12-month rug pull. The Fed will have to try harder.

Will it succeed?

With every dollar saved on a new home, every penny saved on a car payment, and every rebate on a new washing machine or water heater, you get a little extra money to put towards something else. China’s reopening means more supplies of goods and stimulus for the global economy.

Almost none of those gains will go into the crypto market, but we don’t need much. Just enough to push prices higher for long enough that people think prices will keep going higher.

Everything else will take care of itself.

You are the money that you seek

If you’re following my plan, you don’t have to worry. You win whichever way the market goes.

Some say you’re getting REKT with crypto, but not me. Thanks to 2022, many people have more cryptocurrency now than they ever had before.

Does that mean they’re REKT?

I guess it depends on what you wanna get out of this market.

If you want an easy way to build wealth, you’re not getting REKT at all.

It’s hard to build a portfolio when prices start going up. With each passing day, you pay more for a smaller return.

If you want to make more of your government’s money, learn to trade, sell your couch, pick up an extra job, get a promotion, buy bonds (preferably T-bills), or whatever works best for you.

Then, as you have some money to put into this market, put it in. If you follow my plan, you’ll get better results than bad traders and people who dollar cost average, but worse results than good traders.

Bonus?

You’ll have a stake in the financial networks of the future.

Worry about rising interest rates, but also remember the opportunities they create.

Is it so terrible if we went back to a world where to make money, you have to produce something other people want and sell it for a price they’re willing to pay—rather than borrow cheap money from private funds until you can dump your equity on the market in exchange for cash?

With the profit you make from your productive economic activity, is it so bad to put a portion of those profits into speculative assets?

When these assets grow, are we so spoiled that we can’t let others share a portion of our good fortune as they buy their own stakes in these new financial networks?

Can’t we encourage others to see the reality that we see:

A technology that, if properly developed, can revolutionize the way humans create, distribute, and protect wealth in a way that benefits everybody, not just those who have access to those privileged social, financial, and vocational networks I talked about at the beginning of this post.

In doing so, is it so terrible if we make a better life for ourselves and those we care about?

Relax and enjoy the ride!

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N'day wo!

Rumors are racing around the cryptosphere that our most recent pump came from shenanigans with BUSD. A little pumpage of fake dollars into the market and the next thing you know, zoom!

As I pointed out in recent updates, maybe so, but sometimes that's enough. There are other things you might need to worry about, all discussed in my market update from February 15, 2023.

In any event, I wouldn’t get too excited about a 50% rise in bitcoin’s price. It’s pretty common at market bottoms, tops, and everywhere in between.

Also, make sure you got my airdrop report, a two-part report with seven projects that may give you potential airdrops and the steps you can take to put yourself in the best position to qualify.

None of these projects promise an airdrop but they all have that potential. They could be worth thousands of dollars. Even if you don’t get an airdrop, you get to learn about new projects that could do amazing in the next bull run.

Scroll down for a video, articles, a meme, and for premium subscribers, an important and timely note about one of the altcoins in my Altcoin Reports.

In last week’s poll, I asked “Can cryptocurrency thrive without the US government's approval?”

64% said yes. What do I think?

I agree and frankly, I think cryptocurrency stands a better chance of succeeding if the US stays out of it. Somehow, I doubt that’s how things will go. This is one of the themes of my book, Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency.

Thinking Crypto and the Blockchain Association talk about US crypto enforcement, etc

Are you worried about Gary Gensler and US securities regulators?

Don't forget about banking regulators! They don't have a lot of say in what happens with cryptocurrency, but they can make it hard for institutions, banks, and financial firms to service crypto companies or participate in crypto markets.

Ron Hammond from the Blockchain Association talks about these topics and more in this interview for the Thinking Crypto YouTube channel.

I’m sorry that this marks back-to-back weeks of content from the Blockchain Association. Pure coincidence! While it's a big presence in Washington DC, we do have other organizations to advocate for us.

Here are a few that you might want to check out:

* Global DCA

* Government Blockchain Association

* Coin Center

* Chamber of Digital Commerce

* Crypto Council for Innovation

These public interest groups are not just our advocates, they’re also great sources of information and perspective. Sometimes, even better than social media and Substack newsletters!

Follow the rules, still get in trouble

The guys at Hedgehog App got rugged by their bank.

After getting all their ducks in a row and SEC approval for the platform they’re building, their bank decided to cut ties with them after seeing how US regulators are dealing with crypto businesses.

For the full saga, read the Hedgehog post.

I’m confident that the team will bounce back and triumph. I had a similar experience shortly after I started this newsletter.

At the time, I gave new subscribers a little bit of crypto as a “thank you” for signing up. Substack’s payment servicer, Stripe, thought I was illegally laundering money or something, I’m not 100% sure because they never gave me the specifics, they gave me five days to find a different payment processor before they would shut down my account. Substack told me they would have to drop me if that happened.

Fortunately, we all worked everything out and not too long ago, Stripe actually asked me whether I was interested in taking crypto payments. How things change in just a few years!

Let's hope it stays that way.

A Quarter of Prominent New Cryptocurrency Tokens are Scams

Bottom line: Chainalysis says 25% of new tokens are pump-and-dumps.

My take: 25% seems low. Anybody can create a cryptocurrency from their laptop and release it to everybody on earth without any restrictions. Technically, they don't even have to create a token, they can just tell people they're creating a token and ask for Ethereum, then disappear. I’d expect to see more scam tokens than legitimate ones, but who am I to argue with Chainalysis?

Why we care: maybe this industry isn't as dirty as we thought.

Jobs Corner

* Den | Software Engineer | Link to position

* MoonPay | Graphic Designer | Link to position

* Phantom Wallet | DevOps Engineer | Link to position

* Paxos | Treasury Analyst | Link to position

* Alchemy | Growth Engineer | Link to position

* Nansen | Head of Demand Generation | Link to position

* Polygon | Blockchain Engineer | Link to position

* LayerZero Labs | VC Analyst | Link to position

* Fireblocks | Business Operations Manager | Link to position

* Magic Eden | Product Designer | Link to position

* Decentraland | Sr. Data Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Premium subscribers, make sure you read my email from earlier today about the project in my November Altcoin Report.

Relax and enjoy the ride!

It's Super Bowl Sunday in the United States, which always reminds me of a funny question I asked my dad when I was about five or six years old. He had some people over to watch the game and I asked them why they were watching a bunch of men run into each other and fall down.

I believe he replied, it's a metaphor for life. But not for us!

What does this have to do with crypto?

Nothing. Make sure you caught my market update from February 8, 2023.

Also, read my airdrop report, a two-part report with seven projects that may give you potential airdrops and the steps you can take to put yourself in the best position to qualify.

Some of the past airdrops have been worth thousands of dollars. These projects might have that potential. Even if you don’t get an airdrop, you get to learn about new projects that could do amazing in the next bull run. Get the airdrop report now.

Scroll down for a poll, some commentary on the US crypto crackdown, a meme, some crypto job listings, and other content you may enjoy.

Poll

US Legislative and Regulatory Outlook

This is not a newsletter about policy and regulation, but sometimes something happens that captures people’s attention across the cryptosphere.

After Kraken’s staking program got zapped, Nic Carter said the US government is trying a sophisticated, widespread crackdown against the crypto industry. Read his post about what he dubs “Operation Choke Point 2.0.”

As a former Congressional aide and current civil servant, I can assure you that the US government is not very good at sophisticated, widespread crackdowns on anything. They can do modestly effective crackdowns, at best, though sometimes that’s enough (usually not).

More likely, they’re trying to clear the way for Wall Street to launch “safe, regulated” crypto products that “follow the law.”

Those laws make no sense for crypto, but they exist. That’s all we have, for now.

Bitcoiners, relax. Bitcoin has broad support among all branches of government. Many members of Congress and public officials already hold bitcoin and advocate on its behalf. Regulators already accept it, businesses experiment with it, and some local jurisdictions embrace it.

Everything else in crypto? That’s hit-or-miss. Apparently, Americans are OK with an experimental non-governmental money system. Just don’t go creating a technology that takes profits from big banks and Wall Street.

Let’s see what Congress passes this year before we get too panicked. Kraken needs crypto, but crypto doesn’t need Kraken.

In fact, if crypto does what we want it to do, it will make Kraken’s core business model obsolete.

Speaking of Congress, listen to an interview with Kristin Smith, lead lobbyist for the Blockchain Association. In this interview, she gives you the inside scoop on where Congress’s head’s at and what you can expect for 2023.

She doesn’t expect crypto legislation this year but I suspect Congress will have to do something. Either crypto has an “echo bubble” / “disbelief rally” that forces everybody’s hands or some other crypto entity blows up and creates real urgency for Congress to do something.

For the “how will prices go up?” crowd, let’s not forget that US money has gone into crypto for a long time and hasn’t necessarily done as much good as people think. Also, US users can still move money in and out of crypto, stake and participate on their own—just not through exchanges.

And what about people in 200+ other countries who have money and ways to get that money into crypto? Developers and entrepreneurs launching new projects outside of the US and geo-blocking US users?

The US’s loss, everybody else’s gain.

Digital Dogma

With the recent drama about NFTs on bitcoin, I’ve been thinking about digital dogma, the rejection of ideas that you don’t already believe.

Read this article from Daniel McGlynn, About Digital Dogma.

The challenge, as he puts it:

[Crypto asks you to be] open to alternatives and to envision a new financial system based on encrypted ledgers and alternative currencies. But at the same time, it demands that [you] immediately make decisions about which alternatives are best.

It’s a short post but not necessarily light reading. I’d love to hear your thoughts after you read it.

Learn Metamask

One more reminder to take custody of your crypto. Get it off of the exchanges!

But learn how to do that first. Google and YouTube have so many useful guides for all of the many wallets you can use.

There are plenty of great wallets but Metamask is the most widely used. Make it easier to learn with the “Metamask Learn” tutorials.

Nobody told me to say that. I just stumbled across the website and thought you might appreciate it.

For reference, I also use Trezor, Electrum, Linen,* Atomic Wallet, Core, Martian, Keplr, Yoroi, Anchor (EOS/WAX), and Nami.

If you ever want to consult about self-custody, I’m happy to share my knowledge and experience (though I can’t offer technical support). Schedule time with me on Superpeer.

*I have a very small claim on future equity in Linen (the company that makes the Linen wallet).

Jobs Corner

* Uniswap | PhD Research Fellow | Link to position

* Coinshift | Data Engineer | Link to position

* Phantom Wallet | QA Engineer | Link to position

* ConsenSys | Brand Marketing Lead | Link to position

* Coinbase | Senior Payroll Analyst | Link to position

* The Block | Senior Financial Analyst | Link to position

* Messari | Senior ML Engineer | Link to position

* Aptos Labs | Product Designer | Link to position

* Chainlink | Fullstack Engineer | Link to position

* Paxos | Customer Success Manager | Link to position

* Flipside Crypto | Account Manager | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

All eyes on the US central bank this week.

The Fed will raise interest rates and we’ll all get a peak at the US’s January jobs situation, consumer confidence numbers, PMI data, and a bunch of Wall Street earnings reports.

Lots of predictions circulating and tons of prognosticating about soft landings, bull markets, recessions, and new lows for financial markets. I talked a little about the “macro” situation in the January monthly issue, which I posted on Medium for those who didn’t like the audio quality.

To hear Medium narrate the text, tap this button and find the “listen” or play button at the top of the page when it opens.

Also, make sure you got my most recent market update.

Scroll down for a poll, a recording of a Twitter space, a video, three articles, and some job openings.

Poll

Listen to what US crypto regulator Gary Gensler and his deputy told the US Army about investing in general and crypto specifically, from their January 11, 2023, Twitter Space.

Skip to the 5-minute mark, the first five minutes are silence.

Interviewing Blockchain Developers

Toptal published 11 interview questions for hiring managers and applicants.

Tap this button to brush up on your skills and see how you’d answer these questions:

This video brought a smile to my face. IYKYK.

Why are businesses beginning to adopt crypto payment gateways?

Bottom line: crypto-based payment platforms are growing, for the reasons listed in this article.

My take: a few years ago, I talked to my step-father-in-law about crypto. He didn't care about bitcoin, money, decentralization, or any of that. When I told him he could use OpenNode to cut his credit card processing fees from 4% to 1%, his eyes lit up. But the transition would cost a lot—new tech, a new process, training for staff, uncertainty about whether the tech and businesses would stick around, and disruptions to the “routine” that would cause him to lose sales and business. Slowly, companies like Pay It Now and OpenNode have started prying open that door, but it’s tough to overcome legitimate objections and hesitation from business owners.

Why we care: it's hard for traditional payment processors to compete with crypto’s cheap, permissionless settlement rails, but so many businesses have so much money and effort invested in legacy systems it will take a while to get “mainstream” adoption. Let’s not set expectations so high that we’ll get let down.

Aptos to the moon?

You might wonder what I think about APTOS (APT) going full Burj Khalifa FOMO moon lambo supercycle since the start of the year. 

When I reviewed it for my Top 100 list, I said it was too new to rate and, at that specific time (October 2022) when I made my review, was in the middle of a pump and dump (very typical for VC tokens when they launch). 

After the pump dumped, APT's price shot back up.

Web3daily has the best take—read their post, What's up with the sudden rise in APT? 

They said it better than I could.

That said, don't sleep on APT just because it has a low float, insiders control most of its tokens, and it will start massive token unlocks each month from November 2023 onward.

It has some deep pockets and strong talent behind it. I may cover this project in more depth at some future time (maybe, maybe not). 

Jobs Corner

* Aptos Labs | Business Development Lead | Link to position

* Stacks Foundation | Blockchain Engineer | Link to position

* Polygon | Software Engineer | Link to position

* ClubRare | Growth Marketing Manager | Link to position

* Outlier Ventures | Head of Investments | Link to position

* Binance | Senior Data Engineer | Link to position

* Ava Labs | Research Analyst | Link to position

* Chainlink | Engineering Manager | Link to position

* OpenSea | Senior Software Engineer | Link to position

* Risk Labs | Head Sales Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

In this month’s issue, I’ll talk about monkeys, recession data, crypto market trends, and the separation of money and the state.

Money is always and everywhere a social phenomenon

When researchers trained monkeys to redeem tokens for food, the monkeys didn’t just trade those tokens for vittles.

They also sold them for sexual favors and stole them when the researchers weren’t looking. In one instance, a capuchin tried to pawn off a slice of cucumber as a coin—perhaps the first documented attempt at counterfeit money in the primate kingdom.

Are we really so different than those monkeys?

After thousands of years of research, philosophers and economists still debate what characteristics make money desirable.

Do we need inflation? If so, how much? Should we use specie as backing? Does it work best in digital, with paper, or as a commodity? Should it represent an asset or a debt? What’s the best way to create and distribute it?

For them, it’s not enough that people can trade it for the things they want. Utility is not sufficient. Communities can’t decide on their own what they use as currency. Somebody in charge has to decide that it’s worth something.

The first recorded instances of money come from ancient temples and administrative buildings.

These records best resemble modern ledgers—a list of contributions to the temple or its merchants. Each thing was usually measured in bits of metal.

In the modern sense, a price.

Authorities set the terms, e.g., 1 bit for a basket of wheat, 2 bits for a small fish, 3 bits for a big fish, and so on.

Historians believe this was either a system of rewards, a way to account for individual productivity, or a substitute for the actual commodities they represented. Possibly all three.

Form and fungibility varied from one place to another, but generally, this money was more like Dave & Buster’s tokens than the cash we use today.

Modernity beckons

Somewhere along the way, we moved from bits of metal to numbers on a screen, from clay tablets to tablets made of plastic, metal, and glass. Units got smaller or larger, more or less portable, and easier to divide evenly and exchange with each other.

Technology changed, but function didn’t.

For our primate ancestors, a substitute for food. For our ancient leaders, a reward for industriousness or a measure of status. With modern technology, numbers in a spreadsheet and pieces of paper with fancy pictures on them.

We believe that our governments will protect this money, even though we have no control over their actions and only a vague notion of what consequences may come from their decisions. Many of us think we have some control over its use, when in fact we have only as much control as our governments will allow.

Our governments use elaborate financial engineering and market interventions to manipulate its value, all to control your behaviors and perpetuate the belief that it means anything more than what you can buy with it.

Yet, when you try to redeem a $20 bill with the Federal Reserve, they will give you a $10 and two $5s.

I can empathize with the people of 15th-century Europe when they gazed up at the massive public buildings, gilded chapels, and high arrogance of the Catholic Church.

Church authorities believed anarchy would ensue if not for religion to control the people, tell them what is right and wrong, and validate those who own wealth and control the system.

A few brave souls proposed to separate the church and the state.

Some had selfish motives, others had noble goals, but the result was the same: religious freedom.

This freedom gave rise to new liberties and innovations in thought, psychology, philosophy, and spirituality. It gave humans new outlets for creative expression, happy relationships, and psychic joy.

Finally, anybody could live a fulfilling life without conforming to a single religion—or any religion at all.

A new religion

Perhaps we can say the same about cryptocurrency? Once we separate money and the state, we can unlock new liberties and innovations in economics, justice, governance, and commerce.

I suspect if bitcoin maximalists are honest with themselves, they will recognize the religion that they have built around bitcoin.

What is religion if not strength of belief? What other institutions of humanity have persisted forever across time, distance, and culture? What other concept of the world encourages people to aspire to something better?

Religion needs no backing. It needs only faith.

In their religious fervor, bitcoiners created a type of money that inspires a strength of conviction and belief that’s every bit as strong as the mainstream’s adherence to any government currency or any other asset that humans perceive as valuable.

Like the Catholic priests of old, the legacy financial authorities look down on this.

After all, they've already figured everything out, how on earth could anybody have any notion of money other than what they say it should be, right?

Monetary policy must revolve around central banks, just as the sun and stars must revolve around the earth. You can see this with your own eyes! They have charts, astronomers, and professors who say it’s true, so it must be true.

Who are you to question their authority?

Mark gets people REKT again

With the sudden burst in crypto prices, you may already be eager to trade your tokens for more of your government’s money. To trade your stake in the financial networks of the future for a bigger share of today's closed systems of control. To buy back into the government money monopoly.

That makes sense.

Your financial and monetary authorities have stated openly that they want to make you poorer, take away your jobs, and crush your profits to preserve the value of their currencies and perpetuate the status quo.

Like the priests of the ancient temples, they have all the power. “Don’t fight the Fed.”

Besides, you have bills to pay, things to buy, and mouths to feed. You can’t eat financial liberty.

After all, everything’s going to collapse. Risk assets will get crushed. Take a flight to safety.

Are you sure?

Since May 2022, the crypto market has behaved exactly as it has at the bottom of every major market bottom. Remember this graphic?

Now look at this:

It’s cool, Mark, Imma still take profits, bro

Sounds good. Whose profits are you taking?

I took profits in 2018 and 2019. Most of my altcoins went up 100-400% at some point during that time. I sold half after 2x-3x gains.

Huge regret. I missed out on a lot of permanent upside to avoid a temporary downswing. Some of my altcoins are still up more than 1,000% (even after crashing more than 90% from their all-time highs).

That’s a lot of gains I lost from de-risking.

By the end of 2019, I learned my lesson, but only after I paid my government 35% of my gains, forked over more money in exchange and transaction fees, and missed out on all of the growth from that moment to today.

At the time, it felt responsible. Brilliant, even.

In hindsight, I lost a lot of money. I should've stuck to my portfolio strategy.

For whatever reason, I thought I needed to treat crypto differently. Everybody said taking profits is the safe thing to do. Risk management! Sell 50% on the first double.

It’s tough to squeeze the most juice out of this market when you’re always selling on the way up.

Never sell?

To be clear, I'm not saying you should never sell.

I happen to agree with Dr. Richard Smith, who said “90% of risk management is knowing when you’ll sell before you buy.”

After all, what's the point of having this crypto if you never use it? At some point, you're going to trade it for goods, services, or your government’s money. That’s the whole point.

Sell anytime you want, whenever you need money. Just like you’d sell a couch, your time and labor, or anything else.

When will I sell?

When my plan says to do so.

Hopefully, never, but if we see the two signals that I put into my plan, I’ll exit 100%.

Until then, buy low and grow. Set aside cash for whenever bitcoin’s price goes into the buying zone of my plan. Recognize when the market goes up a lot, it will come down a lot. Let the market rise and catch it when it falls.

If you’re following my plan, you could be down as much as 50% but you’re probably close to even and possibly up as much as 350%.

Compare that to dollar cost averaging. If you did that instead of following my plan, you’re down 25% since November 2021 and down 22% since I published my plan.

(These numbers are rough estimates.)

If you traded the market, you may have done phenomenally better but you're probably doing far worse.

With my plan, you’ll also get alerts when bitcoin’s price enters and exits my buying zone.

Today, my plan says to set aside money for the next opportunity. That opportunity may come at any moment—possibly by the time you read this issue.

2023 cryptocalypse?

Mark, we spent all of last year going down. Did you see this scam pump? Don’t be like the sheep! Even Teeka Tewari says not to buy cryptocurrency, that this will be a terrible year.

Seems reasonable. More terrible than 2022?

Sometimes, markets can surprise you. One year ago, a whole bunch of people said we'd be in a recession by now. Now they're saying that a recession will come next year.

What happens if next year comes and there’s still no recession? Or, what if we’re already in a recession, we just don’t know it yet?

Headlines tell you everybody’s getting laid off even as the economy continues to create more jobs with each passing month.

You and I have expected a recession since the US economy reached full employment (generally considered 4% unemployment or less). Within five years of reaching full employment, we have a recession, like clockwork, as you can see in this chart.

We reached full employment at the end of 2021. Expect a recession by 2026, if not sooner.

We see something similar with yield curve inversions, when long-term bonds yield less than short-term bonds. Every time that happens, we get a recession within two years. We’ve had an inverted yield curve since February 2022. Expect a recession by 2024, if not sooner.

Unless you use the old definition of recession, “two consecutive quarters of negative growth.”

If you use the old definition, we had a recession in 2022. Does that count? It used to.

For all we know, another recession has already started. The way the US labels these things, it only does so in hindsight. We won't find out for at least another six months whether the economy is in a recession today.

Macro analysis is confusing!

Whether we’re in a recession or not, we have higher interest rates and more economic stress now than we did last year. So there's no reason to expect anything will get better before it gets worse.

The question is, how much worse? Enough that we need to upend our financial plans?

The economic data says . . .

Any objective measure of economic activity looks really bad for the US.

While that may not matter where you live, it’s not good for the world. The US has the biggest economy and more than one-quarter of global wealth. Wherever it goes, the rest of the world follows.

Many forward-looking indicators are so dismal that you only see comparable readings after a financial crisis—and we haven't even gotten the financial crisis yet!

How can anybody make sense of it?

For example, ISM new orders, a measure of demand for manufactured goods. Look at the drop last month.

This is the first time we’ve seen a drop that severe outside of a recession. All other times the metric moved below 50, the economy had already shrunk and the Fed was cutting rates. Today, the opposite is happening.

Does this mean manufacturers are done for? Did they save enough money during the boom of 2021 and 2022 that they can weather the pullback?

Or US household debt. It just reached its all-time high, just as rising interest rates make that debt harder to service.

Once you adjust for disposable income, household debt has almost reached the same level it did for the entirety of the 2010s.

(Note, this data accounts for the way those higher rates increase the payments people make when they pay down their debt.)

Even if it makes a big leap, it still reaches 2011 levels at best.

Does this mean US households are on the brink of massive default? Or are we just getting back to normalcy?

We’ve known for months to expect great deals on cars in 2023.

Already in the US, used car prices have cratered. It’s a worse year-over-year drop than anything we saw during the Bush recession, the Global Financial Crisis, or the COVID crash.

Delinquencies have started creeping up, too. The most recent data shows late payments trending back to pre-pandemic levels.

On the other hand, dealerships still sell cars as quickly as they get them.

That’s already changing as buyers disappear and inventories grow, but we still have a long way to go before we get into the historical danger zones.

Does that mean imminent collapse? Do dealerships have enough cash and solid inventory management practices to manage the transition back to a healthy market?

Housing?

Mortgage applications have tanked and buyers are canceling build orders at the highest rate ever. That’s bad for builders and a sign of falling confidence and tighter household budgets, but it also holds back the supply of new homes.

That’s good because 2023 will see a glut of failed Airbnb rentals, unnecessary beach houses, and homes that the soon-to-be-unemployed will need to sell.

Also, home equity is still at a historically high level and fixed-rate mortgages are historically low. People with houses have less incentive to sell and more reserves to dip into during times of hardship.

Wages keep going up and the US population continues to grow and get younger. People need to live somewhere, and if this recession lowers the prices for goods and services, anybody who keeps their job will see an increase in purchasing power from the money they make, while housing prices should continue to fall for the foreseeable future.

Does that mean the housing market needs to collapse? Or, can we go back to the long-lost days when anybody with a decent job and good credit can afford to buy a house?

The world economy isn’t looking much better. Global Credit Impulse, a measure of new household and commercial debt, has never looked this bad on a 12-month forward projection.

Yes, it’s worse now than when the US housing market was emerging from the subprime meltdown, China’s exports had only just started to recover from their 2008 collapse, and Europe was in the throes of a debt crisis.

Does that mean we should expect a similar fate? Or, that we should expect a recovery because that’s what happened the last few times we saw such extremes?

I’m glad I don’t write a “macro” newsletter

Messy, messy stuff—and I left out a lot of other data that’s just as confusing!

Does it matter that every previous time we saw the terrible readings in those charts, the Fed was lowering rates, but today it’s still raising rates? Does that make the prognosis better or worse?

Also, what happens if the Fed sees these same leading indicators and decides to change its behavior in advance of the consequences predicted in these charts? Can we avoid the same fate as previous times?

Are these readings a warning about the future or the result you get when you go from an artificial, globally-coordinated pump-and-dump back to “normal” on historical benchmarks? Are they statistical quirks or durable findings?

We shall see.

Sometimes, fate intervenes.

You spend 2022 expecting a European energy crisis, so you stockpile supplies. When an unusually warm winter comes, you end up with a massive surplus. Crisis averted.

Last year, Pakistan and Egypt seemed destined to default on their sovereign debt. They may still, but thanks to government interventions and outside assistance, they've pushed off the day of reckoning—perhaps, forever.

China’s real estate sector is being held together by gum wads, rubber bands, and a whole lot of government support. Maybe that's enough?

On top of that, the federal reserve has facilities and liquidity programs they did not have before 2020. Do these facilities and programs change the dynamics, our expectations, and the Fed’s ability to respond to changes in the markets?

Challenge the assumption

What if the underlying cause of economic insecurity and instability isn’t a change in monetary policy? What if the cause is the legacy financial system itself?

Why is this system unsustainable without extensive government intervention and market manipulation?

If chimpanzees and capuchins can use simple tokens to satisfy their natural desires, why is it such a struggle for humans?

What have our religious, er, I mean, financial authorities done to make this so complicated?

It’d be nice if we could test monetary and economic theories in the real world. Or, build alternative systems that do not depend on human intervention, financial engineering, and accounting gimmicks. Or, if they do, they do so in a public way that people can choose or choose not to accept.

With crypto, we can do this.

Maybe we don't need PhDs in lab coats dispensing tokens to primates or high priests throwing us rewards for doing their bidding.

Wouldn't it be nice to find out?

Isn't it time we tested the assumptions that our economic experts take for granted? Can't we use this new technology to validate centuries of human thought, invalidate archaic assumptions, and perhaps create new avenues of discovery and exploration?

Blockchain and smart contracts let us test new concepts with scientific precision in the real world. This is impossible with legacy technology.

Mark, why are you talking about monkeys and economics? Just tell me if the bottom’s in, and what crypto prices will do next!

I talk about that in my updates for premium subscribers. If you’re not on the premium plan, upgrade your subscription now.

When you subscribe to the premium membership, you get regular updates on the market, commentary on altcoins, and technical, on-chain, and fundamental analysis.

Don’t stop thinking about tomorrow 

While bitcoin’s price remains uncomfortably low against historical benchmarks, it’s behaving as it normally does at market bottoms. In fact, if bitcoin’s price stays above $15,600, the bull market started more than two months ago.

That may sound crazy, but that is the literal truth, even if it doesn’t feel that way.

Fortunately, it will be months, possibly years before people agree on whether cryptocurrency is in a bull or a bear market.

If you’re making your decisions based on whether or not bitcoin is in a bull or bear market, take a step back and look at the situation.

* We just broke a small falling wedge, a bullish pattern. If that pattern completes to its expected target of $26,000, it will break a much larger falling wedge, with a target of $55,000 within the next year or so.

* In May 2022, we saw the first signs of behavioral capitulation. In June 2022, we saw all of those signs.

* In November 2022, we lost the #2 crypto exchange and bitcoin’s price fell barely 20%—a trivial move.

* Over the past few months, we’ve seen positive growth in new addresses, short-term HODLer behaviors, and accumulation patterns. We’ve also seen bottom levels on almost every on-chain metric.

A drop to $14,000 still makes sense, but if you're waiting for that to happen, you could be waiting forever, as I explained in a recent post, Is $14k bitcoin the new $100k bitcoin?

Does that mean you need to buy crypto now?

No. You never need to buy crypto. Why would you trust your fate to a speculative financial experiment?

Know what you’re getting into

When you buy crypto today, you’re not getting cash flow. You’re not earning profits and dividends.

You’re getting a little bit of the wealth that these global, decentralized, open, permissionless protocols will deliver to humanity in the coming years.

(With some altcoins, you’re also getting rewards from staking, delegating, validating, or participating.)

This is a bet on the future, not today. Choose now whether you want crypto or more of your government’s money. That decision will shape everything.

If your goal is to use crypto to make more of your government’s money, there’s really no reason to follow my plan but you may want to upgrade your subscription anyway.

In my updates to premium subscribers, I sometimes point out some very simple, obvious trading opportunities. I also share signs and signals that can help you identify opportunities and risks as market conditions change.

Whatever you want to get from this market, I’m happy to continue sharing my perspective, insights, and knowledge.

For the intrepid few who can brave the challenges that this market brings, who can weather the ups and downs, who can navigate the rough waters that lay ahead, the next few years will be easier than you think.

What happens to centralized entities doesn’t change the value of the decentralized protocols they’re using. Sometimes, it proves their worth.

The market can go up and down 50% at the peaks and at the bottoms. Also, at every price in between.

It’s nice to have lines on the chart as guideposts. It’s great to have data to help us make sense of what people are doing. It’s useful to have metrics and models to help us conceptualize the madness and absurdity of humanity.

We need a leg up on the chimpanzees and capuchins. We need an alternative to the legacy financial system.

Let’s not get so wrapped up in charts and dot plots that we forget where this journey leads:

Freedom.

Relax and enjoy the ride!

Bitcoin’s price keeps zooming. Echo bubble? I just posted an article about that.

A few commentators have commented on the lack of “spot buying,” meaning they don’t see a lot of people buying from the open market, e.g., exchanges or peer-to-peer platforms.

Did they look at what miners are doing and recognize private brokers' role in matching buyers and sellers (including but not exclusively OTC desks). Once you dig a little deeper, you’ll see at least $2 billion worth of extra bitcoin switched hands behind the scenes last week.

Was that part of a large private deal? An insolvent exchange urgently buying bitcoin to fulfill customer redemptions or a paper shortfall? Mere coincidence? Something else?

Whatever it is, it’s significant buying pressure that never gets captured on trading charts and order books. I talk about this, other key metrics and behaviors, and five more altcoins in my update from January 18, 2023. If you missed that update, get it now.

Make sure you’re on the paid plan so you get these sorts of insights and the rest of the analysis I provide.

Also, make sure you got my BUY/SELL/HODL alert from two weeks ago.

Scroll down from some articles, a meme, a video, and job listings that you may enjoy.

Poll results

In last week’s poll, I asked:

Survey respondents voted evenly for each squiggle, with a slight preference for squiggle B, the most bearish option.

What do I think?

I’m happy to see how it goes and prepared for all outcomes. What do you think?

I’ll have another poll next week.

Bitzlato

This week, US authorities arrested the Russian head of an obscure Chinese crypto firm, Bitzlato. They made a big deal about it, with a press conference, announcements to news outlets, and credit to French authorities, Europol, and partners in Spain, Portugal, and Cyprus.

Why all the fuss about this tiny exchange?

According to multiple on-chain Twitter sleuths, most Bitzlato funds went to Binance. Binance was not mentioned at the press conference or in any press releases, but it begs the question:

Was Binance a money mule for Bitzlato’s criminal entities?

Conspiracy theorists, please advise:

* December 12, 2022: “Sources” say US prosecutors may charge Binance officials with money laundering and sanctions evasion.

* January 7, 2023: Binance says it’s cooperating with US investigators and “working with virtually every regulator across the globe.”

* January 18, 2023: US authorities take down a tiny crypto exchange that transacts extensively with Binance. In doing so, the agencies say that they’re going to clean up the crypto markets, specifically, the exchanges.

Some of you might look at that and conclude: “after pressure from US agents, Binance rolled on Bitzlato and probably spilled the beans on other ‘bad’ exchanges. US authorities are about to crush smaller exchanges while Binance gets off easy in return for their cooperation.”

I would say that’s a fictional account of events we don’t know anything about. It’s fun to make things up, right?

Also, one more reason to get your crypto off of exchanges. Learn how to do it safely first! Start with the free advice and tutorials from DAN Teaches Crypto.

If you ever want to consult with me, schedule time with me on Superpeer.

Going along with those observations, CoinDesk shared a chart of OTC balances. Highest since June 2022, and all from a big spike that’s not particularly large, but very sudden and noticeable.

Note, the buyers are not necessarily institutions, they’re just too big or well-known to source their deal from the open market. Last week, there was simply not enough bitcoin available for sale at a price they wanted to pay, so they needed to arrange for a private deal.

Olympic legend Usain Bolt lost $12 million in savings to a scam

Seems the internet algorithms discovered that I write about crypto, because they keep feeding me “scam/fraud” stories in my feeds.

This one involves a retirement fund, not crypto.

Usain Bolt got scammed out of the retirement savings he deposited with a fraudulent investment firm.

The lesson, children?

Never put money into a retirement account.

They’re all scams. The only way to make money with a retirement fund is to sell your holdings for more than you bought them for. Massive Ponzi, even when you include the staking rewards. Stay away!

(Note—I hold a substantial portion of my investments in retirement funds.)

Real World Assets Poised to Be DeFi Growth Engine: Coinbase

Bottom line: Coinbase thinks DeFi will split into permissioned and permissionless realms, with permissioned DeFi platforms servicing the tokenization of real-world assets (RWAs).

My take: one more way for Wall Street to make money off of crypto. They can’t do business on non-KYC, non-AML platforms that don’t have leaders or fit US legal standards. There might be some money in having a subsidiary or some other regulated platform to give their clients new ways to sell financial products, services, and assets, right? If Coinbase can serve as the bridge between the real world and crypto, similar to AOL in the 1990s, it could see a lot of growth in the coming years.

Why we care: regulatory capture does not necessarily mean bad things for crypto. We may end up with a system where you have a legacy framework for institutions while common people like us continue to interface directly with protocols and tokens through our private wallets.

Jobs Corner

* CoW Protocol | Data Analytics Team Lead | Link to position

* WalletConnect | Kotlin / Android Engineer | Link to position

* Subspace Labs | Quality Assurance Engineer | Link to position

* Aurora | Legal Counsel | Link to position

* Monad Labs | Developer Relations Engineer | Link to position

* DXdao | Treasury Manager | Link to position

* Offchain Labs | Blockchain Developer | Link to position

* prePO | UX Engineer | Link to position

* Safe | Senior Data Analyst | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

WhatsApp, Telegram, Discord, and Twitter tell me altcoins are pumping, but most of mine are up only 30-200% in the past 7 days. Not sure what everybody’s getting so excited about.

Catch my most recent update for my assessment of the situation.

If you’re thinking about taking profits, add costs for taxes and fees. And if you’re one of the “sell half at the first double” people, you need to sell more than that to pay your taxes.

In the US, that means selling an extra 20-35% of your tokens in addition to the half you got “for free.” In other countries, you may have to pay 50% or more to your government.

Isn't that ironic?

You give up 60% to 75% of your investment to get back the money you started with and still expect to get a 100x moonshot on the 25%-40% remaining on your investment.

Are you planning to buy after the inevitable crash? You just might see your favorite altcoin go up another 100-500% before that crash sends prices down 50-90%. If that very-realistic scenario happens, you’ll end up buying back into the market at roughly the same price that you sold at.

Depending on what you want to get out of the market, that may be a perfect decision. I'm still sticking to my plan.

Watch this video for a little more of my thoughts about what to do now.

When the market goes up, you never feel like you put enough money into it. When the market goes down, you always feel like you put too much money into it. Change your CoinGecko app to show prices in BTC terms, it may help calm your nerves.

Scroll down for a poll, articles, a meme, a podcast, and some job listings.

Poll

Mt Gox?

Are you wondering why the $2 billion in Mt. Gox distributions didn’t push the market down this month?

Because those bitcoins did not hit the market. The Mt. Gox repayment got pushed to March at the earliest.

That means we still have $2 billion in bitcoin hanging over the market for at least a few more months, waiting for trustees to distribute. Plus the fracas with Digital Currency Group, a government takedown of Nexo, more FTX turmoil, higher interest rates, and possibly a wave of crypto exchange failures.

Can’t catch a break, can we?  

Mark Yusko Chats DCG & Grayscale Bitcoin Trust

Former US Congressional candidate Matthew Deimer interviewed hedge fund manager Mark Yusko about DCG/Genesis/GBTC and what you should and shouldn't worry about regarding the 600,000 bitcoins sitting in the Grayscale trust.

If you’re at all interested in what’s going on, listen to the interview.

You can also find this interview on Spotify and Apple Podcasts.

YouTubers said they destroyed over 100 VHS tapes of an obscure 1987 movie to increase the value of their final copy. They sold it on eBay for $80,600.

Hmmm…

Turns out some YouTubers bought all the copies of a movie, hyped it up to their followers, artificially manipulated the supply to create false scarcity, then sold out their collection for a profit—all openly, in plain view, for the public to see?

Good thing those VHS tapes weren’t NFTs or else US regulators would have already opened an investigation.

NFT creators, here is your new, US-approved strategy:

* Start a YouTube channel instead of a Discord server.

* Buy the entire supply of an old, unused NFT collection. (Don’t create your own.)

* Call them “tapes” and tell your followers about them.

* Burn all but one (or a few).

* Sell the remaining NFTs, er, “tapes” on eBay instead of OpenSea. (Like these guys did.)

Run the same playbook, just change what you call it, where you sell it, and remove all utility from your NFTs. If you’re open and transparent about it, Gary Gensler will let you sell whatever you want.

JPMorgan says it was duped by founder who made up 4 million customers

Bottom line: JP Morgan invested $175 million into an app designed to help students through the college financial aid process. That app was a fraud, as was its founder (who, like SBF, was on the Forbes magazine’s 30 under 30 list).

My take: now’s no time for the “student loans are a scam” bit. Anybody can make a case that college is a Ponzi scheme and student loans are really bad investments, but both serve valid needs. I’m not surprised that a company that laughed at FTX investors got zapped for the same thing with one of its own investments. There are no safe investments. The moment you have a penny in your hand, you have a penny at risk (or in this case, 17,500,000,000 pennies).

Why we care: because scams and frauds exist everywhere, not just in crypto. Also, the Forbes 30 under 30 list seems just a little bit shadier now, doesn’t it?

Jobs Corner

* CertiK | Digital Marketing Analyst | Link to position

* Ontropy | Senior Blockcahin Engineer | Link to position

* Nascent | Venture Analyst | Link to position

* Gemini Exchange | Senior Product Designer | Link to position

* Gelato Digital | Developer Relations | Link to position

* DXdao | Treasury Manager | Link to position

* Nethermind | Dev Ops | Link to position

* Zapper | Data Engineer | Link to position

* DeFiYield | SEO Expert | Link to position

* Aurora | Legal Counsel | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

I heard from YouTube that crypto’s about to blast off or collapse within the next week. Twitter tells me it’ll trend down forever until the US central bank starts printing money again. Reddit says it’s all dead.

I guess it depends on what you consider “blast off,” “collapse,” “trend down,” and “dead.”

Does a 20% pump to $20,000 count as a blast-off? Does a 20% drop to $14,000 count as a collapse? For any other asset, those are big swings. For crypto, those are fairly tame moves.

If bitcoin’s price falls $5 each day for the next six months, it’ll reach $16,000. Does that count as “trend down?” On a weekly trading chart, that price is a “higher low” (a structural uptrend).

Can something be “dead” if it still exists?

As my college professor said, "where you stand depends on where you sit.”

Robert Shiller won a Nobel Prize for demonstrating that financial assets have no intrinsic value and Harry Markowitz won a Nobel Prize for proving that risky assets can boost returns without adding volatility to a financial portfolio. Warren Buffett disagrees with both of them.

I’m not one to challenge Nobel Prize winners or question Warren Buffett, but they can’t all be right. That didn’t stop any of them from being successful.

What does that mean for you?

Whatever you want it to mean. It’s 2023, let’s stop fussing over semantics and appreciate what’s going on around us.

Scroll down for some content you may enjoy.

Make sure you caught my most recent updates:

* January 4, 2023

* December 28, 2022

* December 21, 2022

Also, I could use your help thinking through potential outcomes from problems at Digital Currency Group, the parent company of the Grayscale Bitcoin Trust (a profitable financial product) and Genesis (a failed trading desk).

DCG owes up to $1.6 billion that it can’t repay and it’s under investigation for fraud and other crimes. This week, its creditors may force it into a do-or-die decision about bankruptcy.

As long as somebody buys or takes over GBTC and the other funds, why would anybody need to sell any cryptocurrency as a result? Creditors take a bath (in fiat) and we move on . . . right?

Everybody invested in DCG with fiat. All claims are fiat. Grayscale can’t sell bitcoin from the trust. DCG has less than $1 billion worth of crypto (otherwise they’d have already sold it to pay everybody back) and if there’s any crypto related to the financial dealings, it’s already lost or sold . . . right?

The psychological aspect is obvious. Some people will sell bc either they’re scared or they believe “bad news must mean prices have to go down.” Some people who might have put money into the market will hold off until later or give up the idea totally.

What am I missing? Leave a comment to tell me.

I actually don’t mind people giving crypto to centralized entities.

Sometimes, centralized entities give you rewards or other benefits for keeping your crypto with them. As long as you’re aware of the risks, you can actually do better with them than on your own or with a DeFi protocol. I still keep a list of Crypto Savings Referral Links.

That said, it’s the exact opposite of what crypto’s designed to do. Ironically, crypto will make most of these entities obsolete. Which is why I found this tweet humorous.

AltcoinZ

Please read my most recent report on Top 100 Altcoins—Which Will Survive Through the Bull Market?

It’s my take on each of the top altcoins as I reviewed them in updates from September 2022 to January 2023, with the following information for each:

* What problem it tries to solve.

* My brief thoughts about the project.

* Its performance against bitcoin over the past year or two (also previous history as applicable).

* Video commentary when available.

* Survivability score—how likely will it stay in the top 100 through the bull market?

If you’re ever going to get into altcoins, now’s the time. Hopefully, my commentary helps you make a decision about what projects to look for. You may learn something along the way!

I’ve bought an altcoin every two weeks since June 2022, all within my portfolio strategy.

I should finish my altcoin buys around the end of March or early April. Paid subscribers know what I’m buying as I buy it.

Once I’m done, I may allocate to altcoins here and there as market conditions allow, or I find a new project, but I will mostly stick to bitcoin, occasional altcoin reports, and general commentary about the altcoin market (rarely about specific altcoins).

Non-Fungible Apps

Ignacio de Gregorio dives into an emerging cryptocurrency technology: non-fungible apps.

NFAs tokenize applications as immutable smart contracts, eliminating central points of failure, regulatory seizure, and the risk of losing access to a valuable product or service when a team or community disappears.

(This doesn’t solve the data problem—somebody needs to store all these apps and related information somewhere that’s as immutable, secure, and verifiable without bloating the blockchain. I suspect we’ll solve that problem with decentralized storage platforms like Arweave or 0chain, but that’s a story for another day.)

For a better and more fulfilling understanding of the NFA concept, read the article, A revolution is coming to Crypto apps now.

It’s behind the Medium paywall but you get three free articles when you visit the page from a fresh browser.

WAR ON CODE - REKT.NEWS MEETS THE DEFIANT

Rekt News and The Defiant shared an article summarizing a conversation between Defiant reporter Marvin Lanes and the anonymous Rekt team.

Marvin’s covering Tornado Cash and the trial of Alexey Pertsev. You’ll find interesting insights in the interview, which covers the actual court hearing, Pertsev’s actions, and the Dutch and US government’s motives.

As we move through the regulation/litigation stage of crypto’s evolution, I’d encourage you to pay attention to your government’s actions with nuance and an open mind. As we’ve seen lately, it’s sometimes hard to know who’s the hero and who’s the villain.

For reference, here’s the video that spurred the conversation.

Mark Cuban says a wash trading scandal will cause crypto’s next implosion

Bottom line: a famous US entrepreneur and TV personality says a regulatory crackdown on wash trading (pumping and dumping tokens) will crush the crypto market.

My take: everybody knows exchanges are wash trading or turning a blind eye to wash trading on their platforms, but wash trading is by definition market neutral. I’m not sure why its removal would cause an implosion. You can expect it will cause some naïve crypto participants to sell out of fear and might make others move their money into some other asset. How much? If anything, we should cheer the removal of a harmful, shady practice.

Why we care: it’s always good to recognize short-term risks that may never materialize.

Should We Legalize Market Manipulation for Crypto?

Speaking of market manipulation, I floated a regulatory idea after I heard that a Twitter personality got arrested for rugging a DeFi protocol.

Basically, I advocate for a safe harbor or global fight pit for new DeFi protocols. Everybody’s incentivized to make as much money as possible with these protocols through any means necessary, but only within the confines of a specific, public, real-world environment that’s gated or separate from the financial system.

Anybody can participate and the winners get to keep whatever money they make. Like iron sharpens iron, a proving ground for DeFi protocols with proper disclaimers so people know what they’re getting into.

Protocols that fail will die and the hackers/scammers will reap big rewards. Protocols that survive will exit the safe harbor zone and their token holders will reap big rewards.

I published the article as a Medium post for Data Driven Investor and posted it as an NFT on Mirror, Should We Legalize Market Manipulation for Crypto?

This idea seems crazy but it’s basically what we already have, just without the backroom, hidden arrangements and daisy chains that spread contagion. Also, it’s ridiculously expensive to do something like this with legacy technology (and probably not even feasible) but with cryptocurrency, it’s not nearly as hard.

Food for thought.

Jobs Corner

* CoinList | Data Engineer | Link to position

* Uniswap | Community Lead | Link to position

* Reddit | Solidity Engineer in Crypto Security | Link to position

* Okcoin | Product Manager | Link to position

* Fireblocks | Senior Financial Analyst | Link to position

* Interlay | Community Manager | Link to position

* Niftys | Account Manager | Link to position

* MetaStreet Labs | Solidity Engineer | Link to position

* Nethermind | DevOps Engineer | Link to position

* Oasis Protocol | Head of Marketing | Link to position

* Zora | Finance Lead | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

In this month’s issue, I’ll reflect on predictions and some bigger-picture themes that will play out in 2023 and the longer term.

Predictions are easy when you make them up

One year ago, I gave a prediction article to Luckbox and Bitcoin Magazine.

Both publications got the same draft, but their editors revised it in different ways (sometimes to convey a message I didn’t intend, especially as pertains to altcoins), so I’ll provide both versions:

* Luckbox version

* Bitcoin Magazine version

In a nutshell, I predicted something kinda like what we went through in 2022—a terrible time for crypto but a great investment opportunity for us.

How did I know?

I didn’t. I made it up.

Predictions are always nonsense, but it’s fun to speculate. I did that last year with those articles. I also did it in 2020 with my Special Issue: How High Will Bitcoin Go?

Do you want to read the 2023 prediction that I gave to Luckbox magazine? Read it here:

(Bitcoin Magazine didn’t ask this year.)

As with my other predictions, use it to visualize risks, identify opportunities, and get some perspective about what will cause things to happen in the future. Don’t make any decisions based on them.

Nobody can be right or wrong about things that haven’t happened yet. Even in hindsight, good people can disagree about facts, causes, and the significance of the outcomes—and whether the things happened at all!

Sometimes, you end up being right in spite of yourself. Even the worst poker player can make a gutshot straight draw.

Other times, you expect a perfectly reasonable outcome that doesn’t happen. You flop trips but lose your stack to that gutshot straight.

Right and wrong are closer than you think

Anyway, for the first four months of this year, I thought my 2022 prediction was way wrong. I said as much in the April 2022 issue.

Then, May brought disaster. UST collapsed, triggering a cascade of misfortunes.

Maybe my 2023 prediction will go the same way? Start in one direction, then veer in a totally different direction and end the way I predicted?

I guess we’ll see. Could go the other way—start with something that matches my prediction and end with the opposite.

Dammit, Mark, always with the 50/50 analysis!

True.

If it makes you feel better, my U2R data model says the price will go up eventually, and I put a lot less effort into U2R than any of my predictions. Does that count as strong convictions loosely held?

Markets shift on a dime

In April 2022, we saw a confluence of price, stablecoin activity, movements of bitcoins, and macro conditions—a toxic brew that created dangerous conditions for the lending platforms, people who borrowed against their crypto using those lending platforms, and any private deals related to those positions.

Do you remember this video or any of the other content I posted in April and May?

In hindsight, you might think the market had to collapse.

Why? Risk abounds in all financial markets. Often, they resolve themselves peacefully or never come true.

We only knew the market had cooled off. “Bearlish,” as I put it, in the middle of a three-month upswing, waiting for more shoes to drop, hoping they wouldn’t, and recognizing that even if the market tanked, nobody could say how bad things would get.

As it turns out, very bad.

You can point to many reasons that this market fell apart so drastically. Excessive leverage, bad bets, speculator fatigue, rate hikes, US regulators, and so on.

While that certainly didn’t help, I’d propose a different cause:

Fraud. Blatant fraud.

Not the ever-present pump-and-dumps. Not yield-bearing protocols subsidized by speculators. Not well-meaning developers whose experimental financial technology failed (or worked exactly as designed, but with bad consequences).

Just plain old human fraud: 3AC, Celsius, FTX, and other entities that lied about their businesses and stole other people’s money.

We hang the petty thieves and praise the great ones

Which brings us to the biggest of the big fraudulent frauds, Sam Bankman-Fried.

Everybody knows what happened now. Very simple story:

FTX took user deposits to pay off Alameda’s bad bets and fund FTX’s expansion.

“FTX experienced a bank run against illiquid assets that lost value too quickly.”

—People

Umm…

FTX is an exchange, not a bank.

There should never be a bank run—your crypto should always be there!

The terms of service even say so.

It’s like if you left your car with a valet. Later that day, you saw the head of the valet company drive off in a car that looked just like yours.

When you asked for your car back, the valet company said they couldn’t find it and didn’t know what happened. They’re sorry, they’re just really bad at running a valet company, they’re pretty sure your car’s there somewhere, and as soon as they find out what happened, they’ll testify in front of your Congressional committee.

Later, you get a note from the head of the company. He says your car’s gone and he’s “sorry he screwed up.”

While that may be true, it’s not an excuse.

It’s theft.

Get the story straight

Such are the perils of centralized, off-chain agreements that nobody can verify and trading positions that can’t unwind in an orderly way.

Perhaps if these arrangements had started and ended on the blockchain, everything would’ve turned out differently. You can’t defraud a smart contract.

For that reason, we invest in protocols and the tokens that power the financial networks built on those protocols—not the businesses that exploit those protocols for their own gains.

We do this for our security, portfolio growth, and a stake in the financial networks of the future.

Poor “macro” conditions may tamp down on the speculative enthusiasm you need for FOMO LAMBO MOON SUPERCYCLE. Still, the bet is that we’ll get better returns from owning a stake in projects that have good protocols and tokens designed to capture value from their growth.

Those tokens have as much value as any other asset you own. As they mature, some will see massive appreciation and long-term, durable wealth you can draw from for years.

Plan accordingly.

If you’re interested in seeing my portfolio strategy, tap this button.

All in how you describe it

Does it seem odd to say digital tokens have value?

If blockchain is a technological innovation and cryptocurrency is a monetary innovation, then tokens are a financial innovation. They represent the value that protocols capture from large pools of capital and investment.

That you can exchange those tokens for your government’s money or other goods and services?

Bonus.

This may seem bizarre to a lot of people.

Surely, every asset that could ever exist was already created, right? There can never be any other form of value than the forms we already use, right?

Exactly, Mark. Altcoins are just like Dave and Buster’s tokens or Chucky Cheese points.

That’s a sweeping oversimplification that applies to some, but not all, altcoins.

Outside of Dave and Buster’s, your tickets and reward points are useless. They have no cash value, can’t be resold, and can only be spent on over-priced prizes from a single company.

Unlike Dave and Buster’s tokens, many altcoins run on immutable, open-source protocols with global fungibility that give you trustless, instant settlement of transactions and permissionless access to build businesses and applications.

They’re financial networks. Tokens are the mechanism for capturing and exchanging value within those networks.

Sounds crazy. Certainly crazier than buying shares of stock.

Mind games forever

Or is it? Maybe stocks seem “normal” and “intrinsic” because we’re used to them. After a few centuries of usage, people assume they’re worth something.

What did stocks sound like when they were first invented?

Let’s go back to the 16th Century, with the first sale of ownership stakes in the Dutch East India Company.

You can imagine the conversation between Young Johan and Beatrice when they tried to explain the idea to their British aunt and uncle, Lady Sally and Lord Morton.

“Ye giveth thy money to the business. They give you a piece of paper in return, then do whatever they want with your money.

Sometimes they pay you nothing. Sometimes they give you a penny or two every few months. Sometimes they die. But if the business does well, you can sell that piece of paper to somebody else for more than you bought it for.”

Today, nobody would describe stocks that way.

Few people would be able to describe stocks at all, because 90% of stockholders don’t know what they’re holding or how it works. It’s just so common, they accept it. They don’t ask questions.

We believe stocks have value because people make money off of them and sometimes we do, too. People we trust tell us that they’re valid investments. They’re part of our pension funds and retirement accounts. TV and radio shows talk about them. We have laws and government agencies to regulate them. Some of us get them from our employers in return for taking a lower salary.

We need to believe in stocks. Our entire financial system depends on this belief.

Make them believe

Seemingly nobody believes in crypto anymore. Not even many people who subscribe to this newsletter and read this post.

That’s our challenge to overcome—the lack of belief in this asset class as an investment.

Some think we need to explain to people how this stuff works. Once people understand it, they’ll commit.

“Crypto didn’t fail, the centralized entities failed” and “scammers and criminals use the technology, but crypto’s not a scam or a tool for crime.”

I don’t know if that matters as much as you think.

We don’t use computers, cars, savings accounts, dishwashers, and pens because we understand how they work. These things make our lives easier, better, and more fulfilling. They make our businesses more competitive and our households more productive.

What does crypto do to make people’s lives easier, better, and more fulfilling?

* Fast money with little effort

* Global, immutable proof of ownership over your creations (e.g., NFTs)

* Cheaper ways to sell things to other people

* Sense of community and belonging

* Access to money and capital

* Freedom from censorship and capital controls

As long as crypto can deliver these things at scale, we don’t need to explain anything. The technology will speak for itself. People will want to use it, have it, and advocate for keeping it.

The problem is, the technology isn’t ready to deliver most of these things at scale.

Laws first, then money

That will come, possibly sooner than you think, from advancements in ZKproofs, rollups, layer 2 protocols, better smart contract platforms, simpler wallets, more robust developer tools, and more developers.

New projects like Ease.org, Cypherock, and Harpie will make crypto more secure and easier to use without creating centralized off-chain entities.

Ledger’s new touchscreen wallet, which packs a ton of functionality into a smartphone package, might revolutionize storage and interaction with smart contracts.

Improvements in protocol design and implementation will bring down the cost, complexity, and clumsiness of today’s blockchains.

First, we need to make it through the regulation and litigation stage of crypto’s development. FTX all but ended institutional interest and gave a lot of people a reason to keep their money out of crypto.

After all, if you can’t trust the #2 exchange and the de facto face of the crypto industry—our one-time “savior”—how can you trust anything in crypto?

“Price go down” and higher interest rates drove off the fast, easy money crowd. Now, everything seems like a fraud, a sham, and a waste of time and money.

Governments will clean that up with laws and enforcement actions. Some good people will get crushed, but hopefully few (ideally none). We’ll be left with fewer scams, more responsible participants, and more trustworthy businesses.

Then, Wall Street will enter.

Legacy financial firms will buy DEX tokens or create their own DEX tokens as registered securities. They’ll launch new altcoins and set up lending businesses, just like VCs, except they’ll manage risks appropriately and present a more professional image.

They’re already aghast that so many crypto companies literally printed money and still failed. Think of the opportunity for anybody who can do it the “right” way.

With time, people will forget the exchange shenanigans and Ponzi schemes. Aunt Sally and Uncle Morton will realize the crypto businesses failed but the protocols persist.

They won’t know how or why, but they’ll know there’s something interesting going on.

Cryptocurrency technology and user experience will mature to the point that it fails as much as the legacy financial system (possibly less). Better yet, it will offer safe, easy ways to do things the legacy financial system can’t do.

This is the next challenge. Not education. Not utility. Not bull markets.

Build trust, deliver something great, and wait for prices to go up long enough that people think they will keep going up.

The rest will take care of itself.

Don’t verify, trust

Let’s not get ahead of ourselves. That’s tomorrow’s market. A whole lot of sentiment will have to change first.

A tall task when our present commentary is dominated by naysayers, dooms-dayers, and haters.

Now that Tony on the TV has started selling pillowcases, Priya in the Park’s going viral telling you that crypto’s a scam that will die. Billy the Neighbor capitulated in May after losing his money trading LUNA during the death spiral and only just sold his Tesla stock at a 60% loss because he wants to get out “before the next crash.”

Samantha Down the Street puts a little into bitcoin each month because her boyfriend tells her to, but she never checks her CoinGecko app and she’s out of altcoins because YouTube told her to wait for the bull market.

That leaves you, me, and the Bitfinex’ds of the world.

Hey, Bitfinex’d and all of your friends, do you know what would be great?

Facts, evidence, and data to validate your accusations, preferably before they come true.

Anybody can make a list of entities and hurl insults at people. If your list is big enough, you will always be right about something. If your insults are vague enough and directed at enough people for a long enough time, you’ll hit on something eventually.

Anybody can point out shady stuff. Businesses can stay shady a lot longer than you think (sometimes, forever).

When you mix your good points and observations with misleading, out-of-context video/audio clips, conspiracy memes, circumstantial observations, speculative theories, “crimes” that aren’t crimes, and outright slander, it’s hard for us to appreciate the valuable contributions you make to this space.

We need you to balance out the moonboys and remind us of the risks that come with crypto, not shame people with aggressive, obnoxious attacks that make everybody else feel scared, confused, and angry.

Stop crying wolf. Just show us the damn wolf.

We need you to give us data, not conjecture. Evidence, not reminders of bad things that happened in the past. Facts, not misreadings of on-chain transactions and legal documents.

Proof would be nice, too. Do you want us to verify everybody else, but trust only you?

Perception is not reality

Rather than look for people who can “call” the market or “suss out” wrongdoing, accept that we don’t know what we don’t know.

It’s natural to hate and vilify, praise and exalt. Does it matter?

A good teammate can tell you about the other players, your team’s game plan, and what you can do to play your best game. They can’t predict the outcome of every touch of the ball, but they can tell you what’s going on and warn you about some potential outcomes.

Trading charts, technical analysis, on-chain data, data models, leading indicators, macroeconomics, fundamental technological developments—all these things help us make sense of the market and the circumstances around us.

These inferences let us make better decisions. What you do with that information depends on what you want to get out of this market.

Huge windfalls?

Buy now or after the next crash. Sell once you have the windfall you want.

Fast cash?

Wait until altseason, buy random altcoins, then sell them after their prices go up. I’ll tell you when altseason’s coming.

More of your government’s money?

Learn how to trade.

Some crypto for long-term HODL with $100 you can afford to lose?

Find a casino and have fun. If you win, put a little into bitcoin or one of the altcoins from my altcoin reports.

Wealth from owning a stake in the financial networks of the future?

Stake your altcoins, contribute to protocols and liquidity pools, and follow my plan.

If you chose to dollar cost average, you’re down 51% this year and down 45% since I published my plan. If you had followed my plan, you could be down that much at the extreme, but you’re probably closer to down 20% and possibly up as much as 200%.

With my plan, you’ll also get alerts when bitcoin’s price enters and exits my buying zone.

If it were that easy . . .

Sometimes, I wish I were a trader making predictions.

When they’re right, they get to take credit for it. “As I predicted, we hit my targets.”

When they’re wrong, they get to blame the market. “Trading is all probabilities, nobody can predict the future.”

For now, I’ll continue to make up stories for free and give you analysis and insights for a small fee.

This market can give you a wide range of outcomes at any moment.

Correlations come and go. When you buy and sell, you need to consider taxes, financial goals, technological savvy, investment timeframe, opportunity costs, the risks of holding cash, the good things you can buy instead of crypto, and most importantly, what you want to get out of this market.

Even then, you can’t know how anything will turn out. Only Twitter psychics know and they won’t tell us until after it happens.

We live in uncertain times.

Embrace uncertainty. If not for that uncertainty, you would not have this opportunity.

Relax and enjoy the ride!

Quick note—I won’t have a rundown next week or the week after. Big holidays and festivities!

For those who celebrate, have a very Merry Christmas, Happy Hanukah, Happy Boxing Day, Akemashite Ōmisoka, and best wishes for a wonderful holiday season and a Happy New Year.

I’ll publish the monthly issue in the next few days and squeeze out an update for premium subscribers before the holiday and at least once more before the end of the year.

Make sure you got my updates from last week:

* Market Update - December 13, 2022

* Top 100 Altcoins—Which Will Survive Through the Bull Market?

In last week’s poll, I asked “Do people still ask you about crypto?”

57% said no and of those who said yes, most said not as much as before.

For the 9% of people who said “yes, more than before,” can you tell us what people are talking about when they talk crypto with you?

I’ll have a new poll after the new year.

Non-Fungible Trumptokens

In news that I thought I would only see during a raging bull market, Donald Trump is shilling NFTs of himself.

And they say NFTs are dead.

If you thought this was a parody or deep fake, you didn’t live in the US from 2016 to 2020.

Some punchlines, depending on your view of the man.

* Well, he rugged the US, so he might as well rug everybody else, too.

* Finally, somebody’s making NFTs great again!

* This guy never stops! Pee-pee tapes, pussy grabbing, fake university, tax fraud, January 6, and now he’s selling unregistered securities?

* These things are awesome! I’m buying. The floor price is already 2x higher than the sale price!

* Wen 2024 campaign NFTs?

Technically, they’re not Trump’s NFTs. He sold the rights to another company. That other company sells the NFTs.

How long until Hilary Clinton creates her own DAO? I hear her governance tokens come with a night in the Lincoln bedroom.

Get free crypto (not an airdrop, exchange, or platform)

With the holiday season in full swing, use Rodeo Money to get some free crypto for buying the stuff you’re already going to buy. You can do this from a page the team set up for me!

When you connect your wallet and shop at any of the retailers listed on my Rodeo page, you get rewards as cashback in MATIC, USDC, or wETH—all delivered straight to your Polygon wallet.

Tap this button to get your rewards.

They didn’t sponsor this newsletter or pay me to say this. I like the business and it’s an easy way to practice doing things on-chain.

In fact, I don’t make any money from Rodeo—I pass along all of my Rodeo rewards to you. The Rodeo team batches my portion and your portion as a single payout to whatever wallet you use when you visit the website.

In case you have any interest in messaging the FTX debacle, repeat what Geoff Bennett says in this interview.

You’ll hear a lot of this and similar messaging from the professional class and people who moved from legacy finance to crypto. It’s true, sensible, and realistic.

Quick note on Binance to help you sort through the news, rumors, and video clips.

Binance has several problems:

* Users doubt that it holds all of the crypto they deposited. Some reports claim Binance has 101% of user funds while others claim it has only 99% of user funds. While 99% should cover all requests for withdrawals, it’s not 100% as promised. Also, at Binance’s scale, that totals up to $500 million, no small sum. And if the 101% number is correct, where’d the extra 1% come from and why is it there?

* Its business lost roughly $500 million on FTT tokens and faces a possible $2 billion clawback from FTX and related activities. Does it have enough money to cover these losses?

* US government is investigating Binance for money laundering and possible other crimes. Everybody’s known about this investigation for a long time but it’s only now making the rounds among the press because a “source” told Reuters that US law enforcement agents are close to filing charges and have offered plea deals to Binance’s executives. What happens if the US government takes down CZ, his executives, or Binance itself?

Given the overall climate, you can understand why people are concerned.

Did Binance mix user funds and business funds? Why did wallets from Binance (the parent entity) transact with at least one Binance.US wallet? Binance.US is supposed to be an independent entity barred by US law from CZ’s oversight. What were those transactions about? What does any of this mean for Binance Smart Chain and BNB tokens?

If somebody knows, can you leave a comment? All I see is speculation and conjecture.

Jobs Corner

* ClubRare | Social Media Manager | Link to position

* Flashbots | Senior DevOps Engineer | Link to position

* Evmos | Product Manager | Link to position

* Anchorage Digital | Bank Compliance Associate | Link to position

* Paradigm | Senior Controller | Link to position

* Interlay | Dapp Engineer | Link to position

* Outlier Ventures | Product Engineer | Link to position

* Consensys | Head of Data | Link to position

* Celestia | QA Engineer | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

It’s a big week for crypto. You know what’s happening this week, right?

It’s Taipei Blockchain week!!!

No, Mark, it’s the US Federal Open Market Committee meeting and all that goes with it.

Oh, right, we still live in a world where your financial fate depends on the decisions of the seven Americans on the Federal Reserve Board of Governors.

Yes, this week the US government will release its official data on inflation and retail sales for last month. In between those releases, the US central bank will raise rates by at least 50 basis points.

Bonus: on December 13, committees in both houses of US Congress will “investigate” the FTX debacle. You can catch the House and Senate hearings:

* Senate Banking Committee hearing, Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers

* House Committee on Financial Services hearing, Investigating the Collapse of FTX, Part I

I put “investigate” in quotes because Congressional hearings are all theater. Just look at the lists of witnesses.

The real work happens away from the public’s view. Hearings are mostly Congress’s way of getting “experts” to say the things each member wants to hear to justify whatever position each member wants to take. Though it would be interesting if SBF takes the fifth.

Make sure you got my market update for December 7, 2022.

Scroll down for a poll, two articles, a podcast, a meme, and my jobs corner.

The Tether Typhoon is About to Make Landfall (Or Not)

For a long time, I’ve assumed that powerful people and criminal enterprises use USDT. That’s the reason Tether doesn’t do audits. It doesn’t want its own version of the Panama Papers (which exposed illicit and illegal money flows among global elites and criminals using the legacy financial system).

In other words, Tether is shady but solvent. When those types of people need to cash out, Tether knows that they’d better have every penny handy. Their lives literally depend on it. They have the backing that they need.

How do I know?

I don’t, I made that up. It’s pure fantasy, not a shred of evidence, but until Tether gives us the transparency they’ve promised, we can speculate forever.

(Also, some people will not believe the truth even after they get it.)

Patrick Tan offers a less sinister but more reasonable idea based on facts and circumstances, not my imagination.

In 2020, Jean Chalopin, the head of Tether’s banking partner, Deltec Bank, bought a small US bank. Earlier this year, it sold that bank to FTX. FTX is now bankrupt and the subject of multiple investigations.

FTX’s ownership of the US bank gives US authorities jurisdiction and legal grounds to probe the bank’s activities. If US investigators find evidence of illegal or illicit activities, they can seize or freeze whatever funds flowed through the bank, including USDT and collateral that Tether used to back those tokens.

This might incite panic among USDT holders and a race for the exits.

The irony is, you have this risk with every centralized stablecoin, even USDC. Once you hold anything that you have to redeem from a US entity, you risk its seizure. Russia found this out the hard way.

Imagine if the US government discovered a massive conspiracy by some criminal syndicate or terrorist group involving USDC (or any other stablecoin), and they froze the addresses associated with the illegal activities and all addresses that USDC went to.

Such an action would threaten the solvency of every liquidity pool and protocol that uses USDC as collateral.

Let’s hope US stablecoin legislation will address this concern.

On behalf of my son, here are 12 minutes of Messi highlights.

Sometimes I mention the notion of Web3 being served from decentralized storage platforms rather than on dedicated blockchains.

Listen to or read this interview with Arweave founder Sam Williams on The Defiant Podcast. It explores and explains the concept better than I can.

A New Model for Assessing Crypto Asset Liquidity

Bottom line: Kaiko proposed a liquidity ranking system to replace the oft-cited altcoin metric, market cap. The system would account for volume, market depth, and spreads so you can better estimate the amount of money needed to move an altcoin’s price up or down.

My take: I’m still not sure we have any good metrics for altcoins, but if you’re actively managing an altcoin portfolio, you may want to consider Kaiko’s approach.

Why we care: when investing in speculative financial technology, you want to find the most useful data. According to Kaiko, seven of the top 15 tokens had less liquidity than their market cap suggests. “Big” does not mean “safe” or “less volatile.” It’s never bad to consider an alternative viewpoint.

Jobs Corner

* Chronicle Labs | Backend Engineer | Link to position

* Art Blocks | Senior Project Manager | Link to position

* Elixxir | Frontend React Developer | Link to position

* Nansen | People Associate | Link to position

* Yellow | Middle/Senior Golang Developer (with Solidity experience) | Link to position

* OpenSea | On-Chain Data Analyst | Link to position

* Mirror | Design Lead | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Listen closely. For those who still doubt after all these months of saying it, it’s a simple proposition. The Fed will hike until one of two things happens:

* The Fed funds rate goes above 4%

* Inflation goes below 4%

After that, we can start talking about a pivot—and even then, we’ll have to take it day by day.

With anything more than a 25 bps hike in December, that first condition is met. Most analysts expect 50 bps (the Fed telegraphed this last month).

That is not a pivot.

If all goes to plan, inflation will continue to fall, people will lose jobs, businesses will fail, and we’ll all be poorer, just like the Fed wants, and rates will stay around 4% until the US financial system returns to normalcy.

This seems terrifying but for decades, 4% was considered a “normal” interest rate. What good is seeing the value of your stuff go up if the cost of everything else goes up, too?

Whether that means crypto will suffer? A lot of smart people seem to think so, but a lot of smart people also think not.

Seems crazy that some people have $1 million in stocks, bonds, and cash, yet $0 in crypto. You’re getting the best deal in years and you don’t even realize it.

Complacency kills.

ANYHOW.

Make sure you got my BUY/SELL/HODL alert from December 1, 2022. I also included an update, with another super-brief review of five altcoins and the one I just added to my portfolio.

Scroll down for some fun content and the results of last week’s poll.

In last week’s poll, I asked: how much lower will bitcoin's price go?

About 50% of respondents said $14,000. The next two choices, $8,000 and “only up from here,” split almost all of the rest of the votes.

What do I think?

For the reasons I explained a while ago and will explain again in an update for paid subscribers, $14,000 is a confluence of trends and history. It’s also a popular technical level for traders.

Whether we get that price or not, I’m sticking to my plan.

Let’s revisit this question once bitcoin’s price goes back above the 200-week moving average. It’ll be interesting to see how the results change as the price changes.

Funny thing—almost 7% of respondents said bitcoin’s price will go to $0, which seems odd for somebody who reads this newsletter. If that’s you, perhaps you can explain?

I’ll have another poll next week.

How to Analyze Liquidity Pools and Other Factors to Avoid Being a Victim of Rug Pulls

Bottom line: it’s a bear market so you probably won’t get as many rug pulls as we had in 2020 and 2021, but if you’re new to the space you can easily get roped into some shady business. This article has some tips to help you avoid these shenanigans.

My take: the same technology, strategy, and approach that spawned some of today’s biggest, most legit projects can be used to rip you off. Some of the tips in the article may seem a little advanced and I guarantee they will take you a little time to learn, but it’s worth your effort. They still won’t help you avoid an FTX or similar catastrophe, but they’ll make you less likely to suffer from run-of-the-mill, common scams. Make sure you watch the video embedded in the article.

Why we care: we do what we can to keep our operational risks limited.

This is not a newsletter about politics or regulations, though I mention US legislative and regulatory developments from time to time.

For a better look at what’s going on in DC, sign up for a newsletter from Global DCA, a crypto advocacy group.

After you sign up, you’ll get weekly legislative and regulatory highlights.

Jobs Corner

* Evmos | Product Manager | Link to position

* Outlier Ventures | Head of Legal | Link to position

* Interlay | Dapp Engineer | Link to position

* ClubRare | Social Media Manager | Link to position

* Coinshift | HR Generalist | Link to position

* APY.vision | Principle Developer | Link to position

* WalletConnect | Rust Engineer | Link to position

* Alchemy | People Ops | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Did you get my market update from November 23? It’s a long video but a fairly short summary. If you missed it, get it now.

Also catch the November monthly issue.

Maybe because it’s a holiday in the US or I’m slacking off, I don’t have much to share in this week’s rundown. Maybe something interesting will happen during Thursday’s Senate hearing on FTX.

I could use your help with a question about the looming demise of Genesis or the potential bankruptcy of Digital Currency Group.

Unless they dissolve GBTC or ETHE, what crypto do they have that they can sell? Is there more at stake than cash obligations?

Please leave a comment if you have any information to share. 

Scroll down for one poll, one article, one meme, and some job listings.

The Bahamas' Attorney General Defends Country's Regulatory Regime Amid FTX 'Debacle'

Bottom line: The Bahamas defended itself from accusations of lax oversight of FTX and theft of FTX’s assets but “will not share further information” about FTX-related investigations.

My take: on the surface, that seems shady but if The Bahamas can work this one out fairly, it can put itself at the vanguard of crypto regulation and oversight. FTX controlled over a hundred entities across several countries, it’ll take a while to figure out exactly who was responsible for what. Every country’s regulators failed so it seems unfair to hold only one of them accountable.

Why we care: drama loves spectacle.

FTX’s attestations:

Jobs Corner

* Flashbots | Senior Dev Ops | Link to position

* Across | Data Analyst | Link to position

* Protocol Labs | Content Strategist | Link to position

* Fountain | Founding Engineer | Link to position

* Gelato Network | Business Development Intern | Link to position

* Rift Finance | Software Engineer | Link to position

* Biconomy | Blockchain Engineer | Link to position

* Fuel | Graphic Designer | Link to position

* Paradigm | Business Operations Associate | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

In last month’s issue, I looked at the facts and worldviews that frame our perspective at this moment as we look ahead to the growth we can expect in the coming months and years.

In this month’s issue, I talk about the meaning of our work (before the next upswing makes everybody forget about it).

Hard times make . . .

This month, VCs, market makers, trading firms, and exchanges blew up. People smarter than me say the worst is yet to come.

Terrible news for anybody who lost money on an exchange or a bad business deal. Some people saw fortunes disappear. Some businesses will close forever.

Meanwhile, bitcoin will continue to churn out block after block. Aave will continue to settle financial arrangements. Chainlink will continue to feed prices and real-world data into distributed networks.

Businesses die. People steal money.

Protocols persist.

Maybe that’s the thing everybody misses when they say cryptos “do nothing?”

Maybe cryptocurrencies don’t need need to pay dividends, generate yield, have government backing, or offer “intrinsic value.” They just need to incentivize and reward people for doing things.

Their value comes from what people do with them. Whether that value gets captured at a higher price depends on the token structure, though speculative enthusiasm certainly plays a role.

What if it doesn’t matter what happens to 3AC, Genesis, or any other entity that operated in the legacy financial system? They’ll disappear, default, dissolve, or die.

Cryptocurrency will not.

Fraud? Theft? Failure? Bankruptcy?

Protocols persist.

We buy into protocols, not people. Tokens, not firms. Financial networks, not social circles.

We bet that the successful cryptocurrencies offer more durable, lasting, and sticky returns than legacy assets.

Look out below?

About those legacy assets. . .

In a recent post on Mirror and other outlets, I showed you this picture:

That blue line is M2, a common measure of the US money supply. See its full glory.

M2 is not the only measure of money, but it’s the easiest to calculate and understand. It’s the total amount of dollar-denominated cash and cash equivalents in the world.

That line has gone straight up for years. Now it’s curving down.

Does this remind you of anything? Maybe something like this?

Yes, the classic “anatomy of a bubble diagram” just before the collapse. A new paradigm for dollars.

If this were any other asset, the Doomsburgers would scream “IT’S ABOUT TO CRASH!!!”

That’s nonsense. M2 is not an asset, it’s an arbitrary measure of the quantity of US dollars.

This is not a price chart. The bubble diagram is irrelevant and the United States government can make this line go wherever it wants it to. If the US money supply crashed like that, the world would plunge into deflation and an economic crisis.

Fed Chairman Powell says he’d rather have that than inflation. Something tells me he’ll change his mind once the bodies hit the floor.

After a decade of returns financed by buy-backs and easy money policies, stock investors are laughing at crypto. “Real” businesses think it’s a scam.

Why do they think Wall Street’s schemes are any more sustainable? For those who compare LUNA or FTX to Lehman Brothers, what makes you so sure the US stock market won’t have its own Lehman Brothers moment in 2023, as capital costs squeeze unprofitable businesses, falling revenue forces defaults and restructuring of corporate debts, inflation and/or recession crush earnings, and lower liquidity exposes frauds and financial shenanigans every bit as serious as FTX’s?

Did everybody forget that the UK pension system nearly collapsed this summer? Does nobody remember that China’s housing market almost imploded last year?

Can we assume governments can avoid close calls forever?

What if we’ve just been lucky so far? Historically, western economies get a financial meltdown every decade. We’re due.

Er, and crypto?

Mark, everything you just said sounds like a reason to get out of crypto…

No, it’s a reason to hedge against the legacy financial system. Cryptocurrency is one way to do that. No matter what happens in the wider world, protocols persist.

Crypto prices have reached levels we haven’t seen since 2020.

With bitcoin, you’re getting more upside with less downside than you have in years.

With altcoins, you’re getting more upside for the same amount of risk you’ve always had (100% loss).

On top of that, tighter global monetary conditions will force more altcoins to fail sooner than they would have under looser global monetary conditions. This frees up more capital for “good” projects and keeps you from throwing too much money into losers as you allocate over time.

I’m still buying an altcoin every other week until I finish raising my allocations to all of my altcoins. It’s all part of my portfolio strategy.

While you’re thinking about crypto, don’t sleep on government bonds. In the US, I’m talking about T-bills and treasury notes, not savings bonds. You’re getting the best deal in a generation.

In your country, maybe not, but it’s probably a better return than you’ll get from your bank as long as you won’t need to withdraw cash for at least a month—with roughly the same risk as holding your government’s money.

Speaking of cash. Some say it’s trash, but its utility makes up for the costs and risks of holding it.

In 2023, you might get great deals on anything people normally finance with debt, e.g., cars, houses, boats, major appliances and such.

Unless central banks change course, financial stress will force owners to sell these things at lower prices, boosting the supply of used or refurbished units. Tighter monetary conditions are already holding back demand and a glut of inventory from 2022 backlogs and overproduction will make it hard for sellers to hold their prices.

Get your crypto now so you’ll have cash ready for 2023 discounts on those other investments and big-ticket items. My plan can help you with that.

If you chose to dollar cost average, you’re down 66% this year and down 48% since I published my plan. If you had followed my plan, you could be down that much at the extreme, but you’re probably closer to down 25% and possibly up as much as 200%.

Now is the only time you get a good price for altcoins

Mark, you’re a bitcoin guy, why do you shill altcoins?

I don’t shill.

Bitcoin can do everything altcoins can do, but that will take a lot of engineering and development. Altcoins get to start from scratch.

Besides, I’m set with my bitcoin allocation. I have more now than I ever thought I ever would.

Market bottoms are the best time to buy altcoins. Some might argue they’re the only time to buy altcoins.

Pull up a chart of any altcoin and you’ll see it almost never beats bitcoin from peak to peak.

From bottom to top? Different story.

Look at the average altcoin’s performance against bitcoin from the bottoms of bear markets to the tops of bull markets. We can use Ethereum as a proxy.

You did better in the “bear” markets, even as your portfolio sometimes trended lower against bitcoin for some periods of time.

Let’s also compare the returns from buying the bottoms of bear markets compared to buying after the bull market’s confirmed. Take a look.

Even if you buy before, after, and higher than the bottom, you come out way ahead.

If you wait for the bull market, you’ll miss out on a lot of growth—but you’ll still risk a 100% loss.

I’ll buy an initial stake in any altcoin in any market conditions. I only raise my allocations during times like these, as I did in November 2020 and July/August 2021.

Since the end of May, I’ve bought an altcoin every other week.

For paid subscribers, I shared what altcoin I bought and also reviewed five or ten large-cap altcoins with each update. Also, my occasional altcoin reports, including a new report from earlier this month.

Mark, will you bring back your altcoin research service?

Thanks for asking. You remembered Altcoin Insights!

Sorry, no.

I’m glad I did it, but it was a lot of work that nobody appreciated. Worse, insane 2021 prices made it really hard to find projects worth recommending. On top of that, most subscribers didn’t really care about the investment opportunity, they only wanted to make as much money as possible as quickly as possible, which isn’t my thing.

I’ve thought about bringing it back because pretty much anybody who would subscribe during these market conditions would have an honest desire to get good, brief, substantive research on new, experimental financial projects.

I simply can’t price that service high enough to justify the time and stress that goes along with it. Hopefully, my brief reviews and altcoin reports will suffice.

What happens when the VCs leave?

You might worry that altcoins will fall apart once the VC money disappears.

We’ll see.

After I got into crypto, the flow of private capital into altcoins exploded. Has it done any good?

While private funding helps projects get off the ground, it gives teams less incentive to care about the community. They get their money from booster, not us.

In some cases, more than 40% of tokens go straight to early backers who gave money prelaunch for free or discounted tokens. That’s a lot of rewards for people who contribute nothing to the protocol or its network, as I discuss in this video.

Compare that to bitcoin and some other altcoins, where you need to give something to the network in order to get tokens. You have to put in some work to earn your keep.

In one sense, VC money protects and incubates projects. Development can happen without the social pressure of “why didn’t the price go up” or stress when the market goes too high or low. Building without hype and FOMO has its benefits.

In another sense, that flips the core altcoin paradigm on its head.

As people and communities build and grow the protocols, VCs take their rewards—a type of rent-seeking activity that crypto is supposed to eliminate.

In doing so, VCs have morphed the industry into something much closer to the legacy system that they say they want to replace.

The irony.

Good people can disagree on whether VCs and institutions are good or bad for crypto. You get more money, interest, and talent but also lose the natural, healthy, organic growth that’s essential for durable value and massive returns.

Maybe it all balances out over time. The market gets ahead of itself, then falls back to where it should be.

In the end, we're wagering our fortunes on the outcome of speculative financial experiments. As long as we benefit, does it matter how the projects succeed? Can’t some of these VC tokens do amazing things, too?

Progress comes in fits and starts

Great things rarely come from ideological purity or clever design.

Serendipity, risk, luck, effort, creativity, money, vision, and timing play a role.

Nobody knows how much of each gives you the best mix for success. That’s the adventure. Discovery has its own reward, especially when the best discoveries can grow your wealth in ways the legacy system can’t.

Technology does not decide its own fate. We do. Step by step, year after year. One person’s work builds on another’s. Market forces drive prices up and down, sometimes at a whim.

We need clear laws, frameworks, standards, and transparency so earnest builders will not get lumped in with scammers, developers can innovate without fear of jail or censure, and communities can grow without frauds and charlatans stealing their money.

That’s the next step. It’s a hard one, but we have a lot of great people advocating on our behalf.

The longest yard

While they work, let’s not lose perspective on the problem we’re trying to solve:

The legacy financial system can’t give people the lives that they want. The closed systems of control can no longer keep up with the demographic, social, and technological changes that drive modern commerce and communications.

Cryptocurrency offers an alternative but its fate depends on the devotion of builders, developers, and investors.

That devotion doesn’t reveal itself in the next 100x altcoin, a new data model, or some on-chain metric that most people don’t interpret properly.

It comes from people like us who understand the power of this technology to change our contemporary notions of wealth and finance—and in doing so, give normal people a chance to own a stake in the future, rather than the scraps of whatever trickles down from those who hold power.

What does that future look like?

Nobody knows yet.

That’s the beauty and excitement of this world we’re trying to build.

One vision is the one I present in Consensusland. Another vision is Satoshi’s. Another vision is Vitalik’s and dozens of other visions, all possible, none inevitable.

These visions don’t come with price tags. They transcend market conditions and reflect something far more powerful than whatever price your CoinGecko app shows you on any given day.

Obsess over prices and you’ll miss the revolution.

Protocols persist.

Do you?

Relax and enjoy the ride!

FYI I hired some help for marketing. My newsletter content won’t change but you might see ads on social media or get emails from my marketing team encouraging you to upgrade to the paid plan if you’re not already on it.

Marketing isn’t my thing but I realize it’s important. I’ll let somebody else take the lead on that.

Make sure you got my update from November 16, 2022.

I found a few summaries of the FTX/Alameda mess. There’s still a lot we don’t know and some things we may never know. Here are some articles that may fill in some blanks:

* FTX/Alameda, What Happened?

* F'd TX: The Un-Balanced Sheet

* FTX Collapse & SBF on the run

Now Genesis, a prime brokerage, needs to plug a $1 billion shortfall ASAP.

Sigh.

If you haven’t taken your crypto off of exchanges and into your own custody, now’s a good time to do it. At least sell your USDT before Tether gets too wrapped up in the FTX fallout (Alameda was one of Tether’s biggest customers).

Speaking of getting different stories from different sources:

With some firms, funds, projects, and exchanges in distress, you might worry about the miners.

Miners have had it rough for a while but as a whole, they’ve sold at a fairly constant pace throughout 2022, with some blips upward here and there—most recently a massive transfer from the Binance mining pool to Binance exchange on November 9 (cue the conspiracy theories).

Some of the biggest distressed miners have already sold most of their bitcoins and, as a proportion of the total market, miners hold less bitcoin than they have in a long time.

* If you believe CryptoQuant’s data, known miner wallets haven’t held this few bitcoins since early 2021, when they dumped a ton of it on the market.

* If you believe IntoTheBlock’s data, known miner wallets haven’t held this few bitcoins since 2010.

I’m not sure it matters now. With so few buyers and sellers, it won’t take much to send prices up or down.

Mark, how does this bear market compare to the others? and questions of that sort.

(Your words, not mine.)

Get my answer in this video.

Jobs Corner

* Art Blocks | Senior Project Manager | Link to position

* Elixxir | Frontend React Developer | Link to position

* CoinTracker | Protocol Specialist | Link to position

* Mirror | Design Lead | Link to position

* OpenSea | On-Chain Data Analyst | Link to position

* Nansen | Data Engineer | Link to position

* Yellow | Golang Developer | Link to position

* MetaMask | Cryptography Specialist Engineer | Link to position

* RECUR | Product Operations Specialist | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy here (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

* 👉 An introduction to the altcoin, its history, team, and most importantly, why the token matters.

* 👉 A simple explanation of the utility of this token and its potential price trajectory.

* 👉 The state of adoption for this token, including key partnerships and features.

* 👉 Some things that COULD go wrong with it.

* 👉 How to buy and stake this token

Bitcoinist named this project among its top 5 DeFi projects to watch in 2023 and NewsBTC has it as a top interoperability pick. Read what one reader said about it 👀:

Also, make sure you saw my other posts from this week.

* Buy/Sell/HODL Alert

* Market Update - November 9, 2022

* A Brief Note About FTX/Etc

BTW I’m listening to the FTX Twitter space.

Note, some sources have told me to be concerned about Crypto.com and Gemini exchanges. I do not have any information, facts, or evidence to substantiate why these entities would have problems. While I’d hate to needlessly steer you away from them, I feel compelled to bring this to your attention as I have referred people to these platforms. Better safe than sorry.

In general, you should self-custody your cryptocurrency (that’s the whole point of the technology).

It’s been a CRAZY week. Thanks for sticking around!

When LUNA/3AC imploded, a lot of people unsubscribed and gave up on crypto altogether.

This time, I haven’t seen that among my readership, but I’m sure some of you will cancel in the coming days. I’m sorry to see you go.

I know you’re feeling pretty bad and may have lost money from FTX. Even FTX.us users lost their money, which means the regulators failed. Under US laws, registered exchanges are supposed to keep user funds with a separate custodian. No US customer should ever lose access to their funds.

I suspect we’ve only scratched the surface of what’s going on, though I urge caution with some of the bigger conspiracy theories. You can twist facts in many ways.

For example, this TRON move.

You might that’s a good tweet. Give people assurance! Build trust!

That’s fine but the Tron DAO reserves are all stablecoins. There’s no reason to trade one stablecoin for another stablecoin as a safeguard.

Where does the $300 million come from? Does TRON DAO worry about the quality of its reserves? Does USDT need an extra $300 million to shore up its own reserves? Is Justin Sun concerned that people doubt the integrity of USDD, Tron’s stablecoin? Does Tether need to cover a $300 million shortfall? Are we all just reading this the wrong way, interpreting the words to mean something that wasn’t intended?

Maybe it really is just a well-meaning tweet trying to reassure a skittish market.

The problem is, NOBODY KNOWS. 

Billions in Capital Calls Threaten to Wreak Havoc on Global Stocks, Bonds

Bottom line: private funds may not have enough money to pay back their investors. If too many people ask for their money back, these funds will have to sell assets or collapse.

My take: does that sound familiar? Like crypto, you have a structural risk in a niche market that may cause outsized damage to the wider financial system. And this is on top of $1 trillion in CLOs that may not be rated properly and $7 trillion in junk bonds for businesses that make no money. UK pension funds have it easy, I guess.

Why we care: you might exit crypto to avoid one risk and walk right into another one.

Did you know I have a list of newsletter recommendations?

Substack, my newsletter provider, only gives me space for seven recommendations, but I subscribe to more newsletters than I can fit on the list. I also subscribe to The Marco Compass, which covers international finance, especially central bank actions.

A nice article from Dr. Richard Smith titled Fibs, Frauds, and Futures, where he briefly examines the role of stories in investing.

In one part of the article, he unpacks the core dilemma with crypto: everything is both a Ponzi scheme propped up by a narrative and a real financial ecosystem with a legitimate function (my summary, not his words).

Note, in the article, he cites Matt Levine’s Bloomberg piece, “The Crypto Story.” As part of the coverage of that story, Matt interviewed SBF on an episode of the Oddlots podcast. I cover this in the July 10, 2022 weekly rundown, you may want to read it.

Jobs Corner

* Stacks Foundation | Blockchain Engineer | Link to position

* Reservoir | Data Scientist | Link to position

* WalletConnect | IOS Engineer | Link to position

* Alchemy | Protocol Specialist | Link to position

* Status | Software Engineer | Link to position

* Fuel | Marketing Manager | Link to position

* ZKX | Content Creator | Link to position

These jobs come from the ToolsForCrypto newsletter. If you’d like to post a vacancy (for free), email mark@markhelfman.com.

Relax and enjoy the ride!

Bitcoin’s price is still lower than it was in June, July, August, and September, but people are finally getting excited again.

Its price is also higher than it was in June, July, August, September, and October, but now you hear people whispering about the bear market bottom.

The mind is an amazing thing!

If bitcoin’s price stays above $17,600, the bull market started months ago (specifically, on June 18, 2022). That would be cool and make a lot of sense, but we won’t know with any confidence until months or years from now.

While it’s nice to think about bull and bear markets, I’m just sticking to my plan.

Make sure you caught my market update and heads up from November 2, 2022.

In that update, I shared some interesting developments with the US dollar and some crypto metrics, talked about six altcoins, and walked through my expectations for how this market bottom will end.

Also, premium subscribers, look for a new altcoin report this week. I’m aiming to publish it on November 8 (from the US east coast).

Scroll down for some news, videos, and job listings.

In last week’s poll, I asked what’s the safest non-cash bet right now—your government's bonds, equities, crypto, real stuff (property, metals, etc), corporate debt (bonds/paper).

What option won?

“Real stuff (property, metals, etc).”

What do I think?

I chose crypto, specifically, bitcoin, and not just because I write a crypto newsletter. You’re getting more upside with less risk than ever before. But all options have their merits, as does cash.

Last week’s poll got only 85 votes. Not good. Should I stop running polls? Leave a comment with your thoughts.

For people concerned about governments overtightening and crushing crypto, my thoughts in this video.

Core Scientific reveals financial distress in SEC filing, says its end may be near

Bottom line: a big bitcoin miner may go out of business.

My take: while that would suck, it comes with a silver lining. Core’s demise will relieve selling pressure for the broad market. Core already sold 8,000 bitcoins from June 1 to October 26, 2022, which isn’t a lot, but it ain’t nothing. According to its filing, it has almost no more bitcoins left to sell. We just found out that Argo sold 1,500 bitcoins this summer and similarly has little inventory left and may go out of business. At the same time, Marathon and other mining companies continue to expand. Tough times for some miners, opportunity for others.

Why we care: because we don’t want to make a mountain out of a molehill.

Watch this BBC video from April 1994 and substitute “crypto” for “internet” and “legacy financial system” with “copper wires.” That will give you a sense of where the US is from a regulatory perspective.

Jobs Corner

Email me mark@markhelfman.com if you have a vacancy to announce.

* CoinTracker | Data Analyst | Link to position

* Ledger | Sales & Marketing Assistant | Link to position

* dYdX | Senior Software Engineer | Link to position

* Rarible | Partnerships Manager | Link to position

* Safe | Developer Relations | Link to position

* Gelato | Site Reliability Engineer | Link to position

* Gate.io | Business Development Specialist | Link to position

* ClubRare | Web3 Community Manager | Link to position

These opportunities come from the ToolsForCrypto newsletter.

Relax and enjoy the ride!

Also, make sure you get the monthly issue.

This week, bitcoin’s price broke out of a falling wedge formation on long-term trading charts. Paid subscribers, we talked about this at the beginning of the month. It’s a bullish pattern, so people are getting bullish.

If you’re trading the market, you should have already placed your bets. We don’t trade so we only need to take this under advisement in light of everything else going on in the market. I’ll have another update this week.

Check your inbox for the October 25, 2022 market update and my first Buy/Sell/Hodl alert in a long time.

That update covered five altcoins, some interesting shifts in HODLers, new addresses, and the location of stablecoins, as well as some notes about my plan. The alert speaks for itself.

Scroll down for a poll and other content you may enjoy. BTW is it too late to buy a tungsten cube?

Miner capitulation ala 2018 is highly unlikely

In last week’s rundown, I highlighted a report from Coinshares warning of a potential liquidation event for miners.

Arcane Research published some research that argues the opposite, namely, miners have enough money/credit and not enough bitcoins to crash the market, and they have none of the political concerns that led to a destructive capitulation in November 2018.

Read the report for more details.

Heidi from Crypto Tips pointed out a problem with the “only 21 million bitcoins” myth.

InsuranceFI

Blockworks newsletter argued the case for higher bug bounties and incentives for “bad guys” to wreck protocols. The goal: make DeFi as robust and resilient as possible as soon as possible, at the expense of some protocols (and the money of people who use them).

It’s an interesting question: can we regulate ourselves better than our governments can?

I’d love to see the US create a safe harbor or financial innovation program for cryptocurrency, something like DARPA or the NSF’s exploratory grants or some other way to fund experimental, high-risk research in financial engineering.

In other words, governments should encourage and reward people who try to hack, steal, and manipulate markets as a means to stress-test crypto protocols before releasing them into the wild. Do this within a regulatory framework in a controlled or simulated environment for the first few years, until the projects and communities can work out the kinks.

For a while, I’ve talked about bonds, most recently in an article “Bonds, Bitcoin, and Cash” (which you can get as an NFT on Mirror).

Bonds are having their worst year in a generation (some say in a century). As a result, you’re getting the best deal you’ve gotten in years. Plus, now that governments have raised interest rates, you can finally get some yield for the same risk you take holding your government’s money.

Meanwhile in Markets published a nice article comparing stocks vs. bonds. As strange as it might seem, the calculations worked out more favorably for bonds.

TL;DR—

Once you factor in changes in inflation, cost of living, and purchasing power over time, stocks do not perform nearly as well as people think. In fact, at today’s prices, bonds are a better investment.

Read the article for a deeper, more fulfilling examination of the topic. Here’s a key takeaway:

As investment-grade bonds begin generating real income after years of negative returns, the market comes back to normalcy where investors have options to swap out overvalued equities with safer fixed income.

What does this mean for crypto?

Should equities continue to lag behind other assets in the coming years and crypto continues to grow, Aunt Sally and Uncle Morton will soon look at their 60/40 portfolio and wonder why it’s barely growing while bitcoin goes up, let’s say, 30% each year, on average.

While 30% is a massive letdown for most people in crypto and below bitcoin’s historical growth rate, it’s a great return for any “normal” investment.

Add in a US regulatory and legal regime that gives Wall Street a way to make money with crypto. Mix that with general frustration at the way governments have managed money in recent years.

You might get a whole lot of people who look at crypto as a viable alternative to the legacy financial system.

Job Corner

* Gainium | Content Writer | Link to position

* Brave | Senior Software Engineer | Link to position

* Binance | Product Intern | Link to position

* Zerion | Senior Product Designer | Link to position

* Protocol Labs | Senior Editor | Link to position

* Rabithole | Product Manager | Link to position

* OpenSea | Blockchain Data Scientist | Link to position

* Aptos | Business Development Lead (APAC) | Link to position

Most of these job listings come from the ToolsForCrypto newsletter.

Relax and enjoy the ride!

In last month’s issue, I gave perspective on what to think about as we move through the regulation and litigation stage of crypto's evolution.

This month’s issue looks at the facts and worldviews that frame our perspective at this moment as we look ahead to the growth we can expect in the coming months and years.

End of the Biggest Pump and Dump in History

Here we are, on the wrong side of the biggest pump and dump in history.

Did you think I was talking about crypto?

No.

In the first two decades of the 21st Century, the world’s central banks pumped outrageous amounts of money into the financial markets. Look at the world’s supply of money from 2001 to today, as a percentage of GDP:

Little by little, they bought assets, slowly building up a base, gradually taking supply from weak hands, bidding up prices.

Then, in 2020, they pumped a bunch of money into the market. You can see this in the spike on the right side of the image above.

Shortly after that, the prices of everything went up a lot, quickly. As the owners of so much of the world’s assets, central banks could control the pace of selling. They let prices zoom.

Once enough people bought into the pump, central banks started to raise rates and sell assets. They yanked money out of the system, rug-pulled asset holders, and left new buyers holding the bag.

It’s market manipulation, but at least they told you what they were going to do before they did it. Transparency!

If it seems like the worst is over, remember that assets like stocks, bonds, and real estate remain higher than their historical benchmarks.

In other words, even after central banks wiped possibly $50 trillion off of the world’s balance sheets, major legacy assets still have plenty of room to fall before they get back to “normal.”

Crypto, on the other hand, already crashed. Its pump has already been dumped.

Can’t ignore reality

In May 2022, bitcoin’s on-chain and technical metrics showed the same signs as every previous market bottom. In June, we saw even more signs in the movements of bitcoins and historical measures of investor sentiment. Over the summer, those signs persisted.

Paid subscribers saw this play out in real-time.

Do you remember this image in the weekly rundown from October 9, 2022?

We’re in the squiggly lines in the circle.

With our recent pump from $18,160 to $21,000, you might think we’re climbing out of depression and into the disbelief stage.

You might be right, but not because of a trivial 15% upswing over two weeks. That’s meaningless for a market as volatile as crypto.

If you’re right, it’s because all of the circumstantial, behavioral, and technical evidence matches what we see at the generational bottoms of the crypto market.

We’ll have to wait months, possibly years before we know for sure (and even then some people will still call for $10,000 or lower). These patterns take a long time to appear and can last longer than you might think.

Look around

Still, our recent pump was enough to convince some analysts to take profits and proclaim a new bull market.

Surely they’re kidding, right? Crypto prices are still lower now than they were last month.

Only the bond market has had a worse year than crypto by historical standards, and bond prices are still high enough that governments and businesses struggle to find buyers.

Legacy assets offer less upside and more risk than ever. Crypto offers more upside and less risk than it has in a long time.

We can agree that bitcoins price can realistically drop to $14,000.

At the same time, you have to appreciate the circumstances and accept the reality of the situation.

Mark, you’re saying everything else will crash and crypto will boom?

No.

Mark, you’re saying everything else will crash and crypto will crash, too?

No.

Mark, you’re saying everything else will recover and crypto will boom?

No.

Mark, you’re saying the bottom’s already in for crypto?

No. The bottom is $0. Most altcoins will get there. Bitcoin might, too, but probably not.

We still don’t see a lot of new money coming into the market. Meanwhile, miners still sell all the time. Lots of whales have bitcoin they can dump at a profit, even at these low prices. The class of 2021 remains skittish from bull market losses and household budgets that are getting squeezed.

Legacy equity markets are still waiting for the next shoe to fall. Winter is coming. China’s struggling. Europe’s also having a tough go of it. In too many places, too many people have too little food, too much inequality, and not enough money.

We have many reasons for people to stay away from crypto and many reasons for people to sell their crypto.

This is a not good thing but it has a silver lining. We need entrance liquidity.

When you’re out, I’m in

You may have heard of exit liquidity, the money insiders get when they cash out of a project. You buy high, they sell high.

What about entrance liquidity? Can we make this a new term? Something to describe the situation where people like me buy crypto after prices fall 30% to 95%?

They sell low, we buy low.

Outside of a few weeks in March, April, and May, I bought crypto throughout 2022. If you’ve followed my analysis and plan for buying and selling bitcoin, you would have also bought during those times.

In hindsight, I should’ve waited until the last week of January to start buying into the market again. Still, with my plan, you’re up as much as 300% or down as much as 60%, probably closer to down 10% on your investment.

For the past five months, I have focused on altcoins simply because of the favorable market conditions. One altcoin every two weeks.

With each update for paid subscribers, I tell you what I bought and also review five or ten altcoins out of the top 100.

When you get a chance to enter this market at such steep a discount, you have to take it. The upside is so massive and the downside is so small, you can’t sit on your hands—even if you expect prices to fall.

What's the next narrative?

For some people, it's not enough that crypto prices are low. They need a different reason to put money into this market.

A key level on a trading chart. Some macro or technical signal. A leading indicator. A key milestone in the four-year cycle theory. The halving. World peace.

Others think we need a new story to attract new buyers. So many people have been burned by crashes, scams, fraud, recession, and losses that the old narratives don’t work anymore.

Bitcoin as an inflation hedge?

Failed. Its price is up only 300% since governments went BRRR / money printer / stimmy / negative interest rates during the pandemic.

Bitcoin as a store value?

Failed. Its price is the same now as it was in 2017 and 2020.

Bitcoin as money?

Failed. Nobody spends it, saves it, or trades with it.

Narrative, where are you?!?!?

Oh look, there you are. You’re the same narrative that you always were:

Price. Go. Up.

As long as bitcoin’s price can go up long enough for people to think that it will keep going up, everything will work out fine. People will come up with all sorts of reasons to buy it. Then you will find the new narratives you seek.

Along the way, people may even dig up old narratives.

Some stay Stock-to-Flow is not valid but it’s as valid now as it ever was. Bitcoin’s price has gone way above and way below S2F’s predicted price for years at a time.

In fact, bitcoin’s price is almost never where S2F says it should be. Look at Glassnode’s “S2F Deflection” chart, which tracks how far bitcoin’s price has strayed from the S2F model.

Plenty of time above and below bitcoin’s price (sometimes way above and way below).

If you believed in S2F in 2020 or 2021, there’s no reason to stop believing in it now.

You could also try my U2R model.

I made it up, but it’s a line on a chart. That makes it legitimate, right? It seems reasonable that you could use it. There’s even some math involved.

(I think 🤷‍♂️)

What about expanding cycles? Shrinking cycles? Dynamic cycles? Halving cycles?

Perhaps you prefer the four-year cycle? That makes everything easy. You can just buy a full allocation in December 2022, take profits each time bitcoin’s price doubles, and then sell whatever you have left in December 2025.

No matter what happens with price or time, you can fit a model over bitcoin’s price. For example, even if bitcoin’s price never goes lower than its June 2022 low of $17,600, people will say it bottomed in Q4 (October-December 2022).

How can that be?

The power of the mind. In 2021, the lowest price came in June but people say the bottom was in July. The last bull market started in 2018 but people say it started in 2020.

Now, bitcoin’s price is lower than it was in July, August, and September, but only recently did you hear chatter on YouTube and Twitter about bull markets and bottom formations.

Laws first, then money

While it’s nice to think that higher prices will validate cryptocurrency’s place in our modern life, it’s only one part of a bigger story. At some point, this stuff has to be useful. You can only string people along for so long. Eventually, you have to deliver what they want.

Better technology will help, for example, good U/X, apps and interfaces that remove some of the technical steps that people screw up, battle-tested smart contracts and developer tools, uniform technical standards, and improvements in security and governance.

Laws, too.

Developers and entrepreneurs can’t push the technology to its transformational potential when they never know whether they’ll get sued, fined, or jailed for doing so.

Use a mixer to protect your privacy? Dutch and US authorities may freeze your funds and put your developers in jail.

Sell NFTs to raise money for a business venture? US regulators may wait a few years, then fine you retroactively for violating securities laws.

Create a new cryptocurrency? Put one on your balance sheet? Leverage the technology for payments or settlement of business transactions?

These are simple activities, easy to execute, and mostly harmless—but if you do them the wrong way, your government may zap you. Not to mention, anybody who manages another person’s money risks breaching their fiduciary responsibility.

While this is a concern everywhere, it’s particularly salient in the US.

The US economy makes up one-quarter of the world’s GDP and its financial markets hold most of the world’s wealth.

A lot of that wealth comes from rich people and institutions, the kinds of people I talk about in Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency.

They can’t allocate to crypto until they know the US government will shield them from its excesses and protect their opportunities to profit from its success.

Yet, US laws and regulations stem from ancient precedents that make no sense for crypto.

It’s a security, commodity, property, and money rolled into a single technology. The problem is, the US legal system has different, conflicting laws for each function.

It’s not just big institutions that need laws.

Aunt Sally and Uncle Morton need protection from scammers. Samantha Down the Street needs protection from fraudulent lending platforms. Billy the Neighbor needs somebody to disclose who’s paying for the hype/shill job he’s FOMOing into. Bruce the Banker needs to know who he can sue when things go wrong and on what grounds.

Without legal and regulatory clarity, they will never feel comfortable about crypto. They just got thrown to the wolves with scams, hacks, frauds, and a big crash. You can’t expect them to see the technology as safe and legitimate without giving them a reason to do so.

A little government goes a long way.

Likewise, you can’t expect the legacy financial system to appreciate all of the good things you can do with crypto as long as it’s just a casino game. What does Coinbase do again? Oh, yea, lose money. Is Tether solvent yet? What does this Web 3.0 even mean, anyway?

Until the world’s governments create clear guidelines and expectations, every innovation will be met with caution. Every bit of progress will come with a caveat.

This won’t stop people from trying to do great things, but it will deprive the rest of us of the benefits of their work.

Crypto’s Future Killer App

While you’re looking for narratives, wondering when the bull market starts, and waiting for your government to make crypto safe, don’t sleep on NFTs.

Today, they only prove ownership.

That may seem lame and not very useful, but once you have global, immutable proof of ownership and the rights and privileges that go with it, you can remove layers of bureaucracy and recordkeeping while also crafting automated protocols to transfer, fractionalize, securitize, amortize, and distribute assets to anybody, anywhere, anytime, without human intervention, with certainty that everybody has access to and control over the things that they own.

More importantly, you can sell, rent, or lease your stuff to anybody, anywhere, anytime, in any amount, with whatever conditions you want.

This puts a lot of power in the hands of creators, inventors, property owners, and the people who support them.

It also creates a new investment opportunity: creators and businesses that empower their creations.

For example, metaverses like Pavia and Illuvium, which use NFTs as deeds and vouchers. Publishing platforms like SolType, Mirror, and Sigle, which use NFTs as subscriptions and receipts. Community platforms like Writers Dorm and Bored Apes Yacht Club, which use NFTs for membership and access to exclusive offers and spaces. Marketplaces like AtomicHub, CNFT, and Looksrare, which give people ways to buy and sell their NFTs.

These are not cryptocurrencies, though cryptocurrencies play vital roles within their platforms.

These are Web 3.0 entities servicing the real needs of real people in the real world.

In the real world, I can’t sell you a car that I don’t have. In the digital world, I can do this. I can dupe, copy, or recreate anything. I can lie and defraud you. I can bait-and-switch you.

With NFTs, I can’t do any of that.

NFTs provide the one functionality the modern digital world lacks: ownership.

Have you seen that meme where one guy says “sell me this pen” and the other guy says “it’s an NFT?”

Here it is:

That meme is truer than you think. NFTs really are like pens.

You can make them all different types, shapes, colors, and features. Some are worth more than others. Some cost more than others. Some give you special perks, some do not. Some bestow special status, some do not. Some work better for some purposes, others work better for other purposes.

Pens revolutionized the way people convey thoughts, ideas, images, and emotions. It made these things portable, transferable, and spontaneous in a way that nobody had ever done before.

If only my government regulated NFTs like they regulate pens, life would be so much easier.

Where will the value flow for NFTs? Will it go to the altcoins and networks that support the NFT protocols? Will it go to the businesses that build on those protocols? Will it go to the NFT holders?

Will any of this activity drive value to altcoins? Or will the NFTs steal value from those altcoins—for example, as capital enters to buy the NFT, then exits once the deal is done?

We shall see.

Bool Marckit?

Sounds great, Mark. Also, boring. When does the bull market start?

When prices drop 30-50% in bull markets and rise 100-300% in bear markets, terms like “bull” and “bear” lose all meaning.

If bitcoin’s price stays above $17,600, we’re in a bull market. Otherwise, we’re in a bear market.

Guess what?

It doesn’t matter.

From looking at the on-chain data, it’s clear that the bears don’t have enough crypto to push the prices down.

From looking at the world around us, it’s clear that the bulls don’t have enough money to push the prices up.

Until that changes, we’ll continue to move sideways in the form of big upswings and downswings for the indefinite future.

May I offer a consolation?

This world has a lot more money than crypto. I think we can both agree on where the market’s going to go once we get decent laws and a little momentum.

Up.

Your goal: get in before that happens.

Once you see the on-chain data turn positive, strong trends emerge, and economic stability return to the world’s financial markets, you’re too late. Once bitcoin’s price goes above $50,000 and people tell you to take profits, you’ve missed your opportunity.

Perhaps buying before June was too early. Oh well. You can make up for bad timing. Complacency kills.

Some say that you need to wait for more miners to go out of business or until the world’s governments start printing money again.

What will you do if prices start going up before that happens? What if bitcoin’s price runs to $30,000 and your altcoins double or triple in value?

Will you sell because “this rally will also fail” and YouTube shouts “take profits!”

Will you buy more because “everybody says the bottom’s in” and YouTube screams “bull market!”

What will you do if bitcoin’s price crashes to $14,000 and then bounces up to $19,000 two days later? Will you sell because “dead cat bounce, it’s going lower” or buy more because “that has to be the bottom?”

What will you do if the market goes sideways for another five months and invalidates all the cycles, growth curves, and data models?

Choose now, before the market forces your hand.

I’m happy to help you with that.

Relax and enjoy the ride!

If not, get it now. In that update, I looked at the behaviors of traders, miners, and crypto funds. I also reviewed five altcoins and talked about another for which I just raised my allocation.

In last week’s rundown, I asked why is bitcoin outperforming the NASDAQ and S&P 500 in September and October?

Of all responses, two answers tied:

* Vagaries of the market (i.e., nobody knows)

* The bottom's already in for bitcoin, maybe not for stocks

What do I think?

US equities are in an odd spot. Despite dropping more than 20% on average, the overall market remains overpriced by all historical measures. Some companies reported poor earnings and experts expect more will do so in the coming weeks. New debt costs more than it has in at least a decade and lower valuations make it harder to raise money from selling new shares.

At the same time, crypto is underpriced by all historical measures and already had its Lehman Brothers moment. Also, it has a more diverse base of users and investors than the US stock market. Outside of the US, most people have no way to buy and sell US stocks. Pretty much everybody can buy and sell crypto. As a result, this market faces different dynamics.

Rumors of decoupling from the stock market seem premature, but you’d have to expect the correlation will fall apart sooner than later if it hasn’t already.

(It’ll take a while before anybody has enough data to say either way.)

Do you want an interesting tidbit?

Bitcoin outperformed most assets in Q3:

* S&P 500 (SPX) — down 6%

* NASDAQ (IXIC) — down 5%

* Russell 2000 (IWM) — down 4%

* 20-year US Treasuries (TLT) — down 12%

* Oil (WTI) — down 27%

* Gold — down 8%

* Silver — down 4.5%

* Euro — down 6%

* Corn — up 8.5%

* Bitcoin — up 1%

When I saw this, it made me think about a new allocation strategy. I posted my thoughts in an article for Data Driven Investor, “The New 60/40 Portfolio: Bonds, Bitcoin, and Cash?”

I’ll have another poll next week. Scroll down for some articles, videos, a meme, and jobs you may enjoy.

A Note for Discord Channel NFT Holders

Last week, I mentioned a forthcoming Discord channel, thanks to a partnership with Writers Dorm.

Channel members will need an NFT to verify their identity and access the channel through their pseudonyms. To start, I airdropped NFTs to everybody who collected my first Mirror post, Hold This Thought.

Only two of those people joined the channel!

Check your wallet for the “Crypto is Easy” token or look for your address on the list of token holders:

If your address is on that list, you should have received a little MATIC from my public wallet, 0x9a6600c7B40801dda9A0Fa4E8DE7b1B99FE524a7, along with a note on Blockscan.Chat to confirm it’s actually from me. Since I don’t know who you are, it’s the best way to reach you.

After you do that, tap this button to get instructions for Discord access.

New crypto accounting guidelines could ‘smooth the way’ for adoption

Bottom line: an accounting board will consider a proposal that balance sheets will state the value of bitcoin as its market price, not its lowest price for the given reporting period. 

My take: as a landlord and business owner, I realize accounting rules make little sense but I had no idea that companies had to account for bitcoin at any price other than its actual price. This seems like a small, technical change to a complicated, esoteric bookkeeping system, but I would assume this makes it a lot easier to report the value of bitcoin holdings on corporate balance sheets and makes bitcoin holdings look better when bitcoin’s price goes down, then up during a reporting period.

Why we care: we should welcome anything that makes it easier for people to bring bitcoin into greater usage. Every little bit helps.

Crypto provocateur Protos published an article, “Crypto.com is in Big Trouble but the Warnings Were There.”

Protos publishes legit reports but often with little balance or perspective. Still, the article is worth reading as food for thought.

What do I think about this?

I posted a video about it.

On a related note, now’s a great time to learn how to take custody of your crypto. Once you master that skill, you will never need to keep your crypto on an exchange and therefore never need to worry about the fate of any crypto exchange.

Google has lots of good information about how to do this. I also like the free tutorials from DAN Teaches Crypto.

Read the Coinshares research article on miners, “The Pain Isn’t Over for Bitcoin Miners.”

Miners face higher electricity costs, tighter margins, and financial conditions that should discourage them from bringing more machines online.

In other words, it’s probably never been more difficult to mine bitcoin and less profitable to sell it.

Yet, bitcoin’s hash rate is going bonkers. Why are miners putting more effort into mining? Shouldn’t they do the opposite?

Some people speculate that a big country is mining bitcoin, stashing it, and waiting to dump it on the market to wreck everybody. As crazy as that sounds, it’s a reasonable explanation and a legitimate market risk.

Others point to large miners selling equity or taking out more debt to keep their operations running. As long as they can keep doing this, they can run theoretically forever.

Coinshares says something else is going on:

* New miners are so efficient that they can operate profitably at lower bitcoin prices.

* Mining companies spent a lot of money on bitcoin mining infrastructure in 2021. Since the money’s already spent and the equipment’s already deployed, they don’t lose as much when they keep their machines running. Agreements with electrical grid operators and more efficient machines make this feasible.

The conclusion?

This is not sustainable. Some of these miners will run out of money and unwillingly have to sell their bitcoins.

(As in, actual capitulation, not the on-chain metric that uses the word “capitulation” to mean “some miners turn their machines off.”)

As I noted in my most recent update (and in other venues for the past few months), known miners are selling bitcoin at a historically low pace and their overall inventory has stayed roughly flat, suggesting they’re selling about as much as they’re mining—not hoarding or dumping.

While some argue this suggests miners are healthy, strong, and confident, it could also mask a deeper struggle to stay profitable.

Catch the Blockworks podcast from October 15, 2022, It’s Not Just Inflation, The Fed’s Lost Control.

The show looks at the Fed’s tightening through a macro lens but starts with a good reminder of good things happening in crypto now.

Job Corner

* Gainium | Content Writer | Link to position

* Chainstack | Developer Advocate | Link to position

* Coinshift | Graphic Designer | Link to position

* Zerion | Senior Product Analyst | Link to position

* Hiro | Distributed Systems Engineer | Link to position

* Serotonin | Social Media Manager | Link to position

* Subspace Labs | Community Manager | Link to position

Most of these job listings come from the ToolsForCrypto newsletter.

Relax and enjoy the ride!

Guess what?

It’s none of your damn business!

Just kidding. Although, it really is none of your business 😁

If you’re wondering about my views on how much crypto to hold and in what portion, this post is for you.

I don’t want to get into too much detail about my specific holdings and personal financial situation, but I’ll talk about what percentage of cryptocurrency to keep in your overall financial portfolio, my ideal balance of bitcoin and altcoins, as well as a few specific strategies that I like.

In the grand scheme of things

Before I get into crypto, a big-picture view.

Crypto is just one part of a diversified financial portfolio, mostly built along the lines of modern portfolio theory.

To oversimplify a more nuanced strategy, modern portfolio theory demands that you spread your investments around non-correlated assets, i.e., assets that generally go up and down at different times for different reasons in different market conditions. The forces that drive one asset’s movements do not usually affect another asset’s movements.

As a result, you have a lot of flexibility within a portfolio to respond to life events and changing market conditions without exposing yourself to too much risk at any one time or in any extreme. At the same time, you can get different benefits from owning each of these different types of assets, e.g., cash flow, tax efficiencies, hedges, etc.

So instead of putting $1 million into stocks and bonds, you allocate to a variety of other assets. My portfolio includes real estate, bitcoin, altcoins, stocks, bonds, private equity, cash, and cash equivalents.

My overall goal?

Long-term wealth and financial security. Not FIRE but as close as you can get with a wife and kids. No Lambos, but enough that my family has enough money for the important things in life and a little fun, too.

As with my plan for buying and selling bitcoin, this strategy is based on my situation, goals, and risk tolerance. You will almost certainly have different concerns and priorities.

Bitcoin: a core portfolio asset

I treat bitcoin as a core portfolio asset, one of my essential holdings. Risk-adjusted, no asset offers a better investment profile.

Even when the market’s overextended and overpriced, the long-term growth potential makes bitcoin a no-brainer. With Wall Street’s support and many developers building products and services that leverage bitcoin’s blockchain or use bitcoin as a reward, I have no doubt that bitcoin will remain an important and growing financial asset for the indefinite future.

Why don’t I put all of my money into it?

Because it’s too volatile. With so many other responsibilities, goals, and expenses, I need stable and predictable money sources. Unlike Russell Okung or Michael Saylor, I can’t convert everything into bitcoin—I still need to pay my mortgage in US dollars and it will take years for bitcoin to realize its ultimate potential.

Also, I don’t need to have a lot of bitcoin to make a big difference in my finances.

While I don’t expect to get the massive, explosive gains that the OGs got from buying in 2012 or 2014, I do expect bitcoin’s price will double each year, on average, with occasional extremes like 2017 or 2021 balanced with periods of low or slow growth.

Assuming it keeps that pace, I can aim to put 20% of my wealth into bitcoin and expect my total net worth will double within a decade.

Since I only buy bitcoin when its price falls into the buying zone of my plan, I will do far, far better than that.

As long as bitcoin continues to do what bitcoin has always done, things will work out fine. And yes, 20% of my net worth seems reasonable, certainly not extreme. If not for my other obligations, I would aim for a higher allocation.

Altcoins: speculative ventures

I put altcoins in the same bucket as my private equity investments. The goal is to generate big windfalls or gain outsized stakes in new ventures that turn into long-term assets that I can sell as needed.

As a rule, I don’t rebalance or trade alts.

I hold about 50 altcoins, which may sound excessive. Here’s the thing: probably 90-95% of altcoins will fail. Most already have.

With roughly 10,000 altcoins on the market, that leaves about 500-1,000 great, legit projects to choose from. Plenty of moonshots and lots of opportunities, but nobody knows today which ones will win tomorrow.

For that reason, I spread my investments around many projects. I let the winners run and the losers go to zero. Then I write off the losers on my taxes and keep the winners as part of my long-term financial plan.

When I lose, I get back 20-35% of my investment. When I win, I keep the gains forever (and only pay taxes when I use or sell them). Those gains could reach 1,000x or more. Some have already topped 100x. I only need a few to succeed and those winners will cover the other 50 losers many times over.

Some people say you don’t need that many altcoins and only a handful of “good” alts will do.

I disagree. During altseason, it doesn't matter whether you have 5 or 50 altcoins. Your portfolio will go up. At that point, you can sell your dead altcoins or projects that didn’t work out the way you expected (I still keep the ones I like until they go to zero or infinity).

What happens after that massive FOMO LAMBO MOON mania? Are you that good or so lucky that you can find those very few altcoins that survive?

I’m not.

For each altcoin, I buy up to a fixed USD allocation, and then let the market take over. Since I stop buying once I reach a certain allocation, I always have fresh cash to buy the tokens of new projects I discover along the way. In crypto, the pace of innovation is amazing, you need to have money handy for new opportunities whenever they pop up.

Whenever I can stake, I stake. I sell 3% for cash after the first 1,000% gain.

What percentage of BTC vs alts?

This changes all the time but usually, my bitcoin equals the total amount of all my altcoins—a 50/50 split of BTC vs. alts, though it can go up significantly during altseason.

As long as you only invest money you won’t need for the next few years, you might not need to worry about your overall position size or distribution.

Over the next five years, bitcoin will almost certainly outpace most investments—including most altcoins.

Over that same time period, some altcoins will do much, much better.

As long as you buy tokens for legit projects that are designed to capture value from the growth of their networks, you have an amazing asymmetric investment opportunity. You risk a small amount in return for a chance to get massive gains. You can spread your investments around many altcoins expecting most will fail. Your winners will cover for your losers many times over and way more than any returns you’ll get with bitcoin.

You need to have enough invested in altcoins to make it worthwhile. Bitcoin will cover you for the long-term—you can keep a relatively small portion in bitcoin for safety, then put the bulk into high-reward opportunities in the altcoin space.

Outside of the rare times my plan forces me to sell crypto, I never rebalance out of the market. While I will take 3% profits on altcoins after the first 1,000% gain and sell my losers, I never take profits on bitcoin.

You can’t get 1,000x gains on your investment if you sell half after its price doubles. Buy as much as you feel comfortable with and let it grow or die.

When the market goes down, take money from the non-crypto portion of your portfolio and put it into crypto. I raise my allocations when the market drops.

Know thyself

Before you get too far into crypto, you may want to get an overall perspective on your entire financial situation, your goals, and what you need to be comfortable and secure.

That includes debts, investments, available lines of credit, financial commitments (e.g., rent, car payments, social clubs), and everything else that you consider valuable or important to your happiness and well-being.

Start with a free account with Personal Capital.

Once you create your account, you can link all your financial information to a dashboard that shows all of your investments, including your crypto. Use this dashboard to see everything you own.

Also take advantage of free debt/savings calculators, cashflow management, net worth, portfolio performance, and budgeting tools. That way, you can take inventory of your assets, liabilities, and the risks and opportunities that come with them.

If you really like Personal Capital, you can sign up to get wealth management from a financial advisor. The dashboard is free no matter what you do.

Know thy taxes

Until I got into real estate, I didn’t realize how much your taxes could change depending on your financial decisions and how you account for “things.” A decision that makes perfect sense for one person could make no sense for another, simply because of their income, circumstances, and applicable laws.

Even staking or rebalancing your portfolio can drastically change your overall portfolio results, simply from changes in the amount of taxes you owe or the value of the deductions you can take.

Does your country treat crypto transactions as taxable events? Can you deduct the losses from your taxes, saving you money? What are the tax consequences of buying, selling, and using bitcoin and alts?

How do you account for gas fees, swaps, and withdrawal fees? Staking rewards?

What about dead altcoins—can you claim those as total losses without selling? And airdrops—how do you declare those? Do you even need to?

What about tax-loss harvesting? Do you have non-crypto assets with gains or losses to offset your crypto gains and losses? Does it even make sense to do that given your tax situation?

The list goes on.

Over the long run, small changes in your life or the tax code can change the costs and benefits of every decision you make—not just in crypto, but also in every other financial investment.

I haven’t found any accountants knowledgeable enough about crypto to advise me, nor any good online tax preparation services for crypto. It sucks and hopefully somebody will fill that gap soon. Better yet if governments made sane, simple rules about how to account for cryptocurrencies, but I’m not HODLing my breath.

If you know anybody who can help, can you please tell me about them? Email mark@markhelfman.com or comment below.

Not just crypto

Since I write a crypto newsletter, I won’t say much about other investments but it’s worth your time to look into alternatives.

I like real estate because, in the US at least, it gives you several ways to build wealth—cash flow, equity, and tax breaks. Properly managed, you can earn very low-risk annual returns of 20% or more on an asset that historically keeps pace with the rate of inflation.

I also like to keep lines of credit as a cheap source of money for investing or emergency expenses, plus cash and cash equivalents like TIPS, stablecoins, and short-term bonds.

On top of that, I have small stakes in several private businesses. Small for them, big for me 😃

I keep the rest of my portfolio with Personal Capital. My financial advisor figures out what to do with that money.

While that might not go into as much depth as you’d like, hopefully, it gives you some food for thought or good ideas. Maybe even saves you an email :-)

Relax and enjoy the ride!

Were you surprised by the sudden pump and dump on Thursday and Friday?

Hopefully, you got my most recent update so you knew to expect those kinds of moves.

We may see even bigger swings soon, possibly lasting a few days or even weeks. Don’t read too much into it and keep in mind the other things I said in that update. You should’ve received it on Wednesday. If you missed it, get it now.

Tough times for crypto but even worse for passive investors in the US stock market. Two consecutive down months, a worse performance than bitcoin, rumors of a disappointing earnings season coming, expectations of a 75 basis point rate hike in November, and a strong US dollar that continues to crush profits from foreign markets.

Sadly, I don’t know much about the stock market. Can I offer some perspective on crypto?

On longer timeframes, bitcoin’s price shows a falling wedge pattern with bullish divergences on several trading indicators. You can see this on several charts, for example, the three-day trading chart (without the indicators for better readability):

It’s a bullish trading setup but these patterns emerge from time to time. I talked about it in my recent updates to paid subscribers. Once the pattern breaks, this is a simple trade to execute (though not necessarily profitable).

Since we don’t trade, we don’t need to do anything. It’s just perspective.

When you see a chart like that, your reaction might be “OMG THE BOTTOM’S IN BULL MARKET BUY BUY BUY!”

If anything, your reaction should be “ok, I’ll make note of that and take it under advisement.” Patterns change, trends shift, and sometimes the price does a fake-out or shows weak follow-through.

Scroll down for a poll, meme, videos, personal news, and articles you may enjoy.

Poll: why is bitcoin outperfoming the NASDAQ and S&P 500 in September and October?

Pick one:

* It's a fluke / the tables will turn soon

* Vagaries of the market (i.e., nobody knows)

* The bottom's already in for bitcoin, maybe not for stocks

* Revenge of Stock-to-Flow

Discord Channel Coming Soon

Thanks to Writers Dorm, I will soon have a Discord channel. To join, you will need to buy an NFT. I’ll tell you more about this in the coming weeks.

Before I launch it to everybody, I want to make sure it works ok. I don’t need all the kinks worked out—this is new technology, after all—but I want to test the process and features first.

To start, I airdropped NFTs to everybody who collected my first Mirror post, Hold This Thought. You’re the guinea pigs.

If that’s you, look for a little MATIC in your wallet and connect to Blockscan.Chat for a message to confirm it’s actually from me. All interactions will come from my public wallet, 0x9a6600c7B40801dda9A0Fa4E8DE7b1B99FE524a7.

(Only I control the keys to that wallet.)

Everybody else, stay tuned for more information.

For instructions on the NFT process, visit Get a Pass and View or Sell Your Pass or reach out to the Writers Dorm help desk. You can also email me at mark@markhelfman.com or DM me on Twitter.

Tap this button to learn more about Writers Dorm.

The TIE hosted its Q4 Crypto Outlook, a discussion of the top 6 ecosystems, Bitcoin, Ethereum, Arbitrum, Avalanche, Polygon, and Solana.

The team discussed each ecosystem as its own topic, looking at where it’s growing, where it’s shrinking, and how each one compares to the others.

It’s only accessible to those who have a LinkedIn account.

Some questions they raised:

* As leverage leaves the market, is that good or bad for crypto?

* How legit are centralization risks from entities that can hijack proof-of-stake protocols?

* Does Arbitrum embody the “killer app” approach to ecosystem development? For example, Arbitrum activity is up 600% since August from GMX, NFT rewards, and a rumor of airdrops—despite having no token and using essentially the same technology as Ethereum.

* What matters more: a high lending rate or a high staking rate?

While I’ve talked about the idea of bitcoin’s price dropping to $14,000 since May, only recently have I gotten questions about it. My answer in this video:

On a side note, if bitcoin’s price drops to $14,000 (27% drop to a natural technical level) and the S&P 500 drops to $2,400 (33% drop to match the proportional bottom of the dot-com bust)—would that make you feel different about crypto?

I don’t post much on YouTube but if you subscribe to my channel, you’ll get the videos when everybody else does.

Google selects Coinbase to take cloud payments with cryptocurrencies and will use its custody tool

Bottom line: Google will use Coinbase for crypto transactions and Coinbase will use Google’s data infrastructure for Web3 and application development.

My take: it sounds like a win-win. I’d love to see how much Google makes on those crypto transactions (Coinbase gets a cut). I’m not sold on the idea of people using crypto for routine transactions—I would expect simple payments will run on Lightning Network (start and end with local currency), collateralized payment protocols like Flexa and some DeFi platforms, or traditional Fintech as it does today. But it’s one more small reminder to mainstream users that crypto is a real thing, which will help lobbyists advocate for us and make some people more receptive to the technology (or at least less dismissive).

Why we care: it’s easy to think crypto sucks, will never recover, and everybody’s out to kill it. It’s also easy to get carried away with every story of “adoption” (that often isn’t really adoption). The truth is more nuanced and frequently more favorable to crypto than you might think.

Job Corner

* Gainium | Content Writer | Link to position

* OpenSea | Senior Manager, People Operations | Link to position

* Polygon | Associate, Business Dev | Link to position

* Wintermute | Senior Frontend Dev | Link to position

* Aptos | Marketing Lead | Link to position

* WOO Network | Marketing Intern | Link to position

* Gomu | Developer Advocate | Link to position

* Artblocks | Senior Project Manager | Link to position

Most of these job listings come from the ToolsForCrypto newsletter.

Relax and enjoy the ride!

In case you missed the announcement, I wanted to remind you that this newsletter is going up in price soon.

Right now, you can subscribe for $12/month or $136/year. After October 12, 2022, that will go up to $22/month and $180/year. If you’re not already on the paid plan, tap this button to lock in your lower price now.

If you’re already on the paid plan, no worries! Your price will not change at all for as long as you’re subscribed, even if you signed up at a lower price.

Mark, why tell us in advance? Just raise the price and move on.

I thought you might appreciate the heads-up.

Free subscribers, you should have already gotten emails encouraging you to sign up for a paid plan now before prices go up. I realize this may seem sudden if you’re on the fence. Three days is not a lot of time to make a decision! Check your inbox for emails from October 6 and 8 with more information about the change.

A quick summary of today’s crypto market, visa vis bitcoin (altcoins will go wherever bitcoin goes):

* Half of the bitcoin wallets sit in profit. As a whole, whales and OGs still have substantial unrealized gains.

* We see strong accumulation among people who are already in the market, but not much new money coming in.

* Bitcoin’s price is beyond the extremes of its historical range against all benchmarks, but it’s also behaving exactly as it has during previous market bottoms—up and down a lot within a sideways range for months.

* The market capitulated in May and we’re well past the anger phase of the Wall Street cheat sheet, but it’s unclear whether the bottom’s already behind us.

At the same time, the US government is draining liquidity from its financial system and trying to drive down the price of everything, everywhere. China remains aggressive in propping up its property market. England and Japan need extensive government interventions to keep their currency and debt markets from collapsing. The European Central Bank remains ambiguous about whether to raise rates into an energy crisis and possibly trigger sovereign debt defaults for some of its member countries, or let inflation run wild and possibly watch the Eurozone collapse.

Cumulatively, those economies produce roughly 70% of the world’s GDP.

And you think you’re going to find an analyst who knows exactly what’s going to happen next? You might upend your finances to avoid one fate, only to set yourself up for another.

For example, oil prices have collapsed in the past few months. You’re about to shift your investment strategy to capitalize on this change, then suddenly OPEC announces it’s cutting production in November.

How do you factor that into your decisions?

Fortunately, this is not a macro newsletter. We stick to crypto.

In my most recent update for paid subscribers, I shared an odd similarity in today’s price movements with those of April 2021, looked at some interesting behaviors among market participants, and reviewed ten more altcoins.

Tap this button to catch that update.

In last week’s poll, I asked “if forced to choose, do you think bitcoin's price will ever go lower than $17,600 again?”

67% of responders said “yes.”

That’s slightly higher than the “yes” rate when I ran the same poll in August.

What do I think?

Sure, I could see bitcoin’s price dropping to $14,000. It may even go up to $25,000 or $30,000 first. While that would seem extreme by historical standards, it would fit the range of volatility we see at market bottoms.

If you’re concerned about crypto, you might want to limit your exposure to US stocks, too. Many analysts say the stock market is correlated to bitcoin!

I’ll have another poll next week.

Mt Gox Saga Nears End of the Road

Bottom line: Mt. Gox awardees must finish their claims by January 10, 2023. In practice, this means verifying their identity, selecting a method of compensation, and registering with one of the exchanges that will pay out their claims.

My take: I thought these payments were going to go out by now. Can we get on with it? At least then we won’t have this cloud hanging over the market, where nobody knows the schedule for when these bitcoins will get distributed, how many people will opt for a cash settlement, and what impact the roughly $2 billion in bitcoins will have on the market.

Why we care: still another shoe to drop, the only question is how much impact this will have.

A few people wondered about whether to harvest tax losses (sell crypto at a loss, then buy it back again).

I share my thoughts on that in this video.

I don’t post many YouTube videos but if you want to subscribe to my channel, tap this button. You’ll get the videos as soon as I post them.

Circle removed $9 billion from USDC supply in the last three months

Bottom line: investors redeemed $9 billion USDC for US dollars since June. In other words, this cash left the crypto market and Circle burned the associated tokens.

My take: I talked about this in my September 30, 2022 update. Perhaps somebody at The Block was listening? All the other stablecoins went up or held steady. Usually, all stablecoins go up or down at roughly the same time (though not in the same amounts).

My best guess about why only USDC has seen a drop, but other stablecoins have grown or remained relatively flat?

If you’re an institution or large investor, you’re probably finally getting a good yield with T-bills, US bonds, and money-market funds without the hassles or risks of DeFi and other yield-bearing activities that involve crypto. So you’d want to cash out your USDC for US dollars, then buy those other investments.

Also, maybe some people swapped out their USDC in advance of Binance’s September 29 conversion of USDC to BUSD. Nobody knows.

Why we care: because that’s $9 billion that can’t buy crypto. At the same time, that $9 billion may have never been intended to buy crypto, it just stalking lower prices or farming yield in liquidity pools. And nothing prevents that money from coming back immediately. Getting USDC is very easy.

Stake now or forever HODL your peace

As I review ten altcoins with each update for paid subscribers, I sometimes talk about staking.

When the market’s calm and prices are low—like now—it’s a great time to move crypto into your personal wallet and stake to the protocols you like.

Staking gives you free crypto. It’s also a chance to try out the technology you’re buying into, and it forces you to learn how to navigate Web3 apps, interact with smart contracts, and use non-custodial wallets.

Blockchain.com published a good, brief article with an overview of the concept. If you’re not familiar with the idea of staking, read the article.

Visit CoinGecko or Staking Rewards to get staking information for specific projects. Also, YouTube has lots of how-to guides.

Here’s a little inspiration.

Job Corner

* Gainium | Content Writer | Link to position

* Phantom Wallet | Front End Dev | Link to position

* WalletConnect | Swift/IOS Engineer | Link to position

* Evmos | Business Development Manager | Link to position

* Phala Network | Community Manager | Link to position

* ENS | Project Manager | Link to position

Most of these job listings come from the ToolsForCrypto newsletter.

Relax and enjoy the ride!

People call this an emergency meeting but it’s not uncommon for the Fed to hold meetings that aren’t posted on its calendar.

I’m guessing there’s more urgency to this one because of the near-collapse of the UK’s pension funds and rumors that China and Japan are about to sell their stockpiles of US treasuries and dollars (if they haven’t done that yet).

But this is not a macro newsletter. From the outside looking in, it seems pretty simple to me: the Fed will stop raising interest rates once US inflation goes below 4% or the target rate goes above 4% and not a moment sooner. The only question is how it gets there and which comes first.

In any event, I’m back to posting on Medium and other outlets. I had to step back from free content to take care of important non-crypto activities and do some content/business planning.

When you have two minutes, read my latest post, Two Minutes on Crypto—October 1, 2022.

Also catch my bitcoin and altcoin market update from last week.

Scroll down for a meme, a poll, and some content you may enjoy.

Did you know I have a list of newsletter recommendations?

Substack, my newsletter provider, only gives me space for seven recommendations, but I subscribe to more newsletters than I can fit on the list. When you scroll down, you’ll notice a section for job listings in crypto. That section comes from the ToolsForCrypto newsletter, aka TFC.

They cover Web3 platforms, products, and stories—for free!

Poll: if forced to choose, do you think bitcoin's price will ever go lower than $17,600 again?

* Yes

* No

Throw your Bored Apes in the trash

Pseudonymous author O.C. Ripley gave a nice rundown of some NFT use-cases and compared NFT blockchains. Tap this button to read his/her/their Cointelegraph article, Throw your Bored Apes in the trash.

BTW the article talks only a little about Bored Apes, it’s mostly about the larger NFT paradigm and investment concept. Clever headline!

If you’ve subscribed for a while, you know I follow YouTube trader Alessio Rastani.

While I don’t suggest doing anything because a YouTuber said so, I’d suggest you follow Alessio and watch his videos. He posted an alarming video about the US stock market, noting a technical pattern that has led to drastic declines most of the time.

By now, you know I own stocks because I have to as part of my portfolio strategy, but I’m not big fan of them for a few reasons:

* The overall market is still overvalued against all historical benchmarks.

* Too many businesses have no profits and they will drag down the rest of the market as the world’s economies deflate.

* Index investing has stripped valuations of any relevance to anybody who isn’t an expert in stock analysis.

* Generally, the upside is smaller than properly-financed investment properties and crypto, though individual stocks may offer great deals right now.

If you’re trading the market, none of that should matter to you, you only need to think about how to place your bets as the market goes up and down. This video may help you do just that.

Jobs in Crypto

All job listings come courtesy of the ToolsForCrypto newsletter without edits or commentary.

* Phantom Wallet | Front End Dev | Link to position

* WalletConnect | Swift/IOS Engineer | Link to position

* Evmos | Business Development Manager | Link to position

* Phala Network | Community Manager | Link to position

* ENS | Project Manager | Link to position

Relax and enjoy the ride!

A full 50% of you said interest rates matter more than analysis. 30% said they don’t care about it at all.

I guess I serve the remaining 20%.

It’s a pretty simple equation: the Fed will stop raising interest rates once inflation goes below 4% or the target rate goes above 4% and not a moment sooner. The goal is to make everything you own worth less, whether that’s your house, cash, crypto, stocks, bonds, jewelry, furniture, and everything else, whether you live in the US or another country.

The brightest investing minds of our generation keep looking for a place to hide, seemingly to no avail. India and USD are crowded trades. Equities seem destined to underperform (or worse) in the coming years. Sovereign debt is as risky as it’s ever been. Commodity prices have either cratered or look like they’re about to fall off a cliff.

Sometimes, you just have to buckle up, take your licks, and prepare yourself for whatever happens on the other side.

No surrender, no escape.

(But short-term government bonds offer some refuge.)

If it’s any consolation, most financial assets are still overvalued relative to their historical benchmarks. Bitcoin is not.

(Most altcoins have no historical benchmarks.)

In my most recent update, I revisited the idea of a $14,000 bitcoin, showed you possible signs of new buyers (finally, barely) tip-toeing into the market, and gave my take on the altcoins ranked 11-20 on the ByteTree terminal. If you missed it, catch it now.

In my next update, I’ll look at some interesting patterns with stablecoins, whale behaviors, and a rise in new bitcoin addresses for the first time in a year. Look for that towards the end of the week. Expect the monthly issue within the next day or so. 

Scroll down for a podcast and some other content you may enjoy.

Twitter isn’t the best place for financial analysis but this tweet seemed interesting. I’d love somebody to dig deeper into the data and tell me whether it’s legit.

If you have a knack for financial engineering, please read the thread and comment below with your own commentary on it.

Recent episode of The Scoop podcast, FTX’s Brett Harrison unpacked how regulatory uncertainty holds back the crypto industry. Listen to the episode, it’s less than 30 minutes long.

There’s some inside baseball and jargon in the conversation, but I found it pretty straightforward and illuminating.

Imagine it’s 1991 and the United States had a requirement that all Internet Service Providers kept a paper copy of emails that people send through their platforms.

That’s a straightforward law, unambiguous and operationally simple. But it makes no sense for email. In fact, it defeats the whole purpose of email while adding unnecessary costs, new risks, and severe constraints on innovation for any ISP operating in the US.

That’s the state of US regulations as they pertain to cryptocurrency. They make no sense and nobody’s proposed anything better yet.

At least the EU has something worth debating.

A recent video from Wolves of Crypo raises a red flag on central bank digital currencies.

I’m not big on alarmist content and WoC doesn’t usually do that kind of thing, but this one delivers a strong message.

TL;DW—beware government obsession with “blockchain not crypto.” Governments will use CBCDs to control your liberty and limit your freedom.

While I have a more nuanced and measured view on CBCDs, this video cuts right the heart of the matter in simple, clear terms.

(BTW, the US has no appetite for a CBCD. Our government has put too much time and effort into the FedNow payment infrastructure, the banking lobby is too powerful, and even anti-crypto people don’t like giving the government permission to reach into their bank accounts.)

Chainalysis 2022 Global Crypto Adoption Index

Bottom line: Chainalysis research shows the class of 2021 continues to invest in digital assets and cryptocurrency markets remain relatively active despite this year’s decline in prices. Big, long-term cryptocurrency holders continue to hold and remain optimistic the market will bounce back. The highest levels of grassroots engagement come from middle-income countries, though somehow China ranked #10 despite “banning” crypto.

My take: meshes with what we see on-chain and in various trends. Not much new money coming in but higher engagement/interest levels than 2020 and strong accumulation patterns among people who already have money in the market. Huge whales are still trimming while small hodlers disappear and pretty much everybody else continues to stack and grow (the “whale-eating fish” phenomenon). Most of the rest of the world still seems engaged or curious.

Why we care: it’s easy to believe crypto is dead because the news from DC and crypto prices seem scary. The truth is somewhere in between Peter Schiff and Anthony Pompliano (as always).

If you don’t want to read the whole thing, skip to the key takeaways.

Relax and enjoy the ride!

Woe to anybody holding anything that has financial value in the US.

Could be worse, though. Australia’s housing market is a toxic mix of variable-rate mortgages and insanely high property values. China’s real estate market seems on the verge of collapse.

And here we are with crypto.

No surrender, no escape.

While the smart money investors wait to see whether the Fed raises rates by 75 or 100 basis points, it seems silly to think that way. Both decisions get the same result. Until the target rate goes above 4% or inflation goes below 4%, you know exactly what the Fed will do.

Some people say stick to cash. Not a bad idea in all market conditions. When things are zooming, you keep yourself from chasing after the markets, whether that’s crypto or anything else. When things go bad, you can take advantage of those times. This is part of my portfolio strategy.

Consider your options, though. Bitcoin is undervalued based on all historical benchmarks and data models, while most other assets remain elevated (including the US dollar).

We know things are going get worse—we’ve known that for a long time—but nobody knows how bad things will get or how long the bad times will last. Do you upend your finances for a 20% swing in an asset that goes up and down 50% at the drop of a hat?

For that reason, I stick to my plan.

In my most recent update, I gave my opinions on the top-10 altcoins.

I also talked about percent supply in profit. Not even three days later, famous analyst Willy Woo tweeted about that data, with a different chart.

Coincidence?

As I noted in my update, this metric includes 4 million bitcoins that are probably lost but sitting in profit. It also doesn’t account for paper-traded bitcoins on exchanges and investment funds. As a result, it’s skewed.

For that reason, I don’t worry about the specific levels, just the trends and behaviors it reveals.

In my next update for paid subscribers, I’ll look at some other trends and behaviors, and share my thoughts on the altcoins ranked 11-20.

Crypto is Easy is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Scroll down for a poll and some news and content you may enjoy.

Poll: do US interest rates matter more than crypto market analysis?

* Yes

* No

* I don't care about US interest rates

All of the US government’s crypto reports in one place

For those who want to keep up with the US government’s thinking around crypto, The Block published all of the agency reports.

US agencies publish these reports so the public, Congress, and other agencies know what’s going on. They don’t carry any legal weight, they’re published for transparency and commentary. We may not have new rules or regulations for months or years—and nobody knows what Congress will come up with in the meantime.

All of these changes will come in 2023.

On that note:

Nice summary, great that it’s a tweet, and hopefully it gets into the hands of people who can make money off of this information. They will be our biggest advocates in Congress and the White House.

On another note:

Treasury Won’t Punish Dusted Celebs, Will Allow Users to Recover Funds From Tornado Cash

Bottom line: US citizens can create and use mixers but not Tornado Cash. Also, the US government will let you recover any lost funds and will not prosecute you for your past use of Tornado Cash unless they have some evidence you did something illegal.

My take: who’s going to create Hurricane Cash? And what’s this thing about recovering funds? Sounds good but you need to fill out an OFAC license application with your personal information, which defeats the whole purpose of using a mixer. And then you have to wait god-knows how long to get your funds, through some mechanism that seems unclear to me.

Why we care: people think US law enforcement wants to kill crypto. More likely, they don’t know how to police the use of crypto under US laws—which makes sense because US laws make no sense.

This chart from Ecoinometrics shows the growth of the number of bitcoins in public companies and ETFs.

While companies and ETFs added to their holdings, the overall total went down across all entities.

That drop may come from a gap in the data set that went into the chart. Dig deeper and you see that big drop in “governments” comes from the way BitcoinTreasuries.net accounts for Ukraine’s holdings. The 2021 data includes disclosures from civil servants—government officials, not the government itself, but that’s how it’s accounted for. The 2022 data doesn’t exist (yet?) and presumably went into the calculation as 0, which makes it look like governments saw a precipitous drop in their holdings but we don’t really know.

The coming months will tell us a lot about just how strongly these entities want that bitcoin.

Relax and enjoy the ride!

Some commentators started talking about another bear flag on the weekly trading chart. That’s bad news for anybody who wants crypto prices to go up.

For my thoughts on that, catch the update from September 1, 2022.

Bitcoin finished green for the week. So did the DXY, a common measure of the US dollar’s price. Meanwhile, the S&P 500, Dow Jones Industrial Index, and NASDAQ 100 all finished down for the week. So did corn.

Is this a one-week divergence from well-established correlations or the start of a regression back to crypto as a non-correlated asset?

We’ll find out in many months, once the data people have a chance to run the numbers.

Since June’s market collapse, we have seen a surge in the number of wallets holding more than $2,000 worth of bitcoins. It’s still trending up, as you can see in my Accumulatoors chart.

That chart splits out separate bars that represent various sizes of wallets, from big to small, so you can make some inferences that you can’t make from the aggregate data.

We don’t see a small number of large holders dumping on a large number of small holders while the total amount of wallets goes up. Instead, people at all levels are stacking sats.

While that sounds nice, we still don’t see a lot of new money coming in. Just people like us padding our stash. Until that changes, the market can’t go up.

Story of 2022.

Poll: when will the bear market end?

* Already did

* November 2022

* Sometime in 2023

* After the next bitcoin halving

Congressman flags rising crypto fraud, demands answers from regulators

Bottom line: a Congressional committee wants to know what actions regulators and crypto exchanges have taken to combat fraud and clarify confusing and overlapping authorities.

My take: this is a smart and balanced approach to lawmaking but it won’t matter for any committee hearings. Those are just opportunities for Congresspeople to use other people’s words to make their own points. For enemies of crypto, no response will be good enough. For friends of crypto, every response will seem reasonable. For the exchanges, they just need to show they’re doing good things. Hopefully, they get some good PR out of this, too. For us, this is irrelvant. All the important details will get sorted out privately among the members and their staffs.

Why we care: when you hear “Congress” and “crypto” you may get worried but the reality is more nuanced than that. We have a lot of allies, we just need to give them good reasons to advocate for us. Hopefully, the exchanges will do just that.

NFTs are not dead and neither are scams. @zachxbt has another thread on some shenanigans you may have missed.

Some think US regulators need to double their investigative staff, but they really just need to hire a few on-chain Twitter sleuths. The blockchain exposes all.

Speaking of NFTs and things that are dead, you may appreciate a video I recently posted.

As we go through the regulation/litigation phase of crypto’s development, keep this tweet handy as reference. You’ll need it once lawmakers and regulators hand crypto over to the institutions (not the 2020-2021 meme but actual legacy finance and the people who run it).

As I wrote in Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency, legacy finance will bring a deluge of money into this space but it will also fundamentally change the nature of the technology and the investment opportunity.

Plan accordingly.

BTW you get Bitcoin or Bust and my other ebooks for free when you move from free to paid membership.

Relax and enjoy the ride!

Number 1: read the August monthly issue.

Number 2: cash is not trash. In fact, it is very useful. I hope I don’t give you any other impression.

Number 3: $14,000 seems like an extreme price for bitcoin but it fits within the range of volatility we see at market bottoms (in this case, 50% above or below $25,000).

In last week‘s poll, I asked “will bitcoin's price ever go lower than $17,600 again?”

66% of respondents said yes. They’re probably looking at this chart:

Since we see this bubble pattern play out time and again in all different sizes over many timeframes, it’s hard to know exactly where you are at any time. I talked about this in my June monthly issue.

We already reached capitulation. Did we hit despair yet?

Scroll down for some articles.

Read a post from Foobar about NFT-based royalties. If you own NFTs or you’re thinking about creating one, you may want to consider these thoughts.

Immutable proof of ownership has tremendous value and broad, lucrative applications. Even better that you can program global rights, benefits, and privileges that convey frictionlessly from one person to another.

BUT.

We still have a lot of things to figure out before NFTs go mainstream.

Listen to a conversation between the Web3 Academy guys and @Zeneca_33, with another slant on NFT royalties and the conceptual model of NFTs more generally.

I guess The Merge isn’t a thing anymore but it should be. Forbes published an interview with one of the partners in VC firm Pantera Capital, talking about winners and losers from The Merge. Some food for thought.

Relax and enjoy the ride!

Last month’s issue looked at the investment landscape and how we choose to define the opportunities and the risks it presents. This month’s issue talks about altcoins and strategic considerations, with a brief two-section preface.

Enter the tortoise

I’m more tortoise, less hare.

Steady persistence rather than bursts of frenetic activity. Marathons, not sprints.

Buy low and grow. Sell only when the market demands (and hopefully not at all). Build slowly, safely, and keep going until you reach your goal.

Mark, that’s so dumb. Your sell signal didn’t trigger at all in 2021. Think of all the money you’ve lost!

Yes, I’ve lost a lot of money from selling crypto. I’ve lost far less from buying it.

Maybe those sell signals are too high but I’m keeping them until I can find a better option (I’m trying). With my plan, the buying zone should continue to keep us from getting in over our heads.

In 2021, we sat on our hands from January to mid-May and again from August to December, with a 10-day buying window in September. We paid an average price of $39,400.

If we had dollar-cost averaged, what would our average price have been?

$47,430.

At the end of the year, bitcoin’s price was $46,195. Most traders had lost money, anybody who bought in October and November was down 30% or more, and even dollar-cost averagers were negative for the year.

With my plan, we had a 17% gain with cash to spare. Depending on the timing and amount of each specific purchase, you may have done far better.

Today, if you’ve followed the plan the whole way through, you might be down as much as 35% or up as much as 300%, but you’re probably closer to down 15-20% on your investment. Earlier this year, I changed the buying zone so the comparisons get a little fuzzy.

(With altcoins you may up or down much more.)

NFT come next

Now that NFT prices have collapsed, it’s a good time to look into them. Metaverse got a little over-hyped but there’s a lot of fertile ground there and NFTs have plenty of real-world applications that have nothing to do with jpegs, avatars, and digital real estate.

We’re at the very beginning of the NFT adoption cycle.

Some say verified credentials with decentralized IDs will make NFTs obsolete, but until somebody builds a platform that delivers these features at a global scale in a useful way, NFTs will have to do the trick.

My first step: learn how to do them.

As a start, I minted my first NFT, a Mirror post called Hold this thought. If you’d like to support me, use this button to see the post and collect the NFT.

For full transparency about where your funds go, follow this wallet, the one connected to my Mirror account:

0x9a6600c7B40801dda9A0Fa4E8DE7b1B99FE524a7

I’m not 100% sure what I’ll post there. Probably not anything as cool as UNDRGRND or as fun as Finney, but hopefully something valuable. Can you please leave a comment with some ideas?

I’m also working with Readl and SolType. I’ll reach out to NFTBooks soon and probably a few other platforms. Happy to hear your suggestions for where else I should look.

Is the bottom in?

Don’t be silly. The bottom is $0.

Will bitcoin’s price go that low?

We’ll see. For now, as long as its price stays above $17,600, we’re in a literal bull market, though I’m seriously thinking about banishing the terms “bull” and “bear” from my vocabulary, as they pertain to crypto.

Bitcoin’s price goes up 100-300% in bear markets and drops 30-50% in bull markets. Since November’s all-time high, the market has spent more days going up than down.

In 2021, we had two technical bear markets and two technical bull markets over 12 months. On-chain and technical metrics peaked in January 2021. Altcoin prices peaked in April and May 2021. Bitcoin’s price peaked in November 2021.

None of that makes sense within a “bull/bear” paradigm.

Do bear markets start after institutions and tourists mostly exit (November-December), traders lose their shirts (December-January), buyers disappear (all of 2022), liquidity dries up (April but arguably February), the overall market cap falls 70% from its peak (some altcoins are down 95% or more), and HODLers realize their largest aggregate losses in recorded history?

If it looks like a duck and quacks like a duck, it might be a platypus

For several months, we’ve seen striking similarities between behaviors we saw at previous market bottoms and the behaviors we see today. I reviewed this at length in several updates:

* Market Update - Crash Edition

* Market Update - May 17, 2022

* Altcoin Update - May 19, 2022

* Bitcoin and Altcoin Update - July 7, 2022

* Market Update - July 20, 2022

* Market Update - July 28, 2022

After the UST/LUNA debacle, I presented three scenarios for 2022:

* A replay of 2015. Bitcoin’s price never goes lower, the market meanders for a year, and then it goes up forever.

* A replay of 2018-2019. The market has one more drop, then goes up forever.

* Something in between.

Like so:

So far, our price action has matched most closely to 2018-2019.

On November 20, 2018, we hit bottom on the 1-day trading indicators and entered the “bottom” regions of several on-chain metrics. Then we had a dead-cat bounce and 25 days later, we suffered another drop to the 200-week moving average, roughly 25% lower than the lowest price on the day the indicators bottomed. After that, bitcoin’s price climbed 35% and then started to trend down.

On May 12, 2022, we hit bottom on the 1-day trading indicators and entered the “bottom” regions of several on-chain metrics. Then we had a dead-cat bounce and 28 days later, we suffered another drop to the 200-week moving average, roughly 25% lower than the lowest price on the day the indicators bottomed. After that, bitcoin’s price climbed 35% and then started to trend down.

Not so fast . . .

That’s a nice coincidence and it might sound good because that means the worst is over and it’s only up from here. Disbelief rally, not relief rally.

Let’s hope that’s not what’s going on.

From May to June, diamond hands and true believers lost tens of billions of dollars from lending platforms and everything related to LUNA/3AC.

I lost almost 3% of my portfolio to LUNA/UST. If I had waited two more weeks to take Celsius off of my recommended crypto savings platforms, it would’ve been worse.

Those diamond hands—people like us—served as the floor for the market from January to May. Like us, they planned to keep their money invested. They committed to the market financially and psychologically.

You can’t lose $60-80 billion in dedicated, committed, long-term capital and expect to get it back in a few months.

If the market goes up too fast too soon, too many new buyers will get too excited. They’ll sell.

You might, too. When you’re back to even or maybe up 50% it’s hard to resist the temptation to sell everything or take profits—especially when you’ve sat through a big drop and told yourself “I’m not going to make the same mistake again.”

To get the sustained growth and massive appreciation you want to get out of crypto, you need people with conviction and intent, who want crypto more than they want their government’s money and will tolerate volatility.

Fed to the rescue?

Some people think the US central bank will stop raising interest rates and pump the markets again.

I’ll believe it when I see it.

The chairman of the Federal Reserve said they will keep raising rates as long as necessary to bring down inflation. Inflation barely dropped last month. It’ll take a lot more than that to change the Fed’s plans.

If that means the rest of the world needs to suffer, that’s a price they’re willing to pay. They want you to have less money and make less money. The goal: crush the prices of assets, goods, and wages to preserve the integrity of the US monetary system.

As long as the real economy doesn’t fall into a tailspin, rates will continue to go up.

People think crypto will suffer as a result.

I’m betting people will suffer as a result. Crypto will bring some relief—an alternative to falling stock prices, rising rents, higher interest rates, and general hardship.

That’s the overarching thesis for crypto since I came into the industry and my motivation to write Consensusland. The traditional financial system no longer gives people the lifestyle and opportunities they want.

Crypto might.

Not today, Mark

I know.

Drama about the Merge. Regulatory crackdowns. Cranky tech. Bear flag developing on the weekly trading chart. Mt. Gox settlement dumping roughly 140,000 bitcoins onto the market. Scant evidence of new buyers. We still don’t know what other exchanges and platforms will fail as the market shakes off the fallout from the collapse of 3AC and lending platforms.

Some people advise you to wait until it’s clean and the macroeconomic situation improves.

You could be waiting forever. We’re still waiting for the stock market to show signs of life but pension funds keep putting money into it.

Agriculture and real estate are loaded with people facilitating sanctions evasion, embezzlement, money laundering, drug deals, and human trafficking. Yet, people still buy food and houses.

Some expect the stock, food, and housing markets will collapse.

What if that doesn’t happen? Or if it happens in 2-5 years, at higher prices?

For a brief digression about the practical difficulty of predicting the housing market, read this bonus content.

I don’t have enough space to put it here and anyway, this newsletter is about cryptocurrency, not the US housing market.

I’m not frothing at the mouth to buy more stocks, food, or real estate, but modern economies are too complex for sweeping generalizations. We know we’re in for a bumpy ride, but we don’t know how bad it will be. Markets adjust. Humans adapt.

You can wait until all the shoes fall, but you might be waiting forever.

Embrace uncertainty.

The altcoin parabola you didn’t hear about

What’s the most uncertain part of crypto?

Altcoins.

More like ALT-SCAMS, Mark! No liquidity. Dead. Crypto winter.

Perhaps you missed the shift in momentum from bitcoin to altcoins?

Look at this chart, which is slightly modified from the version I share with subscribers on the paid plan.

This chart compares bitcoin’s market cap against all non-ETH altcoins so you can see what portion of the market each asset captures. It strips out USDC, USDT, and Ethereum to better reflect the true dynamics of altcoins vs. bitcoin.

When the line goes down, altcoins are losing to bitcoin. When the line goes up, altcoins are winning.

For 18 months, bitcoin’s dominance crushed altcoins in an accelerating, parabolic black arc—a long, powerful trend marked in black in the image above.

What happened at the end of June?

Look at the grey circle. Altcoins broke the parabola. They shifted the trend.

Since then, altcoin dominance has grown.

Why?

I don’t know, but I’d guess it’s because almost everybody who wanted to sell their altcoins has already sold.

Meanwhile, we still see plenty of bitcoins in the hands of people who plan to sell or have to sell, e.g., miners, bankrupt lenders, and recipients of the Mt. Gox settlement. That should tamp down on bitcoin’s market share, at least in the short term.

$500 billion worth of scams

That dominance chart looks at altcoins vs. bitcoin, not the overall market and larger trends.

You may look at the $500 billion altcoin market cap—or even the $300 billion market cap of altcoins that are not Ethereum—and think it’s too high.

$500 billion for money that nobody uses? Scams and Ponzi schemes? Platforms that can’t function at scale (and in some cases, at all)?

That bubble has a lot more popping to do.

Or does it?

Most altcoins are dead already. That includes most of the top 50. They just don’t know it yet.

If people sell $200 billion in dead altcoins to buy $200 billion in good altcoins, does that count as “the bubble popped?” The total market cap remains the same but lots of altcoins go to zero.

Market cap is simply the product you get when you multiply the number of coins by their prices. It’s fair to question whether this matters for altcoins.

For example, if 99% of a project’s tokens are held by people who died, don’t care, lost their keys, or gave up on the project, that means 99% of the tokens are off the market, possibly forever. They’re more like unissued shares of stock, which do not get counted when calculating the market caps of publicly-traded companies.

Yet they’re included in the market cap of altcoins. It’s a massive distortion.

It’s down 90%, it can go down another 90%

No kidding.

Did you know altcoins can go down 90% after going up 90%, too?

Every altcoin can drop 90% at any time. Most will drop 100% over time. Some will go up 1,000% or more.

So what? For any altcoin that fails, you’re going to lose 100% anyway, no matter what the price is when you buy it. For any altcoin that succeeds and is designed to capture value from its success, you’re going to come out way ahead.

You get a better deal after the 90% drop.

This is a speculative market. Price tells you nothing about the merits of the project or its token, only how much hype it’s getting on the day you check.

Experimental technology, all of it

Yes. That’s the point. It’s experimental. When you get in before the kinks get worked out and the technology goes mainstream, you benefit from the growth along the way.

Does that pose extra risks?

Yes.

ETH 2.0 might fail. So might bitcoin’s Lightning Network. Smart contract hacks, bad wallets, protocol failures, and faulty codes plague the space.

Luna had arguably the best-designed wallet, lots of interesting applications, functional smart contracts that passed their audits, and platforms that actually worked.

The problem?

Everything depended on its stablecoin, UST. Once UST failed, the project was useless.

Such are the risks you take with experimental technology. It’s not just user fit, good design, solid tokenomics, strong community, and savvy marketing.

So much has to come together in just the right way but nobody yet knows exactly what configuration to put it in so that it all works. To some extent, luck plays a role.

As a result, it’s ok to grade on a curve.

Nobody knows what matters yet

We’re all figuring this stuff out as we go along. Welcome to the Age of Monetary Exploration.

As a feature for people on the paid plan, I publish occasional reports on smaller altcoins you probably haven’t heard of yet.

They’re all legit and some are now well-known, but their books are not written yet.

Take Theta, for example. It’s too big for my altcoin reports but it’s a great project with actual users and developers. A lot of people like it, as do I. It’s exactly the kind of project that can dominate Web3.0.

Or is it?

Will Web3.0 platforms run on their own cryptocurrencies instead of Theta? Might they exist as protocols and smart contracts built on Ethereum or some other layer one?

Maybe developers will build apps that draw content from global, distributed storage platforms like 0chain and Arweave? Content creators will store their content locally and use smart contracts and NFTs to monetize, share, and license their creations and rights to their assets.

If that happens, Web 3.0 tokens will serve no purpose (no pun intended). You’ll have self-custodial storage and programs that manage how you share and monetize your data—perhaps delivered on a routing platform like Syntropy, beyond the reach of internet service providers.

“Web 3.0” but not in the form you’re thinking about now.

Nobody knows. With time and technology, the market will find the answers for us.

Don’t wait for the bull market

Some say friends don’t let friends buy altcoins during bear markets. Others say save cash for new projects that will come along in the next few years.

Bear markets are awesome. You can find lots of interesting projects at low prices. You get to interact with earnest teams and communities that care about the projects. Why else would they stick around?

If you wait for confirmation that the bottom’s in, consider the money you lose from waiting.

For example, if you bought altcoins in 2019, a true crypto winter, you peaked at a 3,000% gain. If you waited until December 2020, you peaked at an 800% gain.

Given the same risk and volatility, would you rather wager the same amount of money for a bigger gain or a smaller gain?

Once the bull market comes, you’ll make the same wager for a smaller gain.

On top of that, everything will get much harder, more expensive, and more stressful—especially if you wait for altseason. Watch this video from February 2021 for more of my thoughts about that.

(NOTE it’s 18-months old, talks about a service I no longer provide, and refers to a different time and market conditions. The message is about altseason, not me.)

Eighteen months ago, in the middle of altseason, I published that video for subscribers of my altcoin research service. Around the time I posted the video, I closed that service and switched admission to invite-only.

Some people thought it was a marketing ploy to create false urgency, but I genuinely felt too many subscribers only cared about flipping altcoins, which is not what I’m about. Switching to invite-only let me screen subscribers.

To be honest, I never felt like I was giving people what they wanted. Probably because I wasn't.

My service aimed to find great projects before they get big and stick with them for as long as the investment thesis remains valid (even if that means riding them to $0). Most subscribers wanted to make as much money as quickly as possible with as little work as necessary.

Not a good “product-market fit.”

Combined, my picks beat the overall market and Ethereum. Most of them lagged the market but the winners more than made up for the laggards.

I’m proud of the work but question the value of research and analysis during bull markets. Everything goes up for basically no reason, just speculative enthusiasm that masks the merits of many projects, as well as the risks.

Bear markets expose those risks and let good projects showcase their merits. Friends make sure friends buy altcoins during bear markets.

Don’t wait for new altcoins

Some people think you should set aside money for new altcoins, not the altcoins that already exist. They’re overpriced, no hype, old technology, and will never go back to their all-time highs.

I have no doubt that some of the best projects haven’t even been conceived yet or only just got started. If you have any to suggest or want to see what others have found, check out my discussion thread on altcoins.

Does that mean old altcoins are bad?

No. In fact, a few years of trial-and-error, community-building, and investment can do wonders for any project. New altcoins might not have that, but the “old” altcoins do.

(At least, any that haven’t died yet.)

Look back at the 2021, 2020, and 2017 altseasons. You can do this with the historical data on CoinMarketCap.

Do you have any evidence new projects performed any better or worse than the old ones? Why would you think they have any better chance of succeeding in the future?

“New” does not mean “better.” Sometimes, it means worse. No altcoin has beaten bitcoin’s performance from peak to peak, only from bottom to top.

“Boomer” coins can still boom.

No risk it, no biscuit

Does it seem reckless to do altcoins when the crypto market’s hanging on the edge of a knife and the traditional financial system seems on the verge of catastrophe?

Not to me. Every asset—including cash—is always considered capital at risk.

Altcoins are far more volatile but not necessarily riskier at these prices. Your downside is capped at 100% while your upside is limitless.

And unlike stocks and bonds, you can use altcoins (if you want).

Meanwhile, for tokens that offer staking rewards, you get free crypto while you wait for the market to recover. That’s free crypto for projects you already plan to buy into.

Why risk that upside just to avoid a 100% loss? Why sacrifice an eternity of growth for a chance to get “one last dip” that may never come?

No need to wait, no time to rush

As we work through the regulation/litigation phase of crypto’s development, you can expect people will not care that much for altcoins. Some may avoid the space altogether. Regulatory risks for people in the US, market risks for people in other countries.

Don’t worry. If all goes well, we’ll have plenty of time to accumulate tokens and participate in the projects they’re connected with. Let the regulators work out the regulations and give the market time to rebuild its foundation.

Your favorite stock will probably never return 500% in five years. Some altcoins will, and they’ll do far better over time. Let their prices rise and wait for the next crash to give you another chance to buy, maybe even at today’s prices.

Altcoins show a shift in momentum against bitcoin. Some of their tokens have dropped 99% or more. Many of the best projects have actual development, experience, and genuine community growth—something that altcoins never had before.

At the same time, bitcoin’s price is in the buying zone of my plan.

As long as it’s in that buying zone, feel free to buy altcoins, too. Take advantage of this moment. Buy low and grow. Bitcoin’s in a 13-year uptrend with massive tailwinds. Altcoins will come along for the ride.

We put our money on the line for a chance to grow our stakes in the financial networks of the future. Isn’t it fitting that we suffer whatever consequences come our way? Can’t we accept some loss in exchange for a much larger gain, over time?

Such is the nature of opportunity in this market. It takes courage, patience, and persistence.

Be courageous, patient, and persistent.

Relax and enjoy the ride!

If you’d like to support me, collect the NFT (bottom of the Mirror post) and subscribe to my feed (top of the Mirror post).

Stop Mark. Why should I care about you? Tell me about crypto.

Ok.

This week, the market went up, then down. Fundstrat chief Thomas Lee and crypto commentator Raoul Pal seem excited about what the prospects hold for the rest of the year.

It’s nice to get excited about crypto, but we still don’t see much new money coming into the market. The buying has mostly come from people who were already in the market (like us).

In 2022, crypto has seen a lot of artificial selling pressure from distressed miners, VCs, bankrupt lending platforms, customers of those lending platforms, and leveraged traders. A lot of people sold crypto they didn’t want to sell.

Soon, a few billion dollars worth of Mt. Gox bitcoins will hit the market, though probably not all at once.

Will that matter? What’s going on beneath the surface? What do you need to pay attention to now?

Check out my update from August 17, 2022.

Please note, in that update, I pointed out a trade setup that played out exactly as I described. If you’d have taken that trade, you would’ve made 15% profit (minus fees and taxes).

Don’t ever trade off of my analysis or anything I say. Never take anything I say as a prediction or “call.”

From time to time, I point out simple trade setups for perspective only, as a reality check. Sometimes they work out, sometimes they don’t.

I only follow my plan, no trading.

I see no reason to risk whatever good things will come in the future to chase a swing trade. My point in mentioning this one:

* So you’re aware of the market conditions and cautious about getting bullish when the chart shows a bearish trading pattern.

* Remind you that a 15% drop is a trivial amount, not guaranteed, and not worth getting worried about.

I’d be more mindful about the bear flag forming on the weekly trading chart. That’s a topic for a future update for paid subscribers.

Scroll down for a poll and some content you may enjoy.

Poll: Will bitcoin's price ever go lower than $17,600 again?

* Yes

* No

In last week’s rundown, I mentioned some crypto advocacy groups.

I should’ve included the Global Digital Asset & Cryptocurrency Association. Please visit their website.

Federal Reserve opens up master account access to banks with 'novel charters,' in win for crypto and fintech

Bottom line: US regulators carved out a path for cryptocurrency businesses to join the larger financial system and interface with the liquidity services of the Federal Reserve, for example, programs that support banks during distress or financial crisis.

My take: people can talk about “bad” regulators but the US government is more complicated, professional, and boring than you think. While the headlines may make you think the US government wants to crush crypto, they don’t reflect all of the activities across a huge bureaucracy that generally wants to support new technology and financial innovation.

Why we care: good people can disagree about specific policies and regulatory decisions, but within the US government, there’s a broad consensus that crypto has potential and needs its own framework. We may get outcomes we don’t like, but we may also get outcomes we like. Let’s not get so anti-government that we forget about the many public servants and legislators that want us to succeed.

In the wake of global sanctions on Tornado Cash and addresses that used the protocol, Empire podcast recorded a conversation with Coinfund CEO Jake Brukhman about how Crypto Networks are Public Goods.

Listen to the podcast.

Digital Assets Already Decoupled From Macro

Bottom line: while prices of digital assets and equities still often move in a similar direction, they seem to have lost their correlations.

My take: seems reasonable but I’m no statistician so I’ll wait for a consensus to emerge. Correlations come and go. Nothing lasts forever.

Why we care: if you’re basing your decisions on correlations, consider what might happen when the correlation ends. What about bitcoin’s correlation with corn since the beginning of June? Corn tracks corn? New alpha?

With the market so depressed and prices so low, you may want to buy some altcoins. I’ve been doing this every two weeks since the UST/LUNA crash. I may even publish a new series of articles with my non-altseason approach, to go with my Advice for Altseason.

(We’re a long way from altseason and may never get another one.)

Hedgehog posted a great, short article on its blog, How to research a cryptocurrency: Your DYOR Checklist. Read it whenever you can.

Relax and enjoy the ride!

Are you getting bullish?

In my August 11, 2022 update, I offered some thoughts about that, as well as a look at the altcoin market, institutional funds, and movements of stablecoins.

One takeaway for the those of you on the free plan:

True believers and diamond hands lost $60-80 billion in May and June, mostly against their will. Maybe that was you.

These people had every intention of keeping it in the market and adding more. They served as the floor that held the market up from January to May.

Their money’s gone.

If this market knows what’s good for itself, it will take a while to recover. The last thing we need is another bout of speculative enthusiasm to give new buyers a reason to exit before true believers and diamond hands rebuild their portfolios.

We need people with the strength and fortitude to stay committed to crypto during times of uncertainty and stress.

Lord knows there’s enough uncertainty and stress to go around nowadays.

There’s also still interest among large buyers and traditional investors.

We’ve seen net inflows into crypto funds almost every week since the LUNA/UST debacle. Wall Street heavyweight Blackrock launched a private bitcoin fund and says its Aladdin trading platform will use Coinbase for custody, brokerage, and execution.

In my July 20, 2022 update for paid subscribers, I noted four mining pools moved unusually large amounts of bitcoin (totaling somewhat less than $1 billion) at roughly the same time on or around July 15.

That was fishy.

Some might think that was a coincidence or an exchange urgently buying bitcoin to cover a deficiency. Maybe it was, but looking at other behaviors within the context of some other things going on at that time, I suspected it was part of a brokered deal on behalf of a large entity.

A few weeks later, Blackrock announced its bitcoin trust.

Was that bitcoin for Blackrock?

We’ll never know and it doesn’t matter. In that update, I was just pointing out how so many sellers had left the market that a big buyer needed to get its bitcoin from miners instead of an OTC desk or exchange.

To be sure, we’ll get more sellers as the price goes up and maybe even if the price goes down. We need buyers and HODLers to step up. I’ll keep an eye on stablecoins, exchange flows, and other behaviors and observations that can give us a sense of whether the market has turned a corner yet.

Scroll down for some big news (for me) and two items of note. I’ll have a poll and more interesting things next week.

I’m on Mirror

I published my first post on Mirror as a collectible NFT, titled “Hold this thought.” Check it out!

If you’d like to support me, collect the NFT (bottom of the Mirror post) and subscribe to my feed (top of the Mirror post).

After you do that, can you please let me know how it goes? It’s such a different interface than anything else you might use! You might find it too complicated. Any feedback will help.

For full transparency about where your funds go, follow this wallet, the one connected to my Mirror account:

0x9a6600c7B40801dda9A0Fa4E8DE7b1B99FE524a7

I’ll post more content on Mirror in the coming weeks and months.

A young crypto billionaire’s political agenda goes well beyond pandemic preparedness

Bottom line: FTX CEO Sam Bankman-Fried wants to have its way with Congress.

My take: seems pretty normal for a big corporate entity. SBF may have his own interests in mind but it’s always good to see crypto advocates build relationships with lawmakers and their staff.

Why we care: crypto can solve a lot of problems but it doesn’t exist in a vacuum. As with all human affairs, government plays a role. As a result, we need people with money, savvy, and connections who can get lawmakers to support what the industry is trying to do (even if we may disagree on specific ideas).

If you read the article, note Congressman Brad Sherman’s quote at the end.

Brad is not a very highly-regarded member of Congress but he hits the nail on the head. From the article:

…intervening in just a handful of elections can quickly grab the attention of every member of Congress. “One of their goals is not to just influence the race that they’re putting money into, but to create fear in everybody else,” Rep. Brad Sherman (D-Northridge), one of Congress’ leading crypto skeptics, said of the industry’s political spending. “You play in five to 10 races, but you send a message to 435 members of the House: ‘We could be coming after you.’”

On that note, here are some US-based crypto advocacy groups you can support:

* Government Blockchain Association

* Coin Center

* Chamber of Digital Commerce

* Blockchain Association

* Crypto Council for Innovation

You may have heard about Tornado Cash, a privacy service that US authorities shut down because North Korea used it to laundered money. Dutch police arrested one of its developers. Key services like GitHub, Circle, Alchemy, and Infura suspended or deleted accounts linked to it.

I guess Blender.io got off easy.

Hopefully, somebody takes the matter to court. You can expect the matter will come up in Congress because the matter touches on several constitutional rights. Capitol Hill magazine Politico published a very brief summary of the key points in “The tornado tearing through crypto.”

These sanctions raise complicated moral, philosophical, legal, regulatory, and operational questions that go way beyond my expertise. Crypto needs to address these and other questions before the technology goes mainstream.

Six Conversations We Need to Have About Cryptocurrency Now But Won’t

Governments will likely force us to confront these questions as we move through the regulatory/litigation phase of crypto’s development.

Some small glimpses into a very big topic:

And my less-insightful commentary:

Relax and enjoy the ride!

BUT I’m also settling back in after a week with family. Minimal crypto.

I’m looking forward to this week’s update for paid subscribers. In the meantime, some interesting bits of content that you may enjoy.

BTW for everybody speculating on the US central bank’s next move, here’s my take:

* Fed is now at the floor, not the ceiling for rates.

* Fed will hike until data shows inflation is cooling across all of its inflation metrics or some bigger economic disaster strikes.

* Fed doesn’t care about the value of anything you own right now. Killing inflation is the most important thing.

Many will suffer as a result.

Some people believe the Fed will “break something," reverse course, print more money, and send asset prices up again.

We’ll see. While I didn’t talk much about the Fed in the July monthly issue, I ran through a few ideas and observations you may want to think about.

Have you seen this Decrypt video?

Watch it now:

Save this for whenever US regulators fine Chipotle, a popular fast-casual chain restaurant, for a bait-and-switch scam rug pull on retail speculators.

Promise people a chance to win $200,000, give them dip instead.

Wall Street Journal Opinion piece: The SEC's Cryptocurrency Confusion

Do you wonder why US crypto regulation is so confusing and seemingly abusive?

This short article sums it up nicely. I’d suggest you read the whole thing. Here’s the nutshell:

Cryptocurrency is so difficult to categorize because many of its variants blur the lines between traditional categories of money, stock and commodities. Most are a bit of each. Some tokens can be used to store data and serve as a form of payment or an investment—all at the same time. The purpose depends on the user’s preference.

Even if cryptocurrency developers wanted to register their projects with the SEC, as traditional public companies are required to, they couldn’t. They don’t have a board, CEO or CFO to file the requisite paperwork with the commission. Nor do they have proxy voting of shares by mail, which the commission still requires companies provide to shareholders.

Consider another facet of crypto that would shock the drafters of the 1933 Securities Act. Imagine if a bank or stock exchange were run by an autonomous, open-source computer code that took deposits and processed loans. Occasionally the code is modified by a few hundred anonymous coders around the world, who collaborate over the internet to keep it running smoothly.

One regulator—the US Securities and Exchange Commission—thinks it has jurisdiction over everything. Most of the rest of the government disagrees, but when you read the letter of the law and consider the various rules that have taken effect over the years, there’s no other agency that makes sense.

US Congress and regulators will develop a crypto-specific framework over the next year.

On a non-crypto note, in her newsletter, Kyla Scanlon raises some great questions about how we interpret the information we get on social media (and media generally).

Worth a read.

Relax and enjoy the ride!

In last month’s issue, I reflected on the collapse of the crypto market and what comes next.

In this issue, I had planned to focus on altcoins. Instead, I’m going to push that off to a future issue. If you have a chance, read my latest altcoin report.

Today’s issue looks at today’s investment landscape and how we choose to define the opportunities and the risks it presents.

How does it feel to be on the receiving end of the greatest pump-and-dump in human history?

The world’s governments pumped a ton of money into the world’s financial markets, then yanked it all away.

And you thought I was talking about crypto?

Nah. Too small.

Crypto is an infinite loop of pumps and dumps, one after the other, big and small, over the long and short term, again and again for years.

Traditional financial markets are supposed to offer the opposite: stability. “Intrinsic value.” Dividends. Yield. Security.

Until they don’t.

If you bought almost any financial asset in the past two years, you’re probably down on your investment.

You’ll probably be ok over the long run. I bought assets over the past two years, too. Also sold some. All within my portfolio strategy.

Some people think that’s stupid or hypocritical. Talk about a terrible investment environment, tell you most assets will take years to reclaim their previous all-time highs, and buy them anyway.

Even worse—encourage other people to buy!

Opportunity knows no price

Every asset carries risks. Nobody can predict how high or low their prices will go over any given timeframe.

Why let that keep you from an opportunity to build wealth? Buy things that go up in value or generate income. Preferably, both.

Crypto’s not the only way to do that, but it’s the only high-growth investment opportunity that you and I can easily buy. The others are reserved for the wealthy, well-capitalized, and well-connected.

As a result, it’s a very important part of my financial plan. Bitcoin is a core portfolio asset, along with cash equivalents, real estate, and the investments I hold with Personal Capital.

If you put a gun to my head and asked me what will happen to property values in every country on earth, I’d tell you we’re all going to take a haircut over the next few years. Maybe 20-30% decline in property values, with all the consequences that come from that drop. Back to even at some point, possibly many years from now.

Does that mean you should sell your house and buy it back later at a lower price? If you bought a house in the past year or two, should you feel bad about it?

What if prices don’t go down? Of if they go down only 10% or so? A lot can change in a very short amount of time.

Do you wait for that hypothetical bad outcome at the risk of giving up good things like cash flow, equity, and tax benefits that come with owning real estate?

Billy the neighbor thinks you’re getting REKT. He’s wrong.

Do you expect a prolonged bear market for stocks?

So do I! Are you selling?

Neither am I.

I sold enough in 2021 and the beginning of 2022. The choice was stocks trading at insane valuations, bonds that will lose a lot of value but at least offer some income, or crypto.

Easy decision.

Now we wait and see what happens.

Maybe 2-3 years of paper losses, with some winners sprinkled in? We’ll see. You know things aren’t looking good, you just don’t know when things will turn around, what the prices will be when they do, and how the markets will respond as circumstances change.

So, why put money into crypto?

Because no other asset class is so oversold relative to historical measures, with so much upside.

Especially when you consider macroeconomic instability, geopolitical risks, trade disruptions, and demographic headwinds that add so many risks for legacy financial markets.

No! Don’t look at the macro!

Yea, I feel the same way. It’s not pretty but we need to talk about it.

China

China is the world’s #2 economy and most countries’ largest trading partner.

Its property values keep falling. Some developers ran out of money. Some borrowers now refuse to pay the money they owe on properties that their builders delayed or didn’t deliver. Banks and local governments are trying to force people to pay.

In some places, riots have broken out. Rumors say some banks have frozen their customers’ funds and debtors have stopped repaying loans of all kinds.

Various estimates suggest up to 1% of China’s outstanding debt stands at risk of default. That may not sound like much, but nobody knows how many other financial obligations depend on the repayment of this debt.

Is China facing its version of the US’s subprime mortgage crisis? What will China’s government do about it?

Let’s hope everything works out.

Household debt

According to data from the Bank for International Settlements, as of the beginning of 2022, households in Australia, Denmark, Switzerland, and South Korea owned more debt than their countries’ entire GDPs. It’s unlikely the situation has changed much in the past six months.

If you believe BIS’s data, these countries could convert a year’s worth of economic production into cash and still not raise enough money for households to pay off their debts.

How long can people service these debts as interest rates go up and growth slows down? What happens when you factor in public sector spending?

Let’s hope everything works out.

Corporate debt

The world’s investment institutions own almost $1 trillion in collateralized loan obligations (CLOs), a type of financial product that combines high- and low-risk corporate debts into a tradable asset.

Since it’s been two years since we had any normalcy in the world’s debt markets, nobody really knows whether these low-risk debts are actually low-risk or whether high-risk debts are properly rated.

On top of that, investors own trillions more in junk bonds—nakedly high-risk debt from businesses that generally have no profits or want to invest in speculative business ventures.

Higher interest rates make it harder to finance debt. Shrinking liquidity makes it harder to generate profits. A surging US dollar makes it harder for US companies to pull profits from overseas and tougher for foreign companies to cover liabilities denominated in dollars (e.g., debt, accounts payable).

Let’s hope everything works out.

Sovereign debt

Too many governments can’t pay their debts. Something has to give.

Let’s hope everything works out.

Eurozone

The European Central Bank started raising interest rates to tamp down on inflation and stem a looming currency crisis.

The problem?

If the ECB raises rates too much, it will force Italy and Portugal into a debt crisis and possible default. (Maybe Spain and other countries, too.)

As a backstop, it created a new financial program to bail out these countries if things go south. Does that put you at ease? Especially with all of the other problems facing Europe?

Let’s hope everything works out.

The rest of it

Emerging market economies, war, COVID-19, food shortages, chip shortages, dollar shortages, energy shortages, inflation, starvation, and general human suffering.

Oh, and the US is almost certainly in a technical recession, even if the government won’t admit it. We’ll find out later this week.

Yet, you still make money. You earn an income. You have some wealth, even if it’s just spare cash from your paycheck, a pension, or savings you’ve accumulated over the years.

What can you do with that money?

Wait until the price goes up

“Macro” conditions suck and that certainly plays a role in how people spend.

At the same time, psychology doesn’t change.

When you think selling assets will give you more money than buying or holding assets, you sell. When you think buying assets will give you more money than selling or sitting on the sidelines, you buy. I do, too.

Inflation, fear, greed, the Fed, energy costs, and the things I mentioned above?

In behavioral economics, those things change the premiums and discounts people place on one asset or another.

In other words, when you’re starving, food seems far more important than whatever else you own. As a result, you’ll pay more for food when you’re hungry than when you’re not. You may even sell things you own to raise money for food.

When financial assets go up, you can’t help but want to put money in—even if you don’t have money to spare. When they go down, you can’t help but want to keep money out—even if you have money to spare.

This is an odd phenomenon.

For real things like houses, cars, and toiletries, we get excited when prices go down. For fake things like stocks, bonds, and crypto, we get worried when prices go down.

I guess how you feel depends on whether you want to buy or sell.

Do you think it’s funny that some people bought bitcoin at $60,000 but won’t buy it at $30,000?

Those people never wanted to buy bitcoin in the first place. They wanted to sell it for more than they bought it for.

Buying was a necessary first step.

When bitcoin’s price hit $60,000 on an upswing, they thought they could make money. When its price hit $30,000 on a downswing, they thought they couldn’t.

Immutability, censorship-resistance, permissionless innovation, open finance, anti-fragility, yada yada?

Whatever. With crypto, the market moves in a specific pattern:

* Crypto flows into the hands of people who want it more than their government’s money. Eventually, the market runs out of sellers. Prices go up.

* Once prices go up long enough for new buyers to think prices will keep going up, new buyers come into the market. Prices go up higher.

* Once prices go high enough that people decide they want to trade it for more of their government’s money, they sell. Prices go down.

* Once prices go down long enough for people to think prices will keep going down, new sellers come into the market. Prices go down more. The cycle continues.

At this point, we only need to care about whether enough crypto has flowed back into the hands of people who want it more than their government’s money. Everything else will take care of itself.

When will that time come?

We can never really know, but trading charts, technical analysis, on-chain data, data models, macroeconomic forecasts, technological and demographic developments help us make sense of the market and the circumstances around us. They give us a sense of perspective about how this pattern’s playing out.

With crypto, prices move so violently and to such an extreme that you end up with such a wide range of prices and timeframes, it’s very hard to do anything more than that.

At every peak and bottom since its creation, bitcoin’s price has gone up 50% after it flashed signs of a peak and down 50% after it flashed signs of a bottom. Wherever bitcoin goes, altcoins follow.

We can all agree that the historical “market bottom” signals already flashed. This is a fact.

That means a drop to $14,000 or even $10,000 would make sense, even if it’s well beyond the range of normal prices when you look at bitcoin’s normal historical trading band.

Let’s say you’re waiting for that drop. When will that happen? How will you know when it’s done? What signal do you use? What price?

What will you do if bitcoin’s price never goes lower than it is today?

But miners are dying

Are they?

I look at miner activity all the time. No data gives you a complete picture but one metric that simplifies overall miner behavior into a simple chart is the Miners Position Index (MPI).

MPI measures miner outflows relative to the historical average for the past year. Since miners always sell, MPI lets us see whether they’re selling more or less than they normally do at any given time.

It’s a blunt, limited tool, but it’s easier than scouring the blockchain for clues. Take a look at the pale line on this chart:

We saw some agitation shortly after the start of the Russia-Ukraine war and LUNA’s bitcoin buying spree, then again last week. Otherwise, it’s pretty much in line with the status quo. Some miners aren’t doing well, but there’s no widespread distress among the total miner population.

Some things miners have done over the past two months:

* Gone out of business.

* Turned off old machines.

* Sold machines.

* Sold bitcoin to raise cash defensively, just in case it takes a while for the market to recover.

* Sold bitcoin to buy new equipment at massive discounts. They want to take advantage of plummeting machine prices before the market recovers. 

* Sold bitcoin to expand capacity, bring more self-miners into their networks, and move their machines to cheaper locations.

* Sold bitcoin as part of a merger or acquisition where a larger company buys a smaller company and sells some portion of that smaller company’s bitcoin.

Over the past few months, some miners defaulted on loans and saw their bitcoins sold against their will, under the terms of agreements they made when prices were higher. Others repaid those loans and took back their collateral, but they may have sold it afterward, for the reasons above.

Concerns about miners seem overblown. As bitcoin’s difficulty adjusts, mining costs will go down. Miners will adjust, too. We will continue onward.

Doesn’t matter. Bear market, bro

Are you concerned that prices will keep going down? More exchanges, lenders, and VCs will blow up?

Hedge with a short position. While you lose money when prices go up, you get to keep your crypto. When prices go down, you make money and don’t have to sell your crypto.

You can do this anytime, at any price. I don’t, but I encourage you to learn how to do this. Some traders use this strategy to juice their profits but you can also use it to manage your risks.

One thing to consider, though.

What if the bear market’s already over?

If bitcoin’s price stays above $17,500, we are already in a bull market—and we don’t even know it. That seems crazy, but this is a crazy market.

On-chain and technical metrics say the market peaked in January 2021. When you look at circumstantial evidence like one permutation of the PI Cycle indicator, the Coinbase IPO, and Elon Musk’s Dogecoin shout-out on Saturday Night Live, the market peaked in April 2021. If we’re going by price, it peaked in November 2021.

Institutions and tourists mostly left in November, December, and January. New buyers disappeared basically throughout 2022. Liquidity dried up in April and still hasn’t returned. Lenders and VCs imploded. Market participants realized their largest aggregate losses in recorded history.

Isn’t that how bear markets end?

In any event, it’ll be a long time before we know when the bull market starts.

First, we need a higher high, the first of two conditions for an uptrend. Then, we need a higher low to confirm the bull market. That could take months.

How would you feel if we did what we did in 2012, 2015, and 2019? During those years, prices went up and down for months but never lower than the previous low.

At what point do you say we’re in a bull market? How high does your return on investment need to get? 100%? 200%? 300%?

If you’re sitting out the market for a little bit, waiting for things to turn around, at what point do you decide that’s happened? When bitcoin’s price hits $40,000? Once Celsius’s bankruptcy settles? After the Mt. Gox bitcoins get distributed? Fed pivot? World peace?

Some say now that we’ve removed leverage, we can get back to normal.

I guarantee leverage will come back in the form of regulated, well-managed lending platforms from Wall Street exiles, possibly as subsidiaries or branches of crypto exchanges. Maybe even banks and Wall Street firms themselves, once the US codifies its regulatory and legislative framework next year.

Nah, Mark. Institutions never coming back. Wall Street doesn’t care anymore.

Institutions were never really that into crypto.

At the peak of the market, even the most generous estimates placed institutional money at somewhere between $70-$100 billion out of a $3 trillion market.

That includes family offices, businesses, countries, funds, everything. At best, 3% of the market, give or take.

Is that really a substantial number?

We know a lot of institutional money left towards the end of 2021 and the beginning of 2022. We followed this in real-time across a series of updates for subscribers on the paid plan.

Yet, while the institutions took money out of the market, the people who ran the institutions and worked for the institutions stayed in the market. Many of them are still here.

They sold their clients’ investments because they had an obligation to do so. They bought for themselves.

The only certainty is uncertainty

While that’s nice, it’s meaningless. The Terra Luna debacle wiped out billions from diamond hands, crushed the lenders, sent the market into a panic, and precipitated a wave of forced selling unlike anything we’ve ever seen in crypto.

It’ll take a while to recover, even after prices go up.

To anybody who thinks bitcoin’s price can’t go to $14,000, look around. We still don’t know how deep the lending debacle goes. Meanwhile, the world’s governments are hell-bent on bringing down the price of everything.

The bottom is always $0. That doesn’t change when the price goes up or down. There is never any limit to how far crypto prices will fall.

Does that mean bitcoin’s price has to go lower than $17,500?

No. What if so many people have already sold that it’s impossible for buyers to find sellers at that price or lower?

In November 2021, people said bitcoin’s price couldn’t go to $100,000 by end of December.

What a silly idea.

At the time, $100,000 was more than doable. A rise of 50% in six weeks? Bitcoin can do that in its sleep. Its price has made similar moves in similar situations forever. Any price up to $135,000 would have fit within the range of normal prices. 

Did that mean it had to happen?

No.

Just like bitcoin’s price didn’t go above $100,000 in 2021, there’s no reason to think it has to go below $14,000 in 2022. “Up” is still an option, as hard as it is for some people to believe.

In fact, bitcoin’s price has gone up many times in circumstances just like today’s.

Best of all bad options?

In any event, we have to accept the situation we’re in. Look at history and the behaviors of people in the market. 

Today’s prices are beyond the normal range of volatility. Every previous signal of short- and long-term bottoms has flashed.

At the same time, bitcoin’s price remains below its 200-week moving average. Until now, its price had never spent more than one day below that technical level.

As a result, you may think this downtrend has to continue. Macro, fraud, regulators, etc.

Everything can change in a heartbeat.

Even if bitcoin’s price goes up 100% or more, that changes nothing. Pumps of 100% happen in every bear market. So do pumps of 50% and 25% and every percent in between.

What would you do if bitcoin’s price went up to $40,000, then down to $30,000, then up to $50,000, then down to $40,000, as you see in the grey circle on this price chart:

Extend that pattern for a few more years. Up $20,000, down $10,000. By 2025, bitcoin’s price will hit $130,000 and you’ll be up 600% on your investment.

Find another market that can realistically give you those types of returns in such a short period of time.

You may think that’s ridiculous.

Ok. Would you be disappointed if bitcoin’s price only goes to $100,000 by 2025? What about $80,000? You’ll end up with 300% gains over three years.

For crypto, that’s a letdown. For any other market, that’s insanely good.

You are the money that you seek

For those reasons, I’m still buying crypto until my plan says to stop.

Some say I’m getting REKT because the value of my cryptocurrency keeps going down.

I beg to differ. I have more cryptocurrency now than I have ever had before.

On average, my plan gets you about 30% more bitcoin than anybody who dollar-cost averages the same amount of money over the same timeframe.

(To be fair, you’d do only 5% better with my plan when you compare only from November’s peak to today.)

At the same time, I’m sitting on better returns on my investment than most traders—even after taking into account the changes in my plan along the way.

If you’ve followed my plan, you’re anywhere from up 300% to down 54% on your investment. You’re probably closer to down 30%.

Whether you’re REKT or not depends on what you want to get out of this market.

If you want an easy way to build wealth, you’re not getting destroyed at all. Quite the opposite. You already lost a ton of money by not buying at prices lower than today’s.

You can’t recover that loss, but you have a chance to make up for it as the market recovers.

If you want to sell crypto for more of your government’s money, you have it just as easy. Buy now, then sell when the price goes up. You get in at $22,000, get out at $28,000, and finish with 25% more than you started with, maybe in as little as a few months.

Even if it takes a year to get up to $28,000, your 25% gain will beat almost every other investment you can make right now.

Better yet, learn how to trade. That’s a skill you can apply to any market at any time.

Never dismiss the value of having a skill that you can apply to activities where you can make money off of your mindset, talent, and all the things that make you an incredible person.

If you do that, you won’t need crypto to make money.

Then, as you have money to put into this market, you can put it in. Grow with this asset class. Stake your altcoins. Try out new dapps and wallets. Discover opportunities to enrich your life with NFTs, Web3 interfaces, and new communities.

If you follow my plan, you’ll get better results than most traders and people who dollar-cost average, but worse results than some traders.

If you don’t follow my plan, you’ll do ok, too. Buy now and you won’t need to buy later.

While that doesn’t necessarily mean you’ll get Lambos, 100x moonshots, and eternal wealth, you’ll get a stake in the financial networks of the future.

Is that really so bad?

Relax and enjoy the ride!

Some people say “friends don’t let friends buy altcoins during bear markets.”

If anything, friends shouldn’t let friends buy altcoins during bull markets. That’s when you lose money.

I would say buy altcoins whenever you feel like it. Just try to hold yourself to small purchases when the market’s hot and try to force yourself to keep putting money in during times like these, as best you can, at a pace that feels comfortable to you.

The cool thing is, you don’t have to rush and there’s less hype to sift through. Same volatility, lower prices, more upside.

Start with some of the altcoins on my Altcoin Reports. I added a new one this month and might have one or two more before the end of this year.

As I mentioned in my most recent market update, cryptos are trading at fire sale prices against every historical measure. For months we’ve seen accumulation amid selling.

That’s great but until new buyers come in, this market can’t sustain upward momentum. In the coming weeks, I’ll be looking for signs that new buyers have returned and keeping an eye on the concerns I’ve raised for a while.

I’m still following my plan, though—and keeping its name.

Scroll down for some content you may enjoy.

In last week’s rundown, I asked “is the four-year cycle still valid?”

63% said yes.

What do I think?

If you believe the four-year cycle’s valid, you’ll find a way to make it valid.

If bitcoin’s price goes up to $40,000 in September, then drops to $22,000 in November, does that count as a “bottom in Q4” even though its price is 25% higher than June’s $17,500?

I guess we’ll see. I’ll take the market as it comes. Stay tuned for another poll next week.

FYI, I’m taking some time away with family during the first week of August. No updates during that time but I may have a rundown, we’ll see. Emails and DMs are always open, no matter where I go!

A common complaint I’ve heard from people working on crypto projects?

They put a lot of time and effort into their work but nobody cares unless the token’s price goes up. Which leads to this tweet:

While this tweet might be made up, it captures real frustration among crypto builders.

In the real world, new ventures take years to come together and sometimes fail. Early backers sometimes wait years to see any gains from their investments. Why would crypto be different?

Pay attention to projects that gain traction or grow during the bear market, even if their token prices don’t go up as quickly or as much as you expect.

Voyager Digital Asks Court to Allow Withdrawals Request

While I’d hate to hold out false hope for anybody who lost access to funds held on Voyager, I’d caution against lumping all distressed lending platforms into the same bucket.

We still don’t know quite how deep the liquidity pit goes but at least the industry is trying to patch it up.

Priority one for the market? Straightening out this mess. Bailouts and bankruptcy protections start the process. Look for regulations from the US within the next year or so.

Don’t lose hope.

Unpacking Uniswap’s ‘Fee Switch’

Decrypt explains why holders of Uniswap, the governance token for a huge decentralized exchange, have not voted to pay themselves fees. While the option exists in the source code, nobody has tried to implement it.

Read the article for the details.

You can hold UNI tokens as a stake in the protocol decisions and the general stickiness that comes from everybody contributing to the liquidity pools that power the exchange, many of which use UNI as their partner pair.

While a lot of people think protocol fees will drive more value to the UNI token, I think it’s fair to ask where that value will go.

When speculators take their fees and cash out, value leaves the ecosystem. They’re just in it for the money. The protocol needs to find other ways to grow.

Without the fee revenue, you end up with more HOLDers who want to participate, not speculate.

In other words, UNI holders have to “do” something to get rewards. Over time, natural churn or boredom will drive speculators out of the network, preserving more value for users and “sticky growth” that can persist once the speculative enthusiasm goes away.

But does it really work that way? I’m not sure anybody knows. It’ll take a while to figure out what works and what doesn’t. Brave new world!

One meme for your week.

Relax and enjoy the ride!

It reminded me of the way bitcoin’s price went parabolic against the US dollar for seven months starting near the end of 2020—only this time, the US dollar’s going parabolic against bitcoin.

Parabolas always break. The question is how high do prices go before they fall and how far do they fall after they do.

Now, the parabola looks like this:

Bitcoin’s price is touching that parabolic trendline.

Does that mean another leg up for the dollar vs. bitcoin? Or does bitcoin’s price finally break the parabola and start to reverse? Either way, how high or low will USD go?

What about the other factors I mentioned in my July 13, 2022 update?

Scroll down for a poll, some info, and a meme you may enjoy.

Note, I’m taking a break from the newsletter from August 1st to 6th. I’ll still respond to emails and DMs during that time.

Poll: is the four-year cycle still valid?

(In other words, bottom in late 2022, next peak in late 2025, next bottom in late 2026.)

* Yes

* No

Mt. Gox to crash the market?

Did you hear about the pending distribution of 137,000 bitcoins from the Mt. Gox settlement? Read the repayment procedures letter, which puts the first repayment date at the end of August.

For reference, in 2014 a lot of bitcoins were stolen from Mt. Gox, an early crypto exchange. Investigators recovered some and litigators are now ready to return them to their rightful owners. Recipients can opt to take their proceeds as bitcoin or cash.

Experts disagree on what this means for the market.

In total, those bitcoins are worth about $2.5 billion—enough that if you combined all of the bitcoins into a single wallet, it would be the third-largest wallet according to Top 100 Bitcoins.

That’s not a large amount for a $400 billion asset, but it comes at a time when we don’t see a lot of new money coming into the market.

You can expect most recipients will sell some or all of their bitcoins. After all, if they didn’t need it for eight years, why would they need it now? Especially when the market value is at least 10-20x higher than what they paid for it eight years ago.

Some have already sold to investment companies like Fortress. Others will certainly take cash or HODL their bitcoins.

Interesting times.

What Coinbase Is Building During the Crypto Winter

Bottom line: Coinbase has several business lines—e.g., custody services, commissions on hosted staking, and its Coinbase Cloud development platform. While the main driver remains the exchange, it has other ways to make money.

My take: not shilling Coinbase, just a look at the bigger picture. Coinbase is one of several businesses trying to build a frictionless, easy-to-use way for people to interact with Web3 platforms, buy/sell/lease NFTs, build/use blockchain dapps, and access all the benefits of cryptocurrency. (And of course, buy, sell, and stake crypto).

Why we care: many crypto businesses do not depend solely on people like us buying and selling speculative financial assets. The question is, how long until crypto sees enough usage before these other business ventures generate strong profits?

Heard about the Ethereum merge, a big milestone for the transition to ETH 2.0. After the merge, Ethereum’s protocol will no longer use miners to confirm transactions and maintain the blockchain. Learn more on the Ethereum Foundation website.

Coming soon, they say. Hope it works out for everybody. Here’s what I think about it:

Relax and enjoy the ride!

The problem: we still don’t know what’s going on behind the scenes with lending platforms, miners, and funds that need to sell crypto or fix holes in their balance sheets. We’ll never see any of that reflected in any of the metrics—on-chain, technical, or anywhere else. As a result, it’s hard to get a sense of perspective about what, if anything, we need to worry about.

Also, what’s going on with the $1 to $4 billion worth of bitcoins that miners posted as collateral for loans or the terms of the return of 142,000 bitcoins to those who lost them in the Mt. Gox heist?

While that seems like a small amount—probably about $5-7 billion combined—with so few buyers and such little liquidity at the moment, it’s enough to make a mess of everything.

I talked about these considerations, some metrics, and my outlook for altcoins in my most recent update.

If you’ve noticed, I haven’t published many articles or tweeted much for a while. I’ve had a lot of things competing for my time, nothing to do with crypto.

In last week’s poll, I asked “is the bottom in?”

78% of respondents said no. Ye of little faith!

What do I think?

It doesn’t matter. You’re getting amazing prices on crypto. If the June 18, 2022 drop to $17,500 remains the lowest price from this point forward, we’re already in a bull market. Otherwise, I see no reason that bitcoin’s price can’t fall to $14,000.

Will that happen?

We shall see. I’m following my plan.

Scroll down for some content you may enjoy.

Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned

Bloomberg published the transcript of a portion of an older episode of Oddlots. In it, FTX CEO Sam Bankman-Fried described yield farming as a bunch of people speculating on imaginary boxes that create tokens.

To be fair, this is an accurate depiction of many DeFi projects.

Does that make them worthless? If a protocol is designed to make money, and it makes money, isn’t that the point? And if people agree on a price for the tokens that power that protocol, isn’t that a measure of value?

Over time, the market will drive the value of useless protocols to $0 and drive the value of useful protocols to some other valuation.

Nobody really knows which protocols will go to $0, but if history has shown us anything, it won’t be based on utility or intrinsic value. It’ll be based on the price buyers and sellers agree on, of which utility and intrinsic value play only one part.

If you can sell a half-acre of dirt for $100,000, you can sell a token for $1 (and you don’t even need government subsidies or tax breaks).

If you understand this tweet, you understand DeFi (true DeFi, not CeFi-DeFi).

ProShares Bitcoin Short ETF Grows Over 300% in One Week

ProShares, an ETF provider, launched the BITI ETF, a new way to make money when bitcoin’s price goes down.

When bitcoin’s price goes down, BITI goes up. If you buy BITI before bitcoin’s price goes down and sell BITI after bitcoin’s price goes down, you make money.

This is the bearish version of BITO, the ProShares ETF that debuted in November 2021 near the peak of the market.

Yes, the bullish version came out at the peak of the market, the bearish version came out last week.

Does this mean the bottom is near? Or already in?

If you’re in the “last time this happened, bitcoin did [fill in the blank]…” crowd, you might come to one conclusion. I’ll just chalk it up to Wall Street trying to make money in whatever direction they can.

The timing, though, bears noting.

Read Anthony Lee Zhang’s post, Growth Hacking and Decentralized Finance.

In this post, he looks at the way growth hacking strategies contributed to the rise and fall of VC-backed crypto projects. It’s a fresh, interesting take on a well-traveled subject.

For the first time, I’m posting a job announcement from a recruiter. I figure, if they’re asking me, I might as well ask you.

I can’t vouch for the recruiting firm, Satoshi Solutions, nor the accuracy of the description, but I have no reason to doubt its legitimacy. If you see any “red flags” please comment below.

Read the description below and if it seems like something you want to learn more about, email JCollins@satoshisolutions.co.uk (tell him you saw the announcement here).

My client is looking for a technical copywriter to create, develop and design written content and documentation to enhance the experience for the protocol and its community.

You will be collaborating across the team to create and edit original copy that is accurate and well researched, writing clear and error-free content that reflects the client's voice.

It’s a career-defining opportunity to join as an early member of a fast-growing project where you have the autonomy and creativity to make the role your own.

Job requirements:

* 3 years’ experience in the advertising industry

* Above 1 years’ of related experience in crypto technical products writing

* White paper writing and typesetting experience is a plus

* Experience in dealing with different creative projects at the same time

* Fast learner, project research ability, and a genuine interest in cryptocurrency, blockchains, and other Web3 technologies

* Flexible and able to turnover quality copy quickly when needed

* Comfort and/or experience with remote work

* Excellent short-form and long-form writing skills in a variety of approved voices and tones

* Work remotely - not commute. Lots of flexibility

* Autonomy and freedom - you decide how to achieve your best work

* Friendly environment - good vibes only

* Collaborative team - you'll not be alone

* Build a new industry - help define the future of the web

Relax and enjoy the ride!

Lots of people posting about whale activity, but from my perspective, looking at the movements of crypto and reports in the news and among people who know more about what’s going on than I do, it’s not as clear as people think.

Unusually large amounts of crypto are moving among whales. No need to show the charts, you can see this clearly on every legit analytics platform.

My best guess? Distressed miners and funds are sending or selling crypto to large buyers who have money to bail them out or take over their assets, possibly through brokers (trusted third parties, OTC desks, etc).

While this may look like panic dumping, I’m not willing to make that conclusion. We don’t know anything about the motivations or terms of these transactions, only that they’re happening.

Regardless, it means less buying pressure on the spot market. Big buyers filled their bids in private deals.

Medium-sized wallets seem to have picked up the slack. Some people think this comes from lots of people taking funds off of exchanges into self-custody, but I didn’t see that in any data I could find on exchange flows. It might be smaller buyers scooping up cheap crypto at the expense of over-extended whales.

I looked more deeply into this and other aspects of the market in my market update from June 28, 2022.

Suffice to say, the market’s floor collapsed. It will take a while to rebuild that floor. We still don’t know what other shoes may fall in the coming weeks and months. Watch my mini update from July 1, 2022, for some thoughts on that.

If you have a chance, catch my altcoin report for July 2022.

Scroll down for a poll and some other content.

Poll: is the bottom in?

* Yes

* No

Decentralization Dies in DeFi

If you have a chance, read Patrick Tan’s excellent piece, Decentralization Dies in DeFi.

In short, he argues that the failure of DeFi came from the consolidation of activity in the hands of a few centralized actors. As he says:

The whole point of DeFi was to self-custody cryptocurrency assets, but because the technology is nascent, interacting with smart contracts and Metamask wallets isn’t as user friendly as dealing with a centralized intermediary lender like Celsius Network.

Millions of depositors were more than happy to accept a lower interest rate than they could have just so that Celsius Network could abstract some of the complexity of DeFi out of yield generation.

For as long as DeFi remains complex, the demand for centralized cryptocurrency lenders will remain.

And for as long as centralized crypto lenders remain, the premise and promise of DeFi will continue to be eroded.

My take?

These lending platforms provided a valuable service. They removed the complexity and risks of DeFi while giving people attractive yields. The collapse came from poor risk management made worse because so many funds dealt with 3AC. 3AC either stole or lost its clients’ money (possibly both), blasting a hole in some platforms’ balance sheets.

At the same time, we have many crypto-native projects aiming to abstract away the complexities, improve the design of native DeFi protocols, and manage or mitigate the related risks in ways that do not require centralized entities.

Hopefully, they can deliver useful, accessible, safe platforms before Wall Street comes in with its own version of CeFi-DeFi, except with professional risk management and a (soon-to-come) US regulatory regime to set guardrails.

I’d say these platforms have about two years before professional, regulated, well-managed lending shops make CeFi-DeFi “safe” again.

This leads me to a tweet:

Now you see bitcoin maximalists calling you stupid for trying to earn some yield on your crypto. Some of them think you’re a terrible person for earning yield on anything, crypto or otherwise.

For my take, watch this video.

Relax and enjoy the ride!

In last month’s issue, I looked at the hidden risks in the global investment environment and how crypto isn’t too different. In this month’s issue, I reflect on the collapse of the crypto market and what comes next.

At the end of 2021, I gave prediction articles to two magazines about what I thought would happen in 2022. You can read the articles if you’d like:

* Luckbox

* Bitcoin Magazine

In a nutshell, I predicted something like what we’re going through right now—a terrible time for crypto but a great investment opportunity for us.

I didn’t have a lot of conviction behind those predictions. They were just reflections on 2021 and some guesses about what might happen in 2022. As with all predictions, take them with a grain of salt. The market determines its own fate. It doesn’t care what I think.

We all knew the deal with crypto: hacks, scams, protocol failures, rug pulls, etc. Pretty standard stuff. The cost of doing business. Pitfalls we try our best to avoid, knowing we’ll sometimes get zapped.

Few of us knew about what was happening behind the scenes: one of the biggest trading firms lied, stole, and lost other people’s money on degenerate speculation. In doing so, they wrecked some widely-used lending platforms and destroyed trust in crypto for years, even among the most ardent supporters.

I just thought we’d have a bad year and possibly a crypto winter. Some people would go to jail. Some projects would fail. Scammers would get bored or go broke. We’d get some new laws and regulations, as well as a chance to get into great projects for cheap.

I just didn’t anticipate it would get this bad.

Yet, here we are. It will take a long time to untangle this mess—probably longer than I would’ve thought at the end of last year.

Not as bad as it could’ve been

At least this cycle was the story of cheap money chasing yield. Crypto bros and scams. Bad actors abusing the trust of others.

We can recover from that.

A lot of people cashed out—some at a loss, some at a gain. Many lost more than they could afford and many made more than they could have expected.

Aunt Sally and Uncle Morton left in October. Summer tourists left in December. Of the few businesses and pensions that took small positions in bitcoin or bitcoin funds, many pulled out in the spring of 2021, towards the end of 2021, or near the beginning of 2022. They were spared.

In the wider world, few people’s fate depends on crypto. They’re so busy getting rug-pulled by their governments and central banks that they’re hardly touched by crypto’s woes. Only we courageous few who choose to persist.

Crypto is not part of a coordinated effort to deflate the global financial system, manufacture recessions, and push small countries to the brink of default. It’s just collateral damage.

Can you imagine how much worse the world would have been if the Terra debacle and 3AC scam had unraveled after crypto had reached mass adoption?

Perhaps our fraudsters and degenerates saved the world—and our industry—from an even bigger disaster that may have come later if they had been able to stick around long enough to see the technology go mainstream and find more than a trivial place on institutional balance sheets, private portfolios, and managed funds.

No more bull, I can’t bear it

This is one reason I’m rethinking the notion of bull and bear markets.

For example, now that the dust has settled, we have a lot of evidence that our market peak did indeed come in April 2021, despite not triggering extreme levels on many technical and on-chain indicators.

In fact, technical and on-chain indicators suggest the peak came in January 2021—meaning the market spent most of 2021-2022 at higher prices than it did at its technical and on-chain peak. Should that happen?

The “bear” market of 2021 lasted only two months and the overall market dynamics matched typical consolidations within an uptrend. The peak came months later. Some altcoins and NFTs went higher in November than during altseason. Should that happen?

We get 100-300% upswings during bear markets and 40-50% crashes during bull markets. Should that happen?

Maybe we need a new mental framework for crypto. Instead of bull and bear markets, how about “Bubble” and “Non-Bubble” markets? Grifting season and building season?

Perhaps there are only two modes for this market: quiet development and FOMO MANIA.

They dance on our graves for three years, we dance on their graves for a year. We spend three years building a better world, then spend one year making fools of ourselves. Once the party ends, some people stick around. Rinse and repeat.

Let’s think about it that way, instead of bull and bear markets.

At least then people will recognize what kind of crypto experience they’ll get: a chance to make fast money or a chance to contribute to the building of new financial systems.

Perpetual bubble machine

In the coming weeks and months, prepare to see a lot of “Anatomy of a Bubble” charts. Here’s one:

I used to have this chart on my website to “track” the bubble, which I put on a timeline from 2012 to 2026.

For some reason, I stopped tracking it and I can’t remember why. Maybe because I thought that it may have led to 100trillionUSD blocking me? On the same page, I posted a separate “mock-to-flow” chart and said it was “like the stock to flow but with more b******t.”

(BTW S2F is as valid now as it’s ever been.)

In hindsight, I should’ve kept the page and added my U2R model, which is also based on a line on a chart that somebody made up.

Looking at the chart each day or week would’ve served as a visual reminder that this market is one bubble cycle after another, constantly, on small timeframes and big timeframes, always masked by extremes in price and volatility, always with different contours and conditions, always with the same result.

Crypto markets move in rhythm with humanity—a perpetual bubble machine, repeated over and over on the shortest timeframes and longest time frames, in two-day cycles, altseasons, two-year cycles, four-year cycles, and ten-year cycles.

Like this:

Each bubble can last far longer and go way higher than you think possible or far shorter and way lower than you could ever expect.

The hard thing about having so many bubbles over such varying timeframes and price ranges?

You never know where you are in the cycle.

Priya in the park will always tell you the market will crash, it’s just a matter of time.

Eventually, she’ll be right. How many opportunities will you lose while you wait for that?

Tony on the TV will always tell you the market will go up, it’s just a matter of time.

Eventually, he’ll be right. How many opportunities will you lose while you wait for that?

Everything seems inevitable in hindsight. It’s never that way in real-time. What happened this year could’ve happened last year, the year before that, two years from now, or four years from now.

Timing is everything

Michael Burry got famous for betting against the US housing market in the mid-2000s. He made a fortune for himself and his clients.

Supposedly, he was months away from running out of money to fund his position. If the housing market had taken an extra six months to burst—or deflated on its own—he’d have lost his bet bigly.

Also, his warnings came several years before the peak, when you could still buy a house for a normal price with a reasonable down payment and terms that made sense for your income, goals, and lifestyle.

In other words, if you’d have limited your exposure to the housing market and its excesses, you would’ve done ok whether or not Michael Burry was right or wrong. You wouldn’t have had to time the market.

If he was right, you’d take a hit on paper but get through it. Depending on how you structured your finances, you may have even had a great chance to acquire more real estate at a discount in 2008, 2009, and 2010.

If he was wrong, your house would keep going up in value. You’d win either way.

With crypto, we’ve dealt with the same problems time after time. Tether, rehypothecation, Ponzi schemes, vaporware, unfulfilled roadmaps, scammers, undisclosed shills, regulatory threats, bans, the list goes on.

Why do people assume these problems couldn’t have gone on for a few more years? What makes people so certain that these problems would ever come to light? That those risks would ever come true? Why did they have to come out now, not in two or three years from now?

In the traditional financial system, people have done bad things forever. We’ll find out exactly how bad those things are this year, as tighter monetary policies and bankruptcies reveal shenanigans every bit as reckless as what you find in crypto.

In every walk of life, you get rumors, lies, cover-ups, and Cassandras whose prophesies never come true. Chicken Little was wrong. Risks pop up, then disappear or work themselves out. People adapt and adjust to the changing circumstances. Humanity’s creativity and resilience change our common destiny.

You plan and prepare for something you believe is certain, but never happens. I did this with the metrics I use for the “peak” signals. I set my triggers too high. They never triggered.

While it’s easy to worry about UST, Celsius, 3AC, and the liquidations yet to come, remember: with crypto, bubbles grow and burst all the time, in big and small ways, over long and short timeframes.

If you sold the peak of every little bubble—“local tops,” as the traders say—you still might end up worse off than somebody dollar-cost averaging the whole way. In this market, the price can go way higher for way longer than you think.

Too often, you sell at “the peak,” then watch prices go up even more. Once they fall back to you, they’re still at a higher price than what you sold at.

Then, the moment you think they’ll go back up, the market tanks.

Somebody else always knows better, but I don’t

How do I deal with this uncertainty?

Buy low and let the market do what it wants.

When prices go down, I buy more crypto cheaper. When prices go up, I set aside fresh cash for whenever the price goes down again. I spread my buys across several days or months. When the market goes up before I finish averaging in, I sit on my cash and wait for the next opportunity.

To help me manage the market, I follow my new plan.

It’s a change from the old plan. That plan bought too high. Under the new plan, you’re down as much as 45% or up as much as 400% but probably closer to down 25% or so.

(Under the old plan, you're doing worse.)

With both plans, you generally buy whenever the bubble cycles go into these blue boxes:

Yes, that means buying the downside after the end of the bubble.

Why take that risk?

Because at any given moment, it’s hard to tell whether that final drop is a bear trap, bull trap, or blow-off phase until after the pattern completes. This market does crazy things, usually when you least expect it will.

You’ll find a lot of glad-handing on Twitter from people who say they played this drop well, but half of those people bought into the market at $53k or $65k and pulled money out from stop-losses at $40k. Some of them are still down on their investment, possibly even more than you are.

Unfortunately, my old plan bought too high, too soon. Should’ve waited for the break of $40,000 in January, an area of technical confluence and a “lower low,” one of the two criteria for a bear market and confirmation that the larger uptrend had ended.

If I’d switched to the current plan sooner, we would’ve had an extra six weeks to set aside money. We also would have bought at a 20-25% lower price. I regret this deeply and changed my plan accordingly.

What does recovery look like?

While today's crypto market continues to tumble with no end in sight, that will change.

Bitcoin will recover. The altcoins that are destined to go to zero will still go to zero (perhaps sooner than we used to think). The altcoins that are destined to succeed will still succeed (we don’t know which ones yet).

Deleveraging speeds up that process.

Next up?

Once we work through the 3AC mess and its implications, expect a lot of changes. Wall Street, non-governmental organizations, and regulators will shape the next few years.

If you have a chance, read Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency. It’s a little dated but the general ideas are still valid.

(You get Bitcoin or Bust and my other books for free with a premium subscription.)

I expect we’ll get regulations, litigation, and probably more engagement from legacy financial companies. Should make for some interesting debates about the rules crypto will have to follow.

The US government will play its role, too. By the end of 2023, it will make bitcoin a part of its financial system, and by extension, the world’s regulated markets. Congress and the administration want this to happen. All that’s left are the details, which could take some time to figure out.

That doesn’t mean bitcoin’s price has to go up. People may never buy it again. It took a decade for the world to come back around to gold. Lots of assets have a place in the US financial system, but they don’t always go up. Market forces still apply.

It just means bitcoin will have relevance for a very long time. As long as the technology continues to evolve and the network continues to grow, you will have an investment opportunity—even if FTX and Crypto.com can’t stay in business long enough to keep their branding on sports arenas.

Does that mean another four-year cycle that sends bitcoin’s price to $500,000 and gives us another FOMO MOON LAMBO altseason?

Maybe, maybe not.

What’s wrong with owning a stake in an emerging asset that has tremendous growth potential? Would you be mad if bitcoin’s price *only* went to $100,000 over the next three years?

Wouldn’t it be nice if new money came into the market without pumping everything to the moon? No more cycles and crashes? Real growth and traction?

Instead of speculative enthusiasm, we’d get plain old enthusiasm. That way, the technology will succeed when it’s ready, not when you want to cash out.

Mark, if you’re so confident, why aren’t you going all-in now? Fire sale!

Don’t be ridiculous.

I have a lot of confidence in my house but that doesn’t mean I’m going to put all of my money into it.

We live in uncertain times. There’s nothing wrong with putting limits on your investments so you can spread your risks without sacrificing your opportunities.

I also have a lot of confidence in my ability to not die. But I have term life insurance anyway, even though—if all goes well—I will lose 100% of my investment and the policy will expire worthless.

Sometimes, restraint is the better part of valor.

The point is to force yourself to take advantage of the downturns. That’s when you get the best value for your investment. Do that and you don’t need to take excessive risks or chase after the market.

What’s the next narrative?

Same as all cycles: price goes up long enough for people to think it will keep going up. Then, they will find the narrative.

Unless the global return to financial normalcy hurts people so much that they feel compelled to flee the traditional financial system, I suspect the next cycle will run on the assumption that “it’s safe now.” If Las Vegas can turn itself into a family-friendly travel experience, crypto can turn itself into a legitimate industry, too.

That all depends on whether we can fix the UST and 3AC mess without blowing out the market. Then we can turn a story of disaster into a problem that cryptocurrency can solve.

With blockchain and crypto, you always know that your money exists. You can verify it on the blockchain. It’s not a promise, handshake agreement, numbers on a spreadsheet, or attestation for the public.

What happened with 3AC? We don’t know, most of it happened off the books. On-chain analysts can find evidence of only some of their positions.

What happened on-chain? Orderly liquidations of over-collateralized positions (with some governance failures sprinkled in).

People failed. Protocols simply delivered the consequences.

Crypto can offer a safer, more transparent, less expensive, and more inclusive alternative to legacy financial systems and huge corporations. Combined with regulations and actual real-life crypto applications, this technology will seem legit (if still experimental).

On top of that, the next few years will bring cool projects like Soltype, Readl, AtomicHub, Emanate, Common Ground, and other Web3 networks that leverage NFTs and DeFi into real-world experiences. Opennode and Strike can already process payments with more privacy and less cost than traditional payment processors.

Coinbase is working on an integrated NFT/Metaverse gateway that will patch into DeFi protocols—without asking anybody to touch crypto, just their self-funded wallet linked to a bank account or filled with USDC.

Uniswap is integrating an NFT marketplace for crypto-natives.

Many great projects have ample funding, strong communities, and interesting technology. They toil in the background, out of the limelight. Over the next few years, some of them will step into the real world and remind people that crypto can do more than “go up” or crash.

This will all give crypto a sense of legitimacy it sorely lacked this go-round.

A long row to hoe

But that comes later. It will take a long time to build trust after the UST debacle and its consequences.

Crypto is probably not as dirty as other industries, but it’s far more transparent. So are many of the people who work in it.

Until we wash away the filth, they can’t shine. That is the immediate next step—cull the herd.

In the past two months, we’ve endured a constant run of forced selling from diamond hands, HODLers, and recently, miners.

The very people who normally set the floor for prices.

As a result, the floor collapsed. The question is how much more selling pressure will come from miners, further liquidations of borrowers, and people who sell the bitcoin they get from the forthcoming Mt. Gox settlement later this year. 

Until we get some new buyers, it’s not really important whether the price goes down to $14,000 or up to $30,000. You have plenty of time to accumulate.

Are you worried that the market will keep going down or never recover?

Whenever you think the market might drop—whether because it’s too high or too low—think about taking a short position. You can do this with the BTC3R leveraged short position on Bitoffer.

That way, you can profit from the drops without selling your crypto.

If the market falls, you make money and keep your crypto. If the market rises, you lose money but keep your crypto.

While that may seem risky, remember that this market spends more days going down than it does going up. Also, when you sell, you basically take a short position on the market anyway. And, is it any less risky than borrowing against your crypto to buy more crypto?

Of course, if you need money, that’s a different story. But if that’s the case, you may want to think about whether you want to risk your financial welfare on the future of a speculative asset class.

Still depends on the greater fool

Yes, of course. Such is the nature of investing. You always have to rely on somebody to come along and pay more for what you don’t want anymore.

Whether that’s Microsoft stock, metal bars, a boat, a bond that you need to sell to raise cash to cover a margin call, or a house.

Yeah, but houses have real utility. Bitcoin does not.

Factually incorrect.

Bitcoin allows you to send money electronically to anybody, anywhere, anytime, in any amount, without restriction, without giving away your sensitive personal information or control of your assets, with certainty that your transaction will go through and every payment you receive is authentic and valid.

Does that mean it’s worth $20,000 per coin?

I don’t know, but that’s what it costs.

I’m pretty sure the land beneath my houses and the structures themselves are worth a lot less than what people are willing to pay for them. There’s no reason you can’t get land and structures every bit as good as mine somewhere else for a lot less.

The market disagrees. Who am I to fight it?

As a result, I get to live in or rent out a house for 20 years, build equity and pay down the mortgage, then sell it to some losers who think they’re getting a great deal but they’re really just getting an arrangement of wood, brick, and metal that they’re always going to have to fix and pay taxes on.

Fools.

Never again

Some say this market will never come back. It’s done. Crypto is dead. Everybody lost all their money. Nothing works. This time is different.

That seems reasonable, but I’m not one to bet against history.

My biggest fear?

Next time, this bubble will be worse because we won’t have Tether FUD, cringy shills, bizarre memes, crypto bros, and central bank policies to scare normal people from investing.

Fewer people will wonder what bitcoin does because we spend so much time educating them about it.

Regulations will make it seem ok to put a little money in. On-chain experts will police the markets. Lots of legitimate, professional people from legacy finance will have their compliance department’s approval to get 401(k)s, pensions, and common people to put a little money into crypto and crypto funds because “it’s safe now.”

Some projects will produce viable technology that works at scale.

And it’s that next bubble that wrecks the world—not because people put money into a risky, volatile asset that they didn’t understand, but because they put money into a risky, volatile asset that they thought was safe.

It’s on us to make this market safe. Let’s hope we succeed.

Relax and enjoy the ride.

In my most recent update, I said “When you dig into the miner data … you see more outflows than normal, especially from Poolin and BBTC [but] no widespread movements across the mining sector.”

While that was true when I put the update together, by the time the day ended, we saw a huge flow of bitcoins from miners to exchanges. That amount is comparable to March 2019 and the fifth-highest amount of bitcoins in one day since 2017.

The number of transactions was unremarkable but the average outflow per wallet was massive, suggesting one or a small number of miners sent an exceptionally large amount. Make of that what you will. I don’t have precise enough data to say for sure. Maybe a better sleuth can figure it out.

That doesn’t change my analysis, it’s just an FYI that the data changed right after I sent the update.

In fact, it may have been an order from an exchange or entity that was short on BTC to cover withdrawals. Easiest to buy directly from miners, especially from distressed miners who need to sell quickly. We just don’t know the true cause, only that it happened.

It’s safe to say, cryptocurrency is having a fire sale.

This crash changes nothing about the investment case. Bitcoin will recover. The same altcoins that are destined to go to zero will still go to zero (perhaps sooner than we used to think). Likewise, the same altcoins that are destined to succeed will still succeed (we don’t know which ones yet).

The only thing that has changed?

Prices.

Forced selling of illiquid assets by diamond hands and HODLERS, the people who normally set the floor for prices. Panic ensues.

Maybe that’s why we see wallets with 1-99 bitcoins grow while whales send huge amounts of crypto to each other? Is this the revenge of the plebs against distressed whales? Big miners buying out other big miners while smaller buyers pick up the scraps?

Until we get some new buyers, it’s not really important whether the price goes down to $14,000 or up to $30,000. You have plenty of time to accumulate.

I’m still raising my allocation to one altcoin with each payday. If it seems inappropriate to talk about that in this moment, I understand. I feel like I need to tell you that I’m sticking with this strategy for the indefinite future. Although, I may sell some cash for more bitcoin. We’ll see.

Please share your thoughts about altcoins on my feedback page.

Tether

Now we hear reports that there’s a run on Tether. People are selling USDT at 1% discounts on the open market and clients are redeeming tokens at a rate we’ve never seen before. They may also be withdrawing from liquidity pools that have USDT pairs.

Not to cause panic, but I have heard rumors for years that some exchanges have agreements to swap crypto for USDT or vice-versa instead of keeping your tokens in-house. In the event of a proper run on Tether—which may never happen—you could lose your crypto (because the exchange doesn’t have enough coins to cash you out).

I hesitate to even mention that because I have no first-hand knowledge and I hate spreading rumors. I’ve heard a lot of rumors about a lot of things over the years and most end up being false.

But at least you know what I’ve heard (not seen or experienced for myself).

By law, US-regulated exchanges aren’t supposed to have these arrangements. With exchanges regulated under other jurisdictions, I honestly don’t know.

Whether this is something to worry about? I don’t know that, either. My thoughts on Tether in this video.

BlockFi

Note, I took BlockFi off of my list of Crypto Savings Referral Links.

They have close connections with 3AC and took a haircut on their GBTC investment. Lots of misinformation and rumors, we don’t know what’s true or not, but with everything else going on, I’m erring on the side of caution.

(I had no problem removing my funds.)

I don’t have anything against these platforms and I hope everything works out ok for everybody. I just don’t see a reason to take that sort of risk now.

Not to scare anybody but simply to provide some perspective, I’ll share an article from The Verge about Tether.

In summary, Tether and USDC are more like money-market funds. They own dollars and a pool of highly liquid assets that should allow investors to withdraw their deposits at any time. Because they’re not 100% dollars, they carry some risk that investors can’t redeem every dollar all at once. You’d think that once they run out of cash and cash equivalents, they’d borrow against their remaining holdings but in this environment, can you assume somebody will lend to them?

In Tether’s case, this concern is compounded by its lack of transparency. It’s nice to tell people what backs your stablecoin, but without more details, it’s hard to know just how much risk you’re taking.

Is a Tether collapse more likely than war between Israel and Iran? A collapse in the junk bond market? Sovereign debt defaults?

Nobody knows. Like USDT, we have no transparency about Israel’s and Iran’s military plans, how unprofitable businesses will pay back their loans, or how heavily-indebted governments can service their debts as the US financial system tightens its belt and China turns off the emerging-market spigot.

Sometimes, your worst fears never come true.

Blockware included a nice write-up on miner capitulation towards the end of its weekly post. Worth reading.

Also, in their update, they have some charts about macro and on-chain.

I’ll keep it short for now. Tough times, I know. We’ll make it out of this together.

Relax and enjoy the ride!

If you’re over your head in crypto, I recognize what you’re going through.

Crypto’s probably not as screwed up as the US real estate market was in the mid-2000s and unlike the bond market, which is also in rough shape, we don’t have robust guardrails or governments and government-sponsored entities that can bail us out when trouble hits.

The story of crypto since April?

Liquidity. Namely, a lack thereof. We don’t have enough buyers and sellers to absorb large movements in the market.

You’ve said that for months, Mark. It’s all a scam.

If I had to do a back-of-the-napkin estimate, I’d say probably only 50% of crypto is a scam. I’ll go as high as 60% if I’m feeling blue.

At the same time, the market saw a lot of speculative enthusiasm in 2021. It’s natural to feel let down—even by the most legit, well-intentioned projects.

I’m raising my allocations to altcoins. One purchase with each payday.

While this may sound silly to some, I’ll explain more in the coming weeks and months. For now, read my altcoin reports to learn about some projects that I like. They may or may not succeed, but they’re not scams.

Does that mean I’m out of bitcoin?

No. The US government’s working to make bitcoin an essential part of its financial system, and by extension, the world’s financial system. Bitcoin has buy-in from Wall Street and it’s the biggest brand in crypto. If you come at the king, you best not miss.

When people ask me about it, I tell them to buy some whenever its price is below $50,000. That’s not what I’m doing, but it’s a simple way to play this market.

Scroll down for some news and notes you may enjoy.

Morgan Stanley's co-president says expect 'fire and ice' as a massive shift in markets gets underway

Bottom line: a rich white guy expects to battle inflation and recession over the next few years.

My take: sounds reasonable. Part of me thinks this is the way Wall Street covers their rear ends. They don't know what comes next and don't want their clients to blame them for whatever happens. No matter how you prepare, a lot of people will suffer as the world returns to financial normalcy—whatever that means. Until then, there are no safe investments.

Why we care: this transition will make a lot of people mad at the traditional financial system. Some will seek an escape. Crypto offers an alternative. Who will take it?

Watch this Blockworks video with @fedguy12, a former trader and author of Central Banking 101. You may appreciate the perspective on risk assets and the way the US central bank manipulates markets and investor behaviors.

I’m still skimming out of USD into crypto while demand for dollars (and cash generally) continues to rise. If cash were crypto, they’d say I’m “taking profits” as the price of USD goes up, but it’s really just reallocating capital within a larger financial plan.

This is pretty much my game plan for the coming weeks and months unless my plan takes crypto prices out of the buying zone or the Fed stops pushing down asset prices.

U.S. SEC investigating Goldman Sachs over ESG funds

Bottom line: US regulators think Goldman Sachs sold ESG funds that didn’t contain ESG investments. In other words, they told clients their money went to businesses that meet environmental, social, and governance standards—but didn’t actually put their clients’ money into those investments.

My take: somehow I don’t think people will read this article and conclude “ESG investing is a scam.” Which is good, because probably only 50% of ESG is a scam. I’ll go as high as 60% if I’m feeling blue. But it’s ESG so people like it, and Goldman Sachs gets investigated for doing something shady a few times each year, so everybody will brush it off as normal.

Why we care: shady people do shady things in every market. In crypto, you see this up close, probably magnified to extremes. It’s more real because everybody seems to talk about it, prices are falling, and you suffer directly. Remember this when the market recovers and people say “it’s safe” again.

Nice article in In Bitcoin We Trust.

Michael Burry hates the stock market and expects it will suffer for a very long time, but he still invests in stocks. Make of that what you will.

Thanks for your questions about the US crypto bill, S. 4356. To be fair, I’m not the best person to analyze the legislation and I expect it will change quite a bit before it moves out of committee, if it does.

Gabriel Shapiro, Jake Chervinksy, and The Block can give you much better insights than I can. Start with Gabe’s tweet.

I’ll keep you posted as interesting thoughts come my way. Relax and enjoy the ride!

Not an ideal situation. I’ll talk more about this in my next update.

Meanwhile, catch the most recent market update and changes to my plan.

From private emails, it seems like the new plan elicits mixed reactions. Let’s see how it goes.

Next up: altcoins.

Bitcoin’s dominance hasn’t hit the 50% level I had originally targeted for my first altcoin purchases, but when you include ETH and the largest stablecoins, their combined dominance surpassed 75%, one of two “switch to altcoins” signals I’ve talked about for a while.

Blood in the streets.

If history is our guide, we can expect altcoins to bleed more against bitcoin in the coming weeks and months.

As a result, I’m now raising my allocations to altcoins. Each payday I’ll buy one altcoin, cycling through all the altcoins that I want to raise my allocation for. Same amount for each.

Help me and your fellow subscribers find good projects! Comment or reply to the threads on the page called feedback on altcoins.

A lot of people are giving up on great projects because they got burned on JPEGs, meme coins, and supercycle moonshots.

In 2018, I bought AAVE and MANA near the peak, then gave up on them because they dropped 90% that year. Figured I’ll sell them whenever I need the tax deduction.

Fortunately, I didn’t sell them. MANA went up 20x higher than what I paid for it. Had I bought more after the 90% drop, that 20x would have turned into 200x or more.

(I still have my AAVE and likewise wish I’d bought more in 2018 when it was called ETHLend.)

I bought ADA at $.66 then came back 10 months later and bought it again at $.06. Still have it. In fact, I used some to buy an estate on Pavia (see if you can find my logo on the Pavia map).

Buy low and grow.

In last week’s poll, I asked at what bitcoin price will you buy more crypto?

12% of respondents said they’re waiting for the price to drop to $14,000. 44% said they’re doing it now while 40% are waiting for a drop to $22,000.

What do you think of those results?

Scroll down for some content you may enjoy.

Did you read May’s issue of Crypto is Easy?

GameStop Launches Self Custodial Wallet for Crypto, NFTs

Bottom line: GameStop’s going full-force into Web3.0, presumably with NFTs and play-to-earn games.

My take: GameStop has lost money almost every quarter for the past four years, so it’d do wonders for crypto’s reputation if they can make money from it. “Crypto turns around failing business” and “crypto’s good for business” headlines will encourage other big names to test the waters.

Why we care: because once big businesses make money from crypto and crypto-related products and services, they’ll stop asking “what does it do?” and start asking “what does it do for our bottom line?”

NFTs will revolutionize the way people protect, distribute, and monetize their creations, but not until governments revisit their commercial and intellectual property laws.

For example, is there a difference between owning the property and owning the right to use the property? If somebody buys an NFT with the expectation that your actions will make it more valuable, does that make it a security?

Next Decentrum Technologies poses deeper thoughts in this article, “an NFT purchase does not automatically give you ownership rights.”

Relax and enjoy the ride!

In last month’s issue, I looked at the macro investment environment and what it means for crypto. This month’s issue looks at the hidden risks in the global investment environment and how crypto isn’t too different.

Many months ago, I had a call with a consultant who warned me the world’s governments would crush crypto.

It turns out we can do that just fine on our own.

While crypto’s not the only market that suffers from excessive greed, scams, and a complete disregard for the welfare of others, it’s the only market that people like us can easily access.

On the way up, it’s great. On the way down, it’s horrifying.

Bond traders are no less ruthless and callous than crypto traders, but they deal with complicated financial products in an opaque market. In crypto, we can see everything on the blockchain, in trading charts, and through on-chain data. Much scarier.

Some bonds lose 50-100% of their value over time. Years, in some cases. So long and gradually that most people don’t even notice.

Some cryptocurrencies make the same trip in weeks or months—so fast, we can’t help but notice.

Cruel market, this.

It’s hard to care about a small South Asian country that has no fuel, money, or food, and just defaulted on its loans. Over 20 million people will suffer as a result and nobody knows what countries and funds have exposure to its bad debts.

Who’s next? Sri Lanka first, then Malaysia? Egypt? Pakistan?

It’s natural to freak out about a promising altcoin that got trapped underneath a stampede to exit *everything* in crypto. That’s your money.

Sri Lanka is somebody else’s problem.

Until it’s not.

Elephants in the room

This is not the first time I’ve talked about debt markets.

Boring, I know, but far more consequential than crypto.

Let’s not get too into the weeds. I don’t want to scare anybody too much. I’ll just touch briefly on two types of debt that the legacy financial system may have taken for granted.

Financial products built around junk bonds.

In the US, Wall Street has invested at least $850 billion in collateralized loan obligations, an alternative to junk, er, “high-yield” bonds.

What’s a CLO?

It’s a combination of debts from high-risk businesses. Investors buy the portion of the CLO that matches their risk tolerance.

While the idea seems ok, it’s basically a corporate version of the mortgage-backed securities that led to the global financial crisis of 2008.

While the CLO market is not as big as the MBS market, you never know what’s lurking in the shadows. Many of those businesses have no profits. Some used the proceeds to invest in high-risk business opportunities.

Now that the US economy shows clear signs of slowing down, when will these businesses get the revenue necessary to pay back their creditors?

Nobody’s tweeting about that, but maybe they should.

Sovereign debt.

Governments owe a lot of money and their growth can’t seem to keep pace. China has a debt-to-GDP ratio of 300% and the US is trying its best to catch up.

What about smaller countries? The kinds of countries that don’t have leverage over their creditors? The ones that can’t service those debts with elegant financial and accounting tricks?

At the beginning of this issue, I mentioned Sri Lanka. I don’t mean to pick on the country and I hope everything works out. I chose Sri Lanka because it only just defaulted. It’s timely.

Is this an isolated incident? One unfortunate country that got in over its head?

Or is this the first domino to fall in a larger debt contagion? While you fret about Tether’s reserves, did you check on any of the countries in the IMF Global Debt Database?

Mark, this is a crypto newsletter. We have enough to worry about, do you need to remind us how bad it is in the real world?

Yes.

If you think you’ll find safety in other markets, you need to know what those other markets look like. Should any of those “safe, regulated” markets fail, it will make UST’s collapse look like a $300,000 NFT rug pull.

Borrow money now?

In recent updates, I showed some crazy, coincidental, seemingly-out-of-nowhere similarities between this month’s crash to $25,500 and the 2015 crash to $153, a generational bottom.

Some people have asked me whether it’s time to “back the truck up” and borrow to buy bitcoin.

My short answer?

I’m ok with you doing that, but there’s no way I’m going to do it. Have you seen what’s going on in the world today?

My long answer: watch this video.

In fact, I revised my plan for bitcoin’s bull market.

(I know, I know, as I said in February’s issue, I’m keeping the title the way it is.)

For a long time, I was proud to say the plan makes sure we buy when the market’s not likely to go much lower for much longer. “Lower” means 50% or less, “longer” means a few months.

I can no longer say that. My plan failed to deliver on its promise. On May 12, you might have been down more than 50% and clearly “a few” months does not mean “half a year.”

Also, we never hit any of the markers for the peak but still fell lower than any non-peak stretch of time except the March 2020 crash. And we may not be done falling. It’s worth questioning whether the plan works.

After reflection, I now have an approach that hopefully fits better with the current mood of the market and my own lessons learned.

Substantively, it follows the same concept and execution, but it’s more flexible and better adapted to our present circumstances. Like the old plan, it beats dollar-cost averaging with less effort and risk.

I plan to revisit this plan once the market picks up steam. See the new plan.

Under the old plan, you’re down as much as 42% or up as much as 450% but probably closer to down 25% or so. With altcoins, you could be up or down a lot more.

I expect this new version will do better.

No escape, no surrender

One thing that hasn’t changed?

The traditional financial system has turned safe investments into guaranteed money-losers and stripped risky investments of their upside. You can’t even go into cash anymore—unless you’re talking about US dollars. And even then, market analysts wonder if USD has peaked.

What if crypto is the escape?

No, Mark, when people lose their jobs, the first thing they’ll sell is crypto!

Yes, most people, when forced to choose between food or crypto, will sell crypto and buy food.

When you assume that means the market has to go lower, you have to assume two things:

* Enough people will lose their jobs to matter. Crypto’s a niche market and only a small portion of the world’s population owns any. Even in times of “high” unemployment, a lot of people have jobs. In general, people in crypto tend to be younger, wealthier, and better employed, according to numerous surveys over the years. The very people who tend to use crypto as an investment are the very people who are most insulated from economic danger. Will a larger global downturn make that much of a difference for the people who want to put money into crypto?

* People have (or still have) crypto they want to sell. We know institutions and tourists left in December 2021 and January 2022. We saw this happen in real-time. Our most recent collapse wiped out fence-sitters, VCs, and people who borrowed against their bitcoin at $50,000-60,000. What if almost everybody who’s left in this market will stay regardless of global financial conditions?

Nobody can say for sure. Maybe “the world’s going to hell so bitcoin must crash to $14,000” is 2022’s version of “printer go BRRRR so bitcoin must go to $288,000.”

The question is, will people trade a high-growth asset at a low price to get some other asset that might also collapse?

Complacency kills

Some people seem convinced that we are on the verge of a global depression or, at the very least, a long bear market for equities and a major worldwide economic downturn.

US GDP and manufacturing were both negative in Q1. Anybody looking for a US recession is already halfway there. What’s it like in your country?

Some people seem convinced that everything will work out ok. Turbulent times ahead but nothing too serious.

In the US, corporate expenditures, home loan-to-value ratios, and consumer behaviors don’t match what you normally see when staring down a financial disaster.

Until they do.

While it’s nice to have TIPS, home equity, cheap lines of credit, and cash to fall back on, most people do not have any of those things. That makes it hard to ride out the crypto waves.

Still, I sense complacency.

On the one hand, many people say “200 WMA,” “supply shock,” “bottom’s in,” and “escape velocity” means the worst is over.

On the other hand, we see a descending triangle forming on the daily trading chart, government crackdowns, Celsius and Tether FUD, and failed cycle/data models. “This time is different.” “Crypto has not lived thru a recession.” Therefore, the worst is yet to come.

What happens if we get something in the middle? The crypto market goes sideways for a year, up 50% and down 50% before it resumes its natural path upward?

While I appreciate strong convictions loosely held, it’s hard to pick one side or the other. We’re sailing in uncharted waters.

Cycle says . . .

While bearish analysts insist the market will rally soon, they’re not calling the bottom. Cycle theories say the peak is in, no new all-time highs in 2025.

From a technical perspective, today’s conditions resemble December 2018 and January 2015. I covered this in several updates for paid subscribers.

If this market acts as it did in January 2015, bitcoin’s price will go up and down for the rest of the year, but not lower than $25,500.

If this market acts as it did in December 2018, bitcoin’s price will drop to $22,000 or $14,000 very soon, then hit $70,000 in January 2023. That would mean a peak in November 2021, a bottom in May or June 2022, and a new all-time high in 2023.

This begs the question: can you have a new all-time high in a bear market?

Some say we already did—in October and November 2021. April 2021 was the true peak.

Tough to say for sure. In October and November, trading indicators and on-chain data showed none of the extremes that characterize market tops, despite the higher prices.

(To that point, analysts still debate whether $69,000 is a “higher high” or “double top”).

From November to today, bitcoin’s price dropped less from top to bottom than it did in March 2020 and or any of the previous bear markets.

Unprecedented—but is it really different this time?

That aged well

Last month, somebody commented on an article I posted in February 2020, speculating that bitcoin’s price was in wave three of an Elliott Wave cycle, one way to measure market movements.

That person said “Bro , do you really know the elliott wave theory? , this article it's so wrong.”

I said “no, but it fits:”

Fortunately, I’m writing this more than two years later, so we have the benefit of hindsight. At the time, I was just drawing doodles. I posted other articles suggesting other potential outcomes, I guess they didn’t stick as well as this one did.

As with all technical analysis, you can only confirm the pattern once it’s completed, and it looks like a Wave 3 to me.

If that’s right, we’re in Wave 4, a corrective period before one final leg up. For the past six months, we have followed an a-b-c correction pattern.

The question is, at what price does that “c wave” end? Did it already complete?

It seems silly to think the bear market’s over. Probably as silly as this observation from February 2020.

Similarly, not something to act on.

In this market, sometimes the silliest ideas end up coming true and the most obvious ones never work out. Like my data model, U2R.

According to this model, bitcoin’s fair price is $75,000. Whatever that means.

(I don’t know. It’s just a model.)

Small things change, big things don’t

Are you worried that our crash to $25,500 signals more pain ahead?

For weeks leading up to April’s drop below $39,000, I told paid subscribers about the notable lack of buyers, the noticeable drop in buy-side liquidity, and the specific situational risk that a drop below the mid-$30,000 range would force liquidations of people who borrowed money against their bitcoin in October and November.

I added the following note at the end of my weekly rundown on April 24, 2022:

Consider pausing your investments…

…I’m honestly not worried about anything [at that time], in fact, we still see a lot of strength in the market.

That said, here are the conditions we’re in for the short-term:

* Liquidity is basically non-existent. That works both ways—a small short squeeze sends prices way up, a minor sell-off triggers a catastrophic fall.

* Leverage is still very high relative to the number of bitcoins available to buy and sell at this moment.

* It’s likely a lot of people borrowed against their crypto to put money into the market. That money already went in as buying pressure. There’s probably not much more coming in behind it. As a result, the risks are skewed to the downside.

* We don’t have a lot of new money coming, at least not enough to show up in any of the data I look at.

* Selling comes in clumps, buying comes constantly but mostly from people already in the market. As a result, a single big whale or miner can sell us into oblivion or cause a panic with a relatively small sale—even though the overall market shows a lot of conviction…

…this is a purely situational strategy that I am applying only in these specific circumstances…since we’re already pretty well invested [after buying for most of 2022], we have the luxury of tapering or stopping our buys.

On top of that, we saw a drop in the total amount of stablecoins and persistent net outflow of stablecoins from exchanges. The safety net was getting weaker. A cascade of liquidations would cause panic among people who would have otherwise HODLed or bought more.

Did that mean the market had to crash?

No.

While we didn’t see much buying, we didn’t see much selling, either. With few bitcoins on exchanges, a trivial purchase could have blasted through the order books and sent the market zooming.

That didn’t happen.

Sometimes, bitcoin’s price goes down and crypto projects blow up. This happens in bull markets, bear markets, upswings, downswings, and pretty much every market condition. This time, it happened at a time when we didn’t have any way to cushion the blow.

No doubt, the crash scared away money that would have otherwise come into the market. It also crushed a lot of people who were already in the market. It’ll take a while for people to trust crypto again.

In a larger sense, nothing changed. Bitcoin hasn’t changed. Ethereum hasn’t changed. Your favorite altcoin hasn’t changed. The global financial situation hasn’t changed.

Time will tell whether that’s a good or bad thing. Sometimes, restraint is the better part of valor.

Either way, all of the risks and opportunities you had in 2021 remain. Except now, those risks cost less and those opportunities offer more in return.

Time is on your side

For bitcoin, any price between $22,000 and $150,000 fits within the range of normal prices. Many altcoins now trade at 2020 prices or lower.

You can get the results you expected in 2021 with half or one-tenth of the money you needed back then. The difference is, you’ll have to wait a while longer to see that investment bear fruit.

On the other hand, you don’t need to rush anymore. You can take your time, put in small amounts, and work yourself into the market slowly.

What will you do if we get that relief rally or short squeeze that so many people expect?

You can set aside fresh cash for another opportunity. You’ll win either way.

* If that rally turns into a new bull market, you’re set. You’re in. You can let the value of your crypto go up. You don’t need to put more money in.

* If that rally fails, you’ll have more money to bring into the market on the way down.

Know thyself

The question is, what does “win” mean to you?

Good traders will lose at least 50% of their trades. The best will lose 60% or more. If you aggregated the scorecard for your favorite influencer’s “calls,” I'd wager that they’d all be about 50/50.

How can you lose half of your trades but call yourself a winner?

Risk management.

When you win, you win big. When you lose, you lose small. Repeat that over time, and you’ll do fine.

I don’t trade, but I played baseball when I was younger.

In baseball, everybody thinks strikeouts are bad, but if you’re swinging for the fences, you’re almost certainly going to strike out more than somebody who’s just trying to get on base.

That’s ok. You only need to hit a few home runs to make up for the extra strikeouts. A home run is worth four hits, on average. Sometimes, you get singles and doubles—those are good, too.

Fans complain that’s boring. Purists think it’s bad. You spend a lot of time on the bench rather than on the base paths.

It’s not the only way to hit a baseball, but it works.

Do you want to flip cryptos for quick cash or find those 100x moonshots?

If you want to flip cryptos, then wait for altseason. Once it comes, buy random alts and sell each of them after they go up 50%. Altseasons are rare and fleeting things. We may never get one again. Get in, get a little money, and get out as fast as you can. More fun than throwing dice at the casino.

If you want to find those 100x moonshots, buy now and stake, use, HODL, and leverage your altcoins as you feel comfortable. Some will go to zero and a few will deliver 100x returns. Overall, you’ll end up 5x above whatever you thought you would’ve gotten in April or November 2021.

One way gets you a 50% return. The other way gets you a 500% return.

But you can’t do both at the same time. Which do you prefer?

Once the market turns around, you may have to come in with a lot more money if you want any chance to get the results you imagined you’d get in 2021 (i.e., 2x on bitcoin, 5x cumulative on altcoins, once you average winners and losers).

Even then, you might lose money. Same as in 2021.

In today’s environment, you have to overcome VCs dumping as their tokens unlock, project teams running out of money, community projects disbanding, inflationary tokenomics that dilute the value of your tokens, and the stress of putting money into an asset that dies.

Even then, you might lose money. Same as in 2021.

What you should do depends on what you want to get out of this market.

I prefer the slow money path. I have enough things to worry about in life, I don’t need to add crypto to the list.

My portfolio strategy diversifies among different types of assets. When one goes down, another goes up to balance out the difference. You can move wealth from one asset class to another as opportunities arise.

For the past few years, I’ve slowly increased my allocation to crypto. A gradual rotation, simply because the market’s so volatile I can’t get too risky.

You probably manage your money in a different way, with different goals. Do what feels best and works for you.

Broken record

If you’ve subscribed to me for a while, you probably get tired of hearing me say the same things again and again.

Why do I do it anyway?

Because people hear me differently when the market’s going up than when it’s going down. Also, I get new subscribers all the time. My analysis changes often but my beliefs rarely do.

If I’m going to be damned, at least I’ll be damned for who I am.

For reference, here are my beliefs:

* You can always make up for bad timing. Complacency kills.

* You don’t need crypto to make money. Your time, talent, energy, and innate skills are worth far more than any speculative financial asset.

* Embrace uncertainty. Without it, you would not have these investment opportunities.

* All financial assets come with risks, even the safe ones. Sometimes, the “safe” assets are the worst—they lull you into a false sense of security.

* Crypto markets rise in a two-step process: crypto flows to people who want it more than they want their government’s money, then prices go up long enough for people to think prices will keep going up. Everything else takes care of itself.

* At any time, the range of realistic outcomes is vast.

* Bitcoin is the best risk-adjusted investment opportunity that people like you and me can make right now. Some altcoins will do very, very well. Most will not. Try anyway.

* Nobody knows how to properly value altcoins. Each one is either massively overvalued or massively undervalued. It will take years to sort out the winners and losers, what works and what doesn’t, and what metrics matter.

Hard times make strong people. There are a lot of things to worry about in life. When it comes to crypto, a little goes a long way.

Do what you can now, stop when you need to, and make sure to take care of whatever matters most to you.

Crypto will always be here when you want it.

Relax and enjoy the ride!

Bitcoin’s price is the same today as it was one year ago. The S&P 500 is down 6% over that time.

Some people say “friends don’t let friends buy altcoins during bear markets.”

If anything, friends shouldn’t let friends buy altcoins during bull markets. That’s when you lose money.

I would say buy altcoins whenever you feel like it. Just try to hold yourself to small purchases when the market’s hot and try to force yourself to keep putting money in during times like these, as best you can, at a pace that feels comfortable to you.

Listen to my thoughts and observations in the May 19, 2022 altcoin update.

With our most recent lower-low on the high timeframe trading charts, bitcoin confirmed it spent the past six months in a bear market. I’m not calling for a bottom—the bottom is $0—but if history is our guide, the bear market’s either over or gearing up for one last crash.

Get my update from May 17, 2022, and you’ll see why.

Yes, it’s possible we just finished a six-month bear market with a bottom at $25,500. We’ll need to wait at least a few more months before anybody can say with any confidence, but if it’s true, that would seem crazy. Can you have a bear market that lasts only six months? And only drop bitcoin’s price 60% from the peak to the (very brief) bottom?

But for this market, everything is crazy. In April, I wrote this article summing up my thoughts:

* Is 2022 the End of Bitcoin’s Bull and Bear Markets?

Scroll down for a poll and some content you may enjoy. Also, please note I removed Celsius from my list of crypto savings platforms until they share more information about their exposure to UST and their relationship with Tether.

Poll: At which of these bitcoin prices will you buy more crypto?

* $14,000

* $22,000

* I'm doing it now

* $40,000

Melvin Capital to shut after heavy losses on meme stocks, market slump

Bottom line: after outperforming for years, a well-known investment company shut down because of a few bad bets.

My take: one Wall Street firm lost more money on “real businesses with intrinsic value” than the entire crypto market lost on LUNA/UST. Sucks for everybody, but a reminder that crypto is not the only cruel, speculative, risky market. I’m guessing Melvin Capital’s founder thought it’d be easier to give up and start over than to fix the fund and rebuild. Sounds familiar.

Why we care: these things happen in all markets, not just crypto. We’ve had hundreds of Melvin Capitals over the years and we’ll probably get many more in the coming years. Sometimes people try their best and fail. That’s different than scheming to rip you off and take your money.

Sticking with the theme of “the US stock market will drag down crypto,” listen to a recent episode of the On the Margin podcast. This episode, Fed Wants to Crash the Stock Market, touches on inflation and US central bank policy.

Frankly, I’d worry a lot more about corporate and sovereign debt than inflation and interest rates (though they’re related). This episode touches on those topics, too.

Wall Street Isn’t Ready for the Crackdown Coming Its Way

Bottom line: US regulators are stepping up investigations of insider trading, market manipulation, collusion, and the practices of SPACs.

My take: you thought they only cared about that stuff when it happens in crypto? As shady as crypto can be, it’s probably not any worse than the legacy financial system.

Why we care: because people get down about crypto and forget how screwed up Wall Street is. As global regulators develop frameworks for crypto, ask whether they’re targeting crypto itself or the people who use crypto to do bad things to you.

One meme for your week.

Relax and enjoy the ride!

Our rise since then has come with the largest number of short liquidations since July 26, 2021. While this type of short squeeze can mark a “dead cat bounce” or “relief rally” before another drop, we’ve seen these types of moves cement local and generational bottoms, too.

In those situations, the pump is artificial but the sellers have already left. As a result, the market goes up.

That said, we have nothing but air between today’s price and $21,000. No time for complacency.

Since January 2022, most of the price movements have come from traders getting liquidated. The direction depends on which side gets zapped. We don’t have a lot of buyers or sellers. It’s entirely possible the whole run from $33,000 to $48,000 came from Terra’s bitcoin buying spree.

Small movements of money can push the price up or down a lot more than you probably think.

As quickly as a small bout of selling can send the market into a panicked tailspin on low liquidity and excessive leverage, a small buy order can push it in the opposite direction, with the opposite result.

As I pointed out in my most recent update, now that we’ve gone a full year since April’s local high of $65,000, we can see some crazy coincidences that align with behaviors and patterns from 2014. See what I’m talking about in my most recent update, posted on May 12.

In last week’s poll, I asked “will bitcoin’s price drop below $29,000.”

56% of responders said yes. They were right.

I’ll have another poll next week. For now, just a few bits of content. Scroll down for links.

Compound Treasury nabs credit rating from S&P

Bottom line: a yield farming company, Compound Prime LLC, got rated B- by one of the US’s top rating agencies.

My take: B- is not a good rating, but it’s higher than I would’ve expected. If that rating rises, that will build trust in cryptocurrency as a viable financial tool. Still, I find it odd that this press release has a positive tone. In its report, S&P said “major rating weaknesses include, in our view, the company's very low capital base, regulatory risk associated with cryptocurrencies, considerable operational risk and complexity, convertibility risk between private stable coins and fiat currency, and the potential hurdles to generate a 4% return.” Not bad for a crypto company, but not exactly something to brag about.

Why we care: lots of work left to do. It’s a long road to Tipperary.

(I agree with this sentiment.)

Will Terra’s UST and LUNA Crash Cause a Shift to ‘Cryptos that have Stood the Test of Time’?

Interesting question, especially with rumors that altcoins will drop another 90% lower and only bitcoin will survive.

Read the article. What do you think?

Last, I’m hoping somebody with some insight can help me understand a pattern I found in USDT movements. I honestly don’t know whether these movements are normal or nothing remarkable, and it’d be great to get your insights and expertise.

Read this tweet thread.

Relax and enjoy the ride!

Did you catch my update from earlier this week? If not, please do. In the update, I talked about some recent changes in miner behaviors and some trends in stablecoins that you may want to see.

In last week’s rundown, I asked which price will come first for bitcoin—$33,000 or $52,000?

58% of respondents said $33,000.

Granted, that was from only 182 votes, which is very low for my polls, so take that for what it’s worth. From the sentiment I’m getting from social media and the bitcoin fear/greed index, I would have expected more people to select $33,000. Seems like the overwhelming consensus says we are about to have a massive drop, presumably below $33,000.

Paid subscribers, I’ll have one or two updates this week. Everybody else—scroll down for some interesting stuff you may enjoy.

I don’t post much on YouTube, just occasional short videos that don’t fit very well in this newsletter. I posted three short QA videos just the other day, if you’re interested.

* Celsius says no interest for US customers, $300,000 bitcoin prediction

* Saylor sold Microstrategy’s bitcoin? Probably not, but I’ll bet his employees did

* Next big thing in crypto

Coinbase Accused of Insider Trading; Is There a Base for the Allegations?

Rumors say Coinbase insiders bought a bunch of various altcoins shortly before Coinbase announced it may potentially list those tokens.

Dirty business, this.

More dirty than traditional finance? Debatable.

Unlike traditional finance, the transparency of the blockchain lets 7 billion detectives figure out what’s going on. Your regulators can only hope to have this much insight into whatever Wall Street’s doing.

State of the Market

About two and a half months ago, Kevin Zhou with Galois Capital published a Medium post that reflects on some key failings of the crypto space.

Not just the grift, as he calls it, but the way you perceive the cryptosphere when prices are up compared to when prices are down. Read it now.

In defense of farming

Blockworks highlighted the difference between Ponzi schemes and the use of staking as rewards, as well as the new incentives that come from staking.

Reminder: stake your altcoins when possible. It’s free crypto and the only way to fight the inflation that comes from token rewards.

Relax and enjoy the ride!

In last month’s issue, I talked about government and sentiment. In this month’s issue, I look at the macro investment environment and what that means for crypto.

Predicting ain’t easy

At the beginning of this year, I gave two prediction articles to Bitcoin Magazine and Luckbox.

While I don’t really like doing prediction articles, I know everybody else loves them. As a content creator, I must oblige. I even made my own bitcoin price prediction almost two years ago.

The problem with predictions is when you’re right, it’s almost certainly a coincidence, and when you’re wrong, people make fun of you.

Predictions are good for the entertainment value of some interesting thoughts and the observations you can make when you think through the possibilities. Making decisions? Not as much.

I won’t link to those articles. While the editors preserved my overall message and much of the substance, they took some liberties with the specific words and language I used in my submission drafts. They made the articles read better but also changed enough that the final product doesn’t quite capture what I meant to say.

What were my predictions?

To shrink two long articles into a one-paragraph summary, 2022 will be a year of transition for cryptocurrency.

Governments will start to wrap their heads around what’s going on and your average person will start to understand the significance of this technology. Regulations, enforcement actions, lawsuits, real-world applications, and potentially another crypto winter will expose the scammers, tourists, and people just trying to make a dollar at your expense.

So far, I don’t think those predictions are anywhere near valid. They’ll probably end up being flat-out wrong.

Yes, the tourists have left but scams still abound and governments have found bigger things to worry about than cryptocurrency.

There’s a hole in the bucket

The world’s largest economies, US and China, show signs of slowing down.

The former is the center of the world’s financial system, the latter is the world’s largest trading partner. While I don’t know what will happen when those economies struggle, I imagine it’s not good.

That assumes something more serious doesn’t happen first.

Seemingly every week, a new debt crisis pops up in another low- or middle-income country. The fallout from the war in Ukraine will cause global shortages of food and oil, perhaps instability and revolts as people suffer from hunger, higher prices, and lower living standards.

Thanks to rising US interest rates and a near-parabolic boom in the price of US dollars, foreign countries and businesses are having a harder time paying off US-denominated debt.

Conflicts among Middle Eastern nations threaten to spill over into a regional war that could suck in all of the world’s big countries. Supply chains remain backlogged worldwide. COVID’s back in China. Inflation’s back pretty much everywhere.

Cryptocurrency seems pretty low on the list of governmental priorities.

Maybe that will change once prices go high enough to threaten the status quo?

We’ll see. Until then, it looks like scams, scammers, shills, Ponzis, dog tokens, and failing projects will run wild for quite a bit longer.

Nowhere to hide

Yes, shocking, scams in crypto. Just like in traditional finance.

Unlike scams in traditional finance, we can see this mischief on the blockchain. Verifiable, immutable proof of wrongdoing. @zachxbt covers these regularly, @cryptowhale occasionally, and lots of others get the word out on Reddit and Twitter.

Once these shenanigans are exposed, the market cleanses itself (and has every incentive to do so). We have seen this time and time again.

That’s not to single out crypto. The legacy financial system has its fair share of shenanigans. Let’s hope there’s no systemic risk. Your options are bad enough without that. Where can you put your money anymore?

Imagine having 40% of your wealth in bonds while yields explode and inflation destroys your purchasing power. You just got hosed—on the “safe” assets in your portfolio.

Cash? You’re kidding, right? At least those bonds pay you something in return for destroying the value of your wealth.

Equities? Overbought and expensive against almost every historical benchmark.

Start-Ups? As soon as VCs and investment banks lose access to cheap money, those unicorns will be a lot harder to come by.

Real estate? Investment properties can do well but you need cash upfront and financing that makes sense, two things that most people don’t have or can’t get. Passive funds may make sense, but the growth in China’s real estate sector has fallen every month for more than a year and in the US, new mortgage applications are down 50% since last year while home prices still outpace the growth in wages.

Commodities? Sure, just make sure you get out before the new supply comes to market.

Compared to those assets, crypto doesn’t look so bad. If you’re not a fan, perhaps you can call it the least bad of all your choices.

Let’s hope everything works out ok for everybody. I’m not betting against the global financial system, but I’m not exactly jumping for joy over any financial investment right now.

Looking good but . . .

As I’ve shared in my premium updates, the crypto market’s in a strong position.

Sellers are coming in fits and starts while buying and HODLing is coming from all corners of the market, just not in large amounts.

What’s the problem?

Lots of crypto is posted as collateral for stablecoins that people recycled into buying more crypto.

How much? We don’t know.

The risk is, if prices drop too fast, that crypto will get liquidated. That will drive prices lower, forcing more crypto to get liquidated. As a result, you get a cascade of liquidations and the market keeps falling very far, very fast.

With so few buyers in the market today, even a small liquidation event can cascade into a total wipeout.

No on-chain metrics or technical analysis can prevent margin calls and automated selling of your assets.

This is not leveraged trading. It’s people putting bitcoins in places where they can get sold automatically, without warning, against their wishes.

It’s the most opaque part of the crypto market. On-chain data will make these bitcoins look like HODL coins. Technical analysis will not account for them at all.

We know people have pulled a lot of ETH and BTC out of DeFi protocols since last year, as I pointed out in my updates for premium subscribers. We can see this on the blockchain.

What are they doing with their loans from Nexo and Celsius? That’s anybody’s guess—and a structural risk that nobody likes to talk about. I mentioned it in my most recent YouTube video.

Some think we have to blast upward because sellers are mostly fatigued and the network shows strong accumulation and HODLing patterns among market participants. Illiquid supply, supply shock, 1-year HODLers, data models, etc.

That’s a two-edged sword. Liquidity cuts both ways.

With near-historic lows in the percent of bitcoins on exchanges, little new money entering the market, and retail interest way down, we don’t have enough liquidity to prevent a massive sell-side liquidation that crushes the market.

Will that happen?

Let’s hope we never have to find out.

Why so bearish, Mark?

Bearish?

No. Did you not see my pinned Tweet?

I’m bullish in the short, medium, and long term.

I know the path we’re on and where the journey leads. How could anybody be bearish about that?

Along the way, you can expect setbacks and challenges. Not just liquidation events.

What about protocol failures? Asteroids? A Tether implosion? Massive fraud among big projects? Governments killing the technology? An exploit on ETH or ETH 2.0?

Or perhaps a more likely possibility—a recession?

As soon as US unemployment dropped below 4% last year, you probably started thinking about how to prepare for the inevitable recession that will come sooner or later. Even more so once the yield curve inverted and the US central bank started cutting back on stimulus.

In your country, the conditions may be different, but the result is always the same: eventually, you’ll have a recession. You can’t avoid it.

You’ll have to take your lumps sometime.

Nobody “wins” in a recession. You can’t know in advance when it will start, how it will end, and how bad it will get, but you can choose to prepare and hope for the best. Hard times make strong people. It’s like healthy diet and exercise—not fun, but you’re better off for doing it.

Likewise, navigating the ebbs and flows of the crypto market. Does the daily trading chart show a bear flag (red, bad), ascending channel (neutral, black), or higher low (green, good)?

Nobody knows. You get to see whatever you want to see.

The bear flag has lasted longer and has a different volume pattern than the textbooks say it should. The ascending channel is a nice fit for the price action, but tells you nothing. Higher lows are great, but they can get wiped away in an instant.

Know which trend to befriend

Traders say “the trend is your friend until it ends.”

Choose your trends wisely.

Some choose to focus on this trend, which started in January 2022:

That’s a short-term trend and easy to reverse. Traders prefer this trend, which started in November 2021.

They’ll flip bullish once bitcoin’s price goes above the most recent $52,000 swing high (seems like ages ago).

I prefer to look at this trend:

That’s the 200-week moving average. Bitcoin’s price never goes lower than that line. Meanwhile, that line always goes up.

Don’t fight that trend. Embrace it. Use it to your advantage. Act when opportunities come your way, sit on your hands when they don’t, and sell only when the market forces you to do so. You’ll get better results than dollar-cost averaging with less risk and just as much effort.

Embrace that trend now, while the US Treasury Secretary thinks bitcoin’s only achievement is solving the double-spend problem. While Aunt Sally and Uncle Mortin think it’s magic Internet money. While Billy the Neighbor waits for bullish confirmation. While bitcoin maximalists think altcoins are all scams. While anarcho-capitalists think crypto will replace fiat currencies. While your average investor thinks the legacy financial system offers a better opportunity to grow and preserve wealth.

Definitely embrace it before this market takes off, out of nowhere, when you least expect it, as it has done so many times before.

The total crypto market’s down 40% from the peak. With my plan, you’re probably down only a little bit and possibly up quite a lot. At most, you’re down 23% or up 620% (likely closer to even).

You’ll be way ahead once prices go up long enough and high enough for people to talk about bull markets again.

The end of bull and bear markets?

That assumes the traditional bull/bear paradigm still makes sense.

What do those terms mean for an asset whose price goes up 100-300% in bear markets and crashes 30-50% in bull markets?

From the start of 2019 until the end, bitcoin’s price went up 120% and seemingly everybody called it a bear market.

In 2020, people said the bull market started in December, with the first new all-time high since 2017—after the price had already gone up 600% in less than two years.

Now, you hear people claim April 2021 was the peak of the cycle and everything else was a dead-cat bounce.

In other words, some people think we had a nearly three-year bear market followed by a five-month bull market and now we’re one year into a bear market that’s already seen two new all-time highs.

Seems odd.

Fitting, though, for a market as crazy as this one. With crypto, you get 100% pumps in the middle of raging bear markets and 50% drops in the middle of massive uptrends. 25% upswings and downswings are normal—sometimes barely noticeable on a price chart.

After November’s all-time high, bitcoin’s price spent two months going down, then three months going up. Can you have a bear market where prices spend more time in an uptrend than a downtrend?

What about percentages? In September 2020, many altcoins dropped 50-80%. Likewise in January 2021. Both times, in the middle of a massive bull run.

When those drawdowns happen in the middle of a raging bull market, you call them corrections. One or two months later, back to zooming.

Today, you call them bear markets. Same drops but the zooms take a lot longer.

Suffice to say, we haven’t seen anything that looks like a classic bottom on a trading chart, nor clear signals in on-chain data or activities in the derivatives markets.

What happens if bitcoin’s price goes to $50,000 before it drops to $35,000 in a massive liquidation event? Does that count as “the bottom” or another “higher low” since January’s $33,000 nadir?

U2R doesn’t care

So many people get psyched out in bull and bear markets.

For that reason, I created the U2R model, which projects a fair price for bitcoin. Here’s the projection:

That black line represents the fair price, $74,000. It’s higher than today’s price. If the model holds, bitcoin’s price will go up eventually.

Tap this button to learn more about U2R.

My most bullish scenario for bitcoin

Do you want to know my most bullish scenario for bitcoin (and by extension, the whole crypto market)?

Up a little, down a little, forever.

Something like this:

For most people, that’s a nightmare. Six months before the price doubles? Multiple drops of +20% along the way?

Nobody wants to wait six months for their Lambo.

How long could that trend continue before traders decide it’s no longer a bear flag? And anyway, how do you get a good entry if the price doesn’t break out of the trading pattern?

At the same time, you get perfect conditions for growth.

Plenty of opportunities for people to enter and exit, enough upward price movement to give new buyers confidence in the market, not so much FOMO that people get too greedy, boring enough that scammers go back to other things, and enough excitement to motivate investors to learn about what they’re buying.

Most importantly, enough liquidity and casual interest that builders and innovators have an audience for their creations.

Would you be upset if the price goes to *only* $90,000 and your investment goes up *only* 2x this year? And then another 2x next year? And another 2x the year after?

That’s a lot more sustainable than a supercycle.

While that’d be nice, I’m not betting on it. This market has always moved in extremes. Big moves up and big moves down. Do you see any reason that should change now?

Emerging “Third Way”

Perhaps one of my 2022 predictions will turn out true, just not in the way I had expected.

Maybe the world will realize one significance of cryptocurrency: independence from Western and Chinese financial systems.

At least a dozen countries risk falling into China’s debt trap at the same time China’s government plans to pull back on its foreign obligations to bolster its domestic economy.

At the same time, pretty much every government seems mad about the crazy rise of the US dollar over the past year.

Sri Lanka, Russia, Pakistan, and Lebanon can’t pay their creditors. Several Latin American and African countries struggle with this, too. Few have options to deal with it.

Do they really want to be forced to choose between SWIFT and UnionPay? Between a eurodollar system that’s squeezing their currency and a digital yuan that lets China strong-arm them into giving up control over swaths of their economies?

Do they put their fates in a system that can cut them off at a moment’s notice or a government that preys on their vulnerabilities?

Do they seek the support of an overbearing IMF or the world’s biggest loan shark?

Some believe the 21st Century will plunge the world’s financial system into an economic Cold War between China and the US.

Maybe cryptocurrency can serve as a third way? A non-aligned movement for modern finance based on non-political, immutable, open, permissionless financial systems? After all, smart contracts won’t leave you hanging. The US and China might.

And who knows? Once freed from the constraints of legacy finance, maybe a new crop of financial engineers will develop breakthough technologies that bring wealth, prosperity, and economic opportunities to billions of people who would otherwise have no good way to access global capital markets?

Maybe, maybe not. Geopolitics is complicated.

It’s also a moot question. Crypto can’t yet scale to handle mass adoption. That will change, but when?

In any event, nobody cares about crypto until the price goes up—and the price ain’t going up.

Until it does

Yet, bitcoin offers the best risk-adjusted return of any asset you can buy right now and some altcoins will do amazingly well in the future.

Perhaps that’s not an endorsement of crypto as much as an indictment of the legacy financial system. Risky investments offer paltry returns, safe investments are guaranteed money-losers, and inflation has turned cash into a financial burden.

At least with crypto, you might get ahead on your money. All the better to do so when the prices are low.

Does that mean they can’t go lower?

Nope. The bottom is always $0.

But the top is infinity.

Look at the state of the global financial system, the world’s economies, and sovereign debt burdens. You’re going to ride those horses? Do you really think those problems will get fixed before crypto prices go up again?

I don’t expect the world to collapse. I’m not so sure we’ll get any of the things I talked about in this issue.

My investment in cryptocurrency doesn’t come from fear of financial failure. It comes from faith in a financial future.

I know where this road leads and I’m content to follow my plan. Step beyond the day-to-day and look at what’s going on around you, trends and behaviors that never appear on your timeline or landing page. Get a reality check.

When the market zooms, I probably seem too bearish. When the market crashes, I probably seem too bullish.

How much of that is a reflection on what I’m saying rather than what you choose to hear? There’s a difference between cautious, effective investing and being bearish. There’s a difference between wishful thinking and accepting a wide range of realistic expectations that include “price will go up a lot, quickly.”

Keep it simple. When prices drop, you get more upside with less risk—for an asset that you already want to have.

Of course, risks remain. Without risks, you can’t have opportunities.

Easy choices, if you want them to be easy

My free advice?

Buy bitcoin and altcoins whenever bitcoin’s price is below $50,000.

While that’s not my plan nor a strategy I follow, it’s a safe bet. That way, you will never have to pay for analysis from people like me or even think about the market.

That said, if you’re not already on the paid plan, please consider doing so. You get access to my plan, analysis, and commentary.

A $50,000 bitcoin in 2022 is like a $10,000 bitcoin in 2019. Everybody obsesses over the swings, but would you really be mad about buying at $10,000 instead of $8,000?

Do you risk buying too early or too high? That the market will fall out from under you? That your portfolio’s value will drop or you’ll see a negative return on your investment?

Sure. You have that risk at every time, every price, forever.

My plan makes sure we limit that risk as best we can and catch the upswings before they come. We always catch the bottom, but we still buy higher, before, and after that bottom hits. We never get it just right.

The problem is, if you wait until everything’s “just right,” you’ll miss today’s opportunity. You can always find a way to make more money. You will never find a way to make crypto prices go down. You can’t fight the trend—at least, not the trend that really matters.

Today, you risk being too early. You might have to make up for whatever you lose in the weeks and months ahead.

Tomorrow, you risk being too late—and you will never be able to make up for what you’ve lost.

It won’t always be this way. At some point, the market will go up. It will get too hot. The risks will flip upside down, and you’ll end up chasing after a market that you will never catch until it’s too late.

Relax and enjoy the ride!

As of this post, the market has almost followed the ideal scenario from my March 30, 2022 update.

That makes me a little uneasy. Generally, life never gives you what you want.

I’m waiting for the other shoe to fall and watching a few bullish and bearish behaviors that I mentioned in my April 12, 2022 update. If you missed that update, get it now.

If you’re trading the market long, I’d make sure to cover your rear with a stop-loss or hedge.

Fortunately, we’re not traders. We have much bigger goals in mind, with a different approach, mindset, and strategy.

Mega-whales and miners shipped off some bitcoins near the end of March and the beginning of April. Is that a preview of more selling to come? Or one last chance for deep pockets to clear out the weak hands before “only up” begins again?

We shall see. If you’re not on the paid plan, you may want to sign up now for analysis on this and other topics.

Scroll down for two articles, a video, a podcast, and a meme.

@sillytuna published the ultimate cheat sheet for NFTs. Read the article, 18 Misconceptions Gamers Have About NFTs, for the most basic, essential details you will need to know about NFTs before the next wave of innovation hits the market.

I cover Realized Cap HODL Waves quite a bit in my updates for premium subscribers. They contain a wealth of information and most people don’t know how to use them effectively.

In my updates, I never set aside enough time for this metric, though I could talk about it for hours. Days, even. But if I did, half of you would unsubscribe.

Glassnode explains it in a 20-minute video. You may want to watch it.

After 61 Years, McDonald's Just Revealed Some Big Plans That Nobody Could Have Predicted

Bottom line: McDonald’s filed for trademarks to protect their business interests in NFTs, Web3.0, and metaverses.

My take: Somehow it seems natural for one of the world’s largest commercial landowners to want a piece of digital real estate. Perhaps they’ll franchise virtual properties as they do with their physical properties?

Why we care: Walmart, McDonald’s, and other huge corporations see opportunities in NFTs and Web3.0, but you don’t. What do you know that they don’t that makes you so skeptical about this technology?

Last week’s On the Margin podcast talked about the most boring and important financial market on earth, the bond market.

The Western financial system depends on a healthy bond market. While that doesn’t mean bond prices need to go up, it does mean they have to deliver predictable risk-adjusted yields. Financial crises don’t come from risky assets going bad, but from “safe” assets failing.

With somewhere north of $100 trillion in bond markets and much more wealth tied to its fate, you should pay attention to what’s going on. Listen to this episode, “Bonds Smell Risk, Will The Market React?” on Apple or Spotify.

* Apple: https://tinyurl.com/mry8y4k3

* Spotify: https://tinyurl.com/3vnnkrkw

A meme before you go.

Relax and enjoy the ride!

I have good news and bad news.

The good news: bitcoin’s price has gone up for 69 days.

The bad news: we’re on schedule for a golden cross in May on the 1-day trading chart. Traders say that’s bullish. I’m not so sure.

Five times, bitcoin’s price went lower for days, weeks, and months after a golden cross. Three times, it went up forever. You can it on this chart.

Does this mean we’re overdue for an “up forever” moment, as the bulls expect? Or will we get that drop to $30,000 or $24,000 that the bears expect?

We’ll see.

If you missed my update from March 30, 2022, catch it now.

Are you wondering why I haven’t mentioned the order books in a while?

Because they’re the shortest of short-term metrics and change all the time. I only mention them when they’re lopsided and they don’t change for a long time, which is very rare.

Today, the order books look like this:

Pretty even. They’ve looked like that for a few weeks now—sometimes a little heavy on the bids, sometimes a little heavy on the asks. Very normal. Totally unremarkable. Therefore I have no remarks!

Scroll down for news, notes, charts, tweets, and videos. Note, I’ll have to skip next week’s rundown—more travel—but I’ll catch you on April 17, 2022.

This week, the yield on 2-year US bonds went lower than the yield on 10-year US bonds, a phenomenon known as “yield curve inversion.”

After the yield curve inverts, the US economy goes into recession within six months to two years. To wit:

That chart only goes back to 1976, but that’s the oldest data I can get. For my take on this event, watch my one-minute YouTube short.

BTW if you hold or use WAVES, read this thread. Not financial advice just FYI.

Note, WAVES is not a Ponzi, it’s a legit project that’s having an artificial pump. Welcome to crypto.

At the end of February, somebody sent a bunch of tokens to FTX from a wallet associated with the project or its team. In March, somebody started leveraging stablecoins to buy WAVES. As the price went up, this person (or persons) leveraged WAVES to mint stablecoins, which he/she/they leveraged to buy WAVES, which were then leveraged for more stablecoins to buy more WAVES.

That’s not sustainable.

If you’ve followed me long enough, you know I liked WAVES a few years ago. Today, I hold no WAVES and I haven’t looked into the project for a long time. Its founder, Sasha Ivanov, suggested Alameda is behind the shenanigans. We may never know whether it’s the VCs, the team, or some whale.

I do know this will come to a bad ending.

Dirty business, this.

That’s all for this week. If you’re on the paid plan, I’ll have another update soon, possibly two this week.

Everybody else, I’ll leave you with this meme.

Relax and enjoy the ride!

I’m on travel so this rundown will mostly cover other people’s content (you’re welcome 😄).

Make sure you read my monthly issue for March.

Scroll down for two articles and two videos.

Watch the latest video from Digital Asset News. In it, Rob gives us some perspective on the US treasury secretary’s begrudgingly positive comments about crypto, as well as a survey about crypto attitudes in the US and factoids about the energy usage of bitcoin miners (particularly compared to gold miners).

Always good to see Rob holding down the fort. True OG, no hype.

Six Months in, El Salvador’s Bitcoin Gamble is Crumbling

Bottom line: in El Salvador, few people use bitcoin, the government’s bitcoin wallet doesn’t work the way they expected, and the government hasn’t yet delivered on most of its plans.

My take: “crumbling” seems an extreme term and not reflective of the actual article, but it probably makes better copy than saying “El Salvador’s Bitcoin Plans Haven’t Lived Up to the Hype Yet.” For the world’s sake, I’m still hoping something good comes out of Bukele’s foray into bitcoin. For crypto’s sake, El Salvador’s experience is a no-lose proposition. If it fails, nothing changes. Those who hate will continue to hate. If it succeeds, it will change some people’s minds about crypto.

Why we care: it’s good to see through the hype.

Selecting an NFT Marketplace

Might seem odd to push this article out when NFT trading volume sits near all-time lows, but now’s a GREAT time to get into NFTs.

Read this UNDRGRND article on the basics of NFT ownership, how your rights are captured, and what to look for in NFT platforms.

InvestAnswers published a 90-minute rundown of the top 21 altcoins. If you’re into altcoins, give it a watch.

Note, I’m not saying whether I agree with those guys, it’s just food for thought.

I’ll catch you next week. Until then, relax and enjoy the ride!

In last month’s issue, I shared my thoughts about data models, analysis, and the expectations that they create.

This month, I talk about government and sentiment.

Did you heard about Goblin Town? Apparently, the crypto market’s in it.

What’s Goblin Town?

“A dark, depressing place where dreams die and anguish reigns.”

Where I come from, we call that a “day job.”

I get it. Since the market reached its zenith in November, overall trading volume has dropped every month, along with prices.

Actually, prices have gone up for two months.

Also, on a monthly basis, volume peaked in December 2020, not November 2021. It’s gone down for 15 months, even though bitcoin made multiple new all-time highs over that time.

See for yourself:

* Bitcoinity

* TradingView

Mark, that can’t be. 2021 was crazy! Laser eyes, supercycle, etc.

Yea. Kinda like when you get to a party at 2 am. Everybody’s happy but you already missed most of the fun. You only get the tail end and the hangover that comes the next day.

Be careful with conclusions

To be fair, volume is not a meaningful statistic and it will continue to mean less as more money flows to derivatives and investment funds instead of the spot market.

Those products let people speculate on crypto prices without actually buying or selling crypto. The spot market still sets prices, but a lot of the volume flows elsewhere. Maybe not the best metric to look at.

Can you ever really find clarity in a single metric? Good analysis demands a lot more nuance than any creator can squeeze into a tweet, Reddit post, or YouTube video. When you use only one single source or agree with only the most common viewpoint, your first conclusions are sometimes wrong.

For example, entity data, a type of analysis that came into vogue last year. This data uses inference and heuristics to figure out how transactions are linked to one another. From that, analysts can identify unique entities and the bitcoins they control.

Its best producer, Glassnode, warns people that the data includes a lot of guesswork.

On top of that, entity data obscures what the actual bitcoins are doing, which is for me the most important information you get from on-chain data. An entity can buy, sell, and move 10 bitcoins and leave no trace in the entity data. To find those bitcoins, you need to look at other metrics.

At the end of the day, I don’t need to know what the entities are doing, I need to know what the bitcoins are doing.

Some prefer whale watching. A few of the biggest wallets have an uncanny ability to sell near the local tops and buy near the local bottoms. Often, they’re off by weeks, during which time the price can move 25-50%.

Many people apply some form of technical analysis. Traders use that type of analysis to plan entries, exits, stop-losses, and hedges. Essentially, it’s a risk-management tool for people who want to make money from changes in the prices of cryptos.

Is that your goal? If not, are you sure you want to make decisions based on technical analysis?

What about fractals? Can you take one outcome from one event on one dimension at one point in time, then use it to form your expectations of this moment?

At best, you can stack a few fractals over each other across several dimensions with perfect alignment. Like, 5 or 6 independent points of data, not two coincidences across different timeframes. Unfortunately, you’re not going to find those very often.

Lots of people think bear markets are bad. For an investor, bear markets are a godsend. You get to buy everything at a discount, pay lower fees, suffer no FOMO, and your mistakes hurt you a lot less than they do during the bull markets.

Bull markets feed you for a day. Bear markets feed you for a lifetime.

Choose your conclusions wisely.

Fear not ye for government

For a while, I have heard people talk about how governments will kill crypto.

Doubtful.

Trim its excesses? Cut down on the scams? Funnel its benefits to a privileged few? Crush innovation in one or a few countries?

Seems a lot more likely to me.

In any event, it won’t matter for crypto’s success. This is a global asset with no borders and no way to stop people from using it (yet). Money, talent, and effort will go wherever it can do the most good.

China kicks out miners, US brings them in. The UK shuts down bitcoin ATMs, South Korea loosens up on crypto exchanges. Russia and Ukraine are both trying to use crypto for their own benefits.

Now the US wants to build a regulatory framework for crypto. The White House gave US agencies until the end of this year to report activities and recommendations. Input will come from all corners of the bureaucracy—technology, environmental protection, national security, law enforcement, tax administration, and finance.

Once the administration settles on its regulatory plans, it will take months to collect public comments, negotiate administrative differences among agencies, resolve conflicting areas of authority, and implement changes.

While the bureaucrats work out the details, you never know what Congress might do. There’s a reason the US government is always two steps behind the private sector.

And seeing the US dollar as a central bank digital currency? Maybe one day. Not any time soon. Watch my brief video about how the US bureaucracy works. It may seem like satire, but it’s not.

Learn to love lobbyists

Today, we have lobbyists, special interests, Wall Street, and people with deep pockets willing to speak up for us.

In 2021, crypto companies spent $9 million on lobbyists, presumably more from private citizens. Even the U.S. Chamber of Commerce sent crypto lobbyists to Congress.

While that’s not a lot of money, it ain’t nothing.

More importantly, its working. Lobbyists are finding partners and allies who can advocate on our behalf, like oil companies, rich people, and payment processors.

Last summer, US Congress debated an infrastructure bill that could have crushed crypto developers. After outrage from the crypto community, a coalition of members changed the language and US regulators promised not to crush crypto developers.

Who generated that outrage?

Lobbyists.

It takes a lot of money and savvy to get people mad enough to take action.

Such efforts not only change laws but also change minds. More with every passing day.

We need lobbyists to show rulemakers that we’re not a bunch of scammers, money launderers, and anarcho-capitalists trying to rip people off, evade taxes, and destroy the global financial system. Those people represent only a small segment of the industry—a segment that gets smaller with every passing day.

Better yet, lobbyists can show members how they and their constituents benefit from crypto.

For some members, that means votes, money, and publicity.

For others, that means a legacy, or maybe a job if they get voted out of office, or perhaps a genuine desire to use technology for the public good.

Whatever the motivation, a lobbyist will find it. As a result, we benefit.

Enough politics, Mark. Shut up and play football

Right, I understand. You don’t want to hear my thoughts about government. What’s bitcoin’s price going to do, up or down? Make me rich, Mark!

Sure, no problem.

Follow my plan and don’t sweat the details.

You may not do as well as a good trader, but you’ll beat the bad ones and you’ll come out ahead of anybody who dollar-cost averages.

Today, you’re down 14% at the most on your bitcoin, probably close to even or ahead on your investment, and possibly up 700% or more.

(With altcoins, you may do much better or much worse.)

Whenever bitcoin’s price is outside of my plan’s buying zone, convert your cash into stablecoins and deposit them on a savings platform for 7-12% interest. Use my crypto savings referral links for a little boost on your deposit.

Tomorrow’s assets will look nothing like today’s

Do you ever wonder why I call cryptocurrencies the financial networks of the future?

It’s not because they will replace money or government currencies.

Rather, it’s because the legacy financial system can’t compete with global, free, immutable computer protocols that function everywhere, all the time, for everybody, without human intervention.

That legacy system can’t scale fast enough, operate cheaply enough, or cut enough manpower to compete with developers, engineers, and marketers working on laptops and patched into distributed social networks. With cryptocurrency as the incentive, builders can harness the world’s collective creativity and energy towards solving huge technological problems and crafting all sorts of financial structures and applications.

Do you think a few old people in suits—or even a group of young people in sweatpants—can outcompete that?

Imagine hand-written scrolls beating the printing press, mail carriers beating the telegram, telegrams beating the telephone, or telephones beating the internet.

Over time, NFTs will replace deeds, titles, membership cards, royalty agreements, leases, and many types of collectibles. Governance tokens will replace common stock. DeFi protocols will replace bonds and fixed-income products. Altcoins will replace alternative and liquid assets, each serving a unique function within the larger world economy.

Bitcoin will serve as the settlement layer for most commerce, with apps, bridges, side-chains, and second-layer protocols to handle routine transactions.

All the world’s wealth will be scalable, transferrable, and infinitely divisible.

Once the laws catch up

Eventually.

Before this thing can reach the mainstream, we need laws that make sense. Our modern financial system rests on tenets and principles from the industrial age. You can’t build a 21st Century financial system on 20th Century laws.

Too many people have too many questions about taxes, accounting, regulations, registrations, consumer and privacy rights, and what they can get sued or fined for. FYI this is the biggest reason I don’t leverage NFTs for my business (yet). The legalities remain vague.

Until that changes, let’s temper our expectations of how quickly this technology will go mainstream.

When the market goes back to all-time highs, people will tell you it’s mainstream. For me, it’s not mainstream until I can find an accountant who can handle the crypto portion of my taxes.

The good news for us?

We don’t need crypto to go mainstream. We just need it to grow.

By the time this technology hits the mainstream, the market will be so big, mature, and sophisticated, we will no longer have this amazing investment opportunity. VCs, insiders, and financial experts will beat us to it—if they haven’t already done so.

The traditional investment paradigm is dead

This is inevitable, especially when you consider how the legacy financial system no longer gives you any expectation of yield.

I’m aware you may have a different investment environment where you live. I’ll use the US markets for my examples in this newsletter.

With US blue-chip stocks, the kinds typically found in the S&P 500, you can get an average 1.3% dividend on top of any future growth. Sounds great, right? These are the best businesses in the world!

At the same time, that average dividend is near the lowest in history. Relative to all historical benchmarks, the S&P 500 is massively overbought. The Shiller P/E chart, which accounts for inflation, sits at the second-highest reading ever recorded—behind only lead-up to the peak of the dot-com bubble burst.

What about small caps?

Using the iShares Russell 2000 ETF as our benchmark, we can see an average dividend of 1% for small corporations. Less than the blue chips.

You may think that’s ok, after all, these small businesses have more room to grow.

The problem?

Roughly 40% of those businesses had no profits in 2021. Let’s hope more of them can show profits this year.

And bonds?

US junk bonds give you about 6% annual interest. That’s less than the rate of inflation and this debt comes from businesses that either have no money or want to use your money to speculate on high-risk investments. Also, you lose your investment if the company fails.

Is 6% enough to compensate you for probably never getting your principal back?

Government bonds offer more security but they pay you barely more than a savings account (almost nothing). Your capital can never grow and when you account for inflation, you’re basically locking yourself into a contract that will lose money.

At least with stocks, you *might* see your investment go up.

Little wonder why investors have started flocking to art and commodities. Risky investments don’t reward you for your efforts and safe investments are guaranteed money losers. At least you can use pictures and metals!

For many of us, our parents grew up in a world where the financial system could provide safe yields and low-risk ways to protect our wealth. That world no longer exists.

Maybe it’s time to try a new one?

Obviously not, Mark. Price are not going up!

Are you sure? The total crypto market’s up 27% over the past 62 days.

Tame by crypto standards, I know. If it makes you feel better, in two weeks the market will have gone up for longer from January to now than it went down from November to January.

Either way, don’t worry about it. Price is simply a function of buyers and sellers. It tells you nothing about the investment opportunity.

Neither do war, peace, government, stocks, or seasons. You won’t find opportunity in green dildos, “mainstream” coverage, the crypto-related search volume on Google trends, the number of active addresses, or any measure of hype, fear, or greed.

This market rises in two steps:

* Crypto flows to people who want it more than they want their government’s money.

* Prices go up long enough for people to think prices will keep going up. Then, they buy. Everything else takes care of itself.

Those steps never change.

Once step 1 is complete, you’re already behind the curve. If you wait for step 2 to finish, you will miss out on the best opportunities.

You may wonder where the new money will come from or what will “spark” the next leg up. What’s the next narrative? Where’s the big catalyst?

Narratives and catalysts come after the price goes up. That’s when people need reasons to justify chasing the market higher.

Freedom money? Inflation hedge? Fast money before the next crash? “These guys know what they’re doing” so they’ll make me rich? A great trading opportunity? An asset for my children? Prices will never go lower?

Only matters when the price goes up.

That is the beauty of bitcoin and every altcoin that builds a strong community or a robust use case. You get to decide what makes it a good investment.

I do this, too. I published my reasoning for bitcoin in my bitcoin investment thesis.

For altcoins, I pick each for its own reason. Since I have about 50 of them, it’s too much to put here. Occasionally, I publish one of them as an altcoin report.

Unsafe at any price

Does that mean you need to wait for the price to go up before you put money into the market?

In a recent survey of my subscribers, 15% of respondents said they’re doing just that.

Most people take the same approach. In 2021, bitcoin maximalists told you that’s what institutional investors do, too. The higher the price goes, the safer it is. You have to wait until the price goes up, otherwise, you’re stupid. Never catch a falling knife!

Truth be told, it does feel safer when the price goes up. Search volume and exchange activity go up. Active addresses and many other metrics rise. You see and hear more people talk about it. That validates your decision.

The problem is, this all happens after the best opportunities have passed. Once search volume spikes, exchanges get more traffic, popular people get active again, and you hear “nobody’s selling,” you need to push that feeling of safety out of your head.

This market is never safe.

The bottom is always $0, no matter how high bitcoin and altcoin prices go.

If you follow my plan, you will not have to worry about this unless you want to.

Mark, always with the plan, why do you always hype the plan?

It’s not hype, it’s conviction.

When you can condense all buying decisions into three lines on a chart and set very clear selling signals, this market gets very easy.

Imagine you figured out how to do that. Wouldn’t you want to tell people about it?

At all times, this market is variable, volatile, with a huge margin for error and a wide range of outcomes. My plan puts those attributes in our favor.

When you have a high-ceiling asset class with limitless potential in the middle of a 13-year uptrend and massive tailwinds, you just need to take advantage of opportunities when they present themselves. Let the market take care of everything else.

Save your money and energy for those moments. Sell only when the market forces you to do so.

Some of the decisions seem counterintuitive but you’ll do better than most, worse than some, and never worry until there’s a reason to worry.

Along with my plan, I also post one or two updates each week for premium subscribers. In those updates, I look at data on the behaviors of people in the market and other metrics, sometimes mixed in with reflections on my own experiences, to get a sense of perspective around what’s going on at any given time and set some realistic expectations.

If you’re not already on the paid plan, you may want to upgrade your subscription before the next big move happens.

Big move, shmig move

I hear ya.

That kind of thinking takes me back to the beginning of 2019, which most people consider a bear market. Bitcoin’s price only doubled that year. Big letdown.

I sold half of my crypto in March 2019. Some data models and traders said we should expect bitcoin’s price to drop from $4,000 to $3,000, and I figured I’d buy it back later at a big discount.

It didn’t work out the way I expected.

Fortunately, altcoins didn’t budge much when bitcoin zoomed. I had a heavy allocation to altcoins, and still do, so I was able to basically buy my tokens back in early April at roughly the same price I sold at. I lost maybe 10% overall, plus fees.

That 10% is a lot of money now, but what can you do? A lot of people didn’t buy until the price went above $10,000, just before the market crashed in July after bitcoin briefly tapped $14,000.

You’d be surprised how many people refused to buy below $4,000 because it was too risky, but happily bought at $10,000 thinking it was a sure thing.

True, but irrelevant

Many people think this most recent bull market started in March 2020 and ended in April 2021.

From the data I look at, the market bottomed in December 2018 was already showing signs of weakness by November 2020.

In November 2020, large HODLers started taking profits. Key on-chain metrics had already turned against us. Greed started creeping back into the market. OGs started peeling out.

At the time, I said the market wasn’t ready to boom.

While that was true, it didn’t matter. Speculative enthusiasm overwhelmed the market. The crypto market turned into a crypto casino. I didn’t buy another penny of bitcoin until May 2021.

You probably entered around late 2020 or early 2021. Remember laser eyes? “Institutions won’t let the market crash.” $100,000 guaranteed. $288,000 by the end of the year. Supercycle. “Nobody’s selling.”

You may think that kind of blind hype can’t happen again. People are too smart. The market’s too big, it would take too much money. Governments will try to stop it. Insert your own reason to doubt.

And yet, today’s market is about the same size as it was in January 2021. It’s 30% higher than it was in June 2021. Both times, the market doubled in the months that followed.

What has changed so much now that we can’t get those same outcomes?

Trading charts show bullish divergences and trend shifts across many indicators on many timeframes. On-chain data shows a lot of selling pressure has left the market.

Good sailors don’t fear choppy waters

So, “only up” from here?

We shall see. Why can’t we get one more drop before Moontown? It’s happened before in similar circumstances.

Any price between $20,500 and $150,000 fits into the “normal” range of bitcoin’s volatility. Altcoins can go up or down 50% at any moment.

In November and December, we saw institutions and summer tourists leave while OGs took profits.

In December and January, we shed some whales and leveraged traders.

In February and March, we saw miners sell a little more than usual as trading volumes disappeared, institutions started trickling back in, diamond hands gobbled up a big chunk of supply, and buy orders stacked up below $33,000.

Now we see accumulation and constructive growth across all dimensions. Key bitcoin metrics like the stablecoin supply ratio oscillator, aSOPR, and rHODL show levels that only appear when the market’s in a healthy spot. Various measures of altcoins show they’re generally keeping pace with bitcoin (some better than others), both in terms of price and usage.

So, what can you do about it?

Whatever you want. Premium subscribers, you know what I’m doing—just following my plan.

Today, you may not need my plan. If you want to build wealth with crypto, you have only one good decision at this moment, and it’s an easy one.

If you want to make money buying and selling crypto, that’s a different story. You may never need my plan. Hopefully, my newsletter gives you some perspective to make better decisions, appreciate the market conditions, and discover some information you won’t find in trading charts.

Once the market seems safe, that’s when you’ll need my plan the most.

At that point, all the decisions will get harder. Prices will keep going up after the opportunity has passed. Drops will go lower than you could ever imagine. Every bullish fractal will seem utterly convincing. Every bearish observation will seem utterly foolish. Each dip will seem like a buying opportunity, but only some will be.

Steady as she goes

What happens next? Will we get the +100% gains we’ve seen in previous bear markets? Or the +30% drops we’ve seen in previous bull markets? Experts on both sides have called for each of these outcomes.

Does the world go into a global recession from shortages of oil and grain? Will the US and Chinese economies continue to slow down? Will war in Ukraine spill over to Europe and Asia? What other calamity lurks just around the corner, hidden today by the vagaries of the markets and the fog of financial speculation?

We shall see.

This market always goes wherever bitcoin goes.

Fortunately, with bitcoin, we can see the behaviors of people in the market. We can see it in the movements of bitcoins, the flows in and out of various funds and exchanges, and all sorts of measures of human behavior.

Anything that happens in the larger world will appear in this data. Bitcoin’s blockchain captures all transactions.

Everything else? Just details. Worry about these things because they matter for humanity, our individual fates, and the fates of people we care about.

As far as crypto goes, act when the situation demands it and you’ll be ok.

Relax and enjoy the ride!

Make sure you get my March 17, 2022 update so you know what I’m looking for before I get too excited about this market.

In last week’s poll, I asked “how high does bitcoin's price need to go before you will buy more?”

Only 65% of people said they’d buy at today’s price or lower.

Granted, 20% of people said they don’t buy bitcoin at all. So really, 15% of survey respondents prefer to buy bitcoin at a higher price. If that’s you, I hope you get what you’re waiting for!

When will bitcoin’s price go higher?

We shall see. It may have already started to do that.

Since January 22, bitcoin’s price has gone up for 57 days, bringing the rest of the market along. The total crypto market cap sits 20% higher now than on that date.

Not the 100-300% gains we’ve seen in previous bear markets, but also not the 30-50% drops we’ve seen in previous bull markets.

No matter what prices do, the steps are always the same:

* Crypto flows to people who want it more than they want their government’s money.

* Prices go up long enough for people to think prices will keep going up. Then, they buy.

Everything else takes care of itself. We’re finished with step 1. Step 2 is only a matter of time. If you’re following my plan, you know what I’m doing.

On a side note, the European Union voted against a proposal to ban bitcoin and other proof-of-work tokens in member countries. What a relief!

Scroll down for two articles, a note, and a meme.

Apes buy Punks

Bottom line: when Yuga Labs, creators of Bored Apes Yacht Club, bought the commercial rights to Crypto Punks and Meebits, it raised a lot of questions about what other people can do with your intellectual and financial property.

My take: as I get more familiar with NFTs and the creator economy, I’m still unclear about the legal treatment of NFTs. Can their creators change the issuance and perks without your consent? What about non-NFT revenues built around the success of your NFT? For example, if I force you to buy an NFT to read this newsletter, then decide I want to go back to a subscription model—what happens to the value of your NFT? Did I break the terms of our agreement? Or in this case, what happens if Yuga Labs decides to dump the Meebits project and all associated perks, causing the floor to collapse? Can you sue? Do they have any obligation to you? They don’t have any stake in your NFT, you don’t have any stake in their business, and they make money off of Meebits’s popularity, not the Meebits themselves. I could go on (and I will, later this year).

Why we care: NFTs will upend our modern concept of ownership and revolutionize the way people distribute rights and privileges. It’s not a bad thing to think about what that means. Your government can’t help you (yet) and I’ll bet your NFT’s creator (or lawyer) won’t, either.

Has The NFT Bubble Popped? — OpenSea Revenue Drops 97%

Bottom line: OpenSea’s revenue dropped 97% since its peak. Platform trading volume is down 70% since then.

My take: If you caught my mini update from March 11, you would know OpenSea isn’t the only NFT platform that’s down. As with all applications of crypto, from DeFi to branded tokens, you get a burst of speculative enthusiasm as people discover these ideas. While that enthusiasm always dies down, the idea does not.

Why we care: NFTs have lost a lot of steam over the past few months, but today’s volume is on par with May and June of 2021. Similarly, perhaps because of this, Ethereum gas prices are very low. In fact, fees are low across pretty much all platforms. Minting and buying NFTs is cheaper than it has been in a very long time. You might want to take advantage of that.

Frankly, it’s a great time to experiment with everything you can do with erc-20 tokens. DeFi, NFTs, staking, pretty much everything costs 80-90% less than it did just a few months ago.

Also, consider checking out the Cosmos (ATOM) and Terra (LUNA) ecosystems. I suggest you get the Keplr and Terra Station wallets to start with.

I’ve been a fan of Terra since 2020. I had known about Cosmos for a long time but only got turned onto it about a year ago when I heard about Switcheo’s integration with its technology.

Ethereum has a massive head start. Don’t sleep on its competitors.

I’ll leave you with one meme you’ll have to get from Reddit. I can’t embed it here! Tap this button.

Relax and enjoy the ride!

Will bitcoin’s price go up or down?

While the EU’s actions certainly don’t help, we don’t know yet know how this vote will go. In any event, crypto is a global asset. Money, talent, and success will follow wherever the opportunity goes, whether that’s in the EU or elsewhere.

That said, if you have any insights into the matter, please comment below. I opened the comments section to everybody, not just people on the paid subscription.

Ok, about the crypto market.

In this week’s updates, I noted interesting activity from miners and institutional investors, commented on NFTs and the significance of DeFi users taking a lot of their bitcoins out of smart contracts, and shared what I’d need to see from this market before I shift my attention from bitcoin to altcoins.

If you missed those updates, here they are:

* Crypto Market Update - March 8, 2022

* Mini Update - March 11, 2022

Scroll down for a poll, two articles, a speech, and a meme.

Poll: How high does bitcoin's price need to go before you will buy more?

* Today's price or lower

* $47,000

* $53,000

* $70,000

* Higher than $70,000

* Bitcoin's a boomer coin, I don't touch it, I only do altcoins

Conservative Candidate Yoon Suk-Yeol Wins South Korea’s Presidential Election

Bottom line: South Korea elected a crypto-friendly president.

My take: I don’t know whether the crypto stance had much to do with the election results, but it’s pretty cool to see this from South Korea, whose incumbent leadership cracked down on crypto exchanges last year. Let’s see if this new leadership can make good on its stated goal to better regulate the crypto industry.

Why we care: something to keep in mind when you read about Singapore and UK banning bitcoin ATMs.

White House Issues its Executive Order on Cryptocurrencies

Bottom line: President Biden will give US agencies nine months to report on potential uses and regulations for cryptocurrencies, including a central bank digital currency (USD on the blockchain).

My take: it’s good to see the Biden administration aim to create a government-wide, general framework for crypto. Obama’s administration didn’t think much about it (nobody did), Trump’s administration ignored it, then tried to kill it, then gave it to Wall Street. Let’s see what Biden’s people do with it. Once there’s some meat on the bones, we can start talking about “good” or “bad.”

Why we care: it’s too soon to start placing bets on the final outcome of this effort. It will include lots of US agencies—from technology, environmental protection, national security, law enforcement, tax administration, finance, and other parts of the federal bureaucracy. Meanwhile, Congress can get involved at any step of the way. Let’s worry when we need to worry, celebrate when we need to celebrate.

On that note, read this statement from the head of the US Office of the Comptroller of Currency, the agency that regulates the US private banking system.

While this statement presents some specific facts without proper context, it captures one big concern of US financial regulators: people unfairly taking advantage of you.

Good people can disagree about how to clean up crypto—and what that even means. For the OCC, that means better education and transparency for people who buy, use, and sell crypto. This will matter a lot in the coming years, as US banks wade deeper into the crypto waters.

US laws are nonsensical and archaic, not evil. Different agencies have different concerns and viewpoints on crypto.

One member of Congress or a single bureaucrat can say or do something you don’t like. That doesn’t mean the rest of the government agrees with them.

If you have an hour and a half, you can watch the recorded webcast of the related meeting (I didn’t).

A little humor to start your week.

Relax and enjoy the ride!

Since my March 1, 2022 market update, order books show a persistent stack of buy orders down to $20,000 and proportionately few sell orders above $40,000 across a bunch of exchanges.

I check a few times each day. While my service doesn’t catch all of the exchanges—sometimes only a handful, sometimes up to 15 depending on the quality of the feed for any particular moment—the books have looked like this for days:

Buyers on the left, sellers on the right. Not a lot of people waiting to sell at higher prices. Lots of people waiting for bitcoin’s price to drop to $30,000 or lower.

If that’s you, good luck. You have a lot of people ahead of you.

Granted, the order books change ALL THE TIME. When you read this, they may show a stack of sell orders.

So why do I mention it?

Because it hasn’t changed in at least five days, which is rare. What are the buyers waiting for? From the results of last week’s poll, I think I know. More on that a little further down the page.

Quite often, when you see order books skewed to the left, you get only a few hours or a few minutes to fill your low bids. Sometimes, they don’t fill at all.

In January and February 2022, you had a combined total of 64 hours to catch bitcoin’s price below $35,000. In June and July 2021, you got even fewer hours to catch the drops below $30,000, spread across three days. See the boxes shaded in this price chart.

Catching bottoms is hard!

And even if you catch it, you still don’t know if you’re going to get another leg down afterward.

What’s the solution?

I don’t know. For that reason, I stick to my plan.

(BTW the bottom is $0.)

Last week’s poll asked, “Will bitcoin's price ever go below $33,000 again?”

60% of you said “yes” with the other 40% split evenly between “no” and “I don’t know.”

My answer?

I don’t know, but if that happens, it would surprise me. I’ll have another poll next week.

Watch this Data Dash video about the Mayer Multiple, one of the metrics I looked at when researching my plan. It’s bitcoin’s price divided by the 200 daily moving average, an average of all prices for the past 200 days.

While I don’t make any decisions based on this metric, it’s a nice tool for getting a sense of how “hot” or “cold” the market is. You can use this tool to validate your feelings about tops and bottoms. WooBull keeps a chart to follow along.

Contrary to the title of this video, the Mayer Multiple doesn’t actually predict bottoms but when you post content online you have to write titles that grab eyeballs and catch the attention of the algorithms that run the social media platforms. For example, using words like “bitcoin model,” “predict/prediction,” “bottom” (when the market’s down), “peak” (when the market’s up), and so on.

It’s like wearing a suit and tie to business meetings with Boomers. You probably don’t want to do it, but you have to do it or else they won’t care what you have to say.

The Past, Present, and Future of NFTs — And Why it Will be Wild...

Bottom line: learn about how NFTs evolved and what they will do in the future that they can’t do today.

My take: as smart contracts improve and governments craft property laws that accommodate digital assets, you’ll find more and wider usage of NFTs. That transition will take a while. JPEGs are the first iteration.

Why we care: we dismissed bitcoin until Wall Street started talking about it. We treated altcoins like trading cards until they produced actual real-world benefits. Do we really want to miss the boat on NFTs because our JPEGs lost their value?

And last, a meme that people of my age can appreciate.

Relax and enjoy the ride!

Meanwhile, the Ukraine/Russia war hangs over the world’s financial markets.

To say we live in uncertain times is an understatement.

In my monthly issue, I touched on the notion of uncertainty and what that means for you as somebody invested in the crypto market. Did you read it? If not, do it now.

Scroll down for a poll, two videos, one article, and a tweet.

Poll: Will bitcoin's price ever go below $33,000 again?

* Yes

* No

* I don't know

Watch this video for my thoughts about the Ukraine conflict and how it matters for crypto. It starts about one-minute into the video.

TL;DW—this is potentially the most consequential event since the creation of the modern financial system, with potential to set a new framework for finance in the 21st Century, possibly for a different reason than you think.

If You Scanned that QR Code During the Super Bowl, the FBI Has a Warning For You

Bottom line: bad people can manipulate QR codes to take your crypto (or worse).

My take: you probably realize this but just in case you didn’t, keep this in mind next time you scan a QR code. It may not take you where you think. You don’t want to give your info to Conbase when you meant to send it to Coinbase.

Why we care: when you do even the most trivial business in crypto, you have to look out for rug pulls, hacks, protocol failures, and scams. Don’t let a QR code trip you up, too.

Not often I cover a tweet but the Twitter algorithm put this one in my feed. It may seem a little dense—the comments are as interesting as the tweet itself.

Background: a lot of countries cut off Russia from half of its financial reserves. As a result, they made it very hard for Russia to prop up its currency and manage its monetary policy. News reports suggest Russia reached out to India and China for help getting around this.

How deeply does Russia go into crypto? If it goes deep, how will it conceal its transactions, which will be massive, obvious, and easy for enemies to trace? How does it enter and exit without spiking and crashing the prices?

Perhaps the West’s financial actions mark the first step before further trade restrictions. Cut off Russia from a large portion of its wealth, crush the ruble, destroy its financial system, and give time for the rest of the world to find alternative sources of oil, wheat, and other Russian commodities.

With what consequences?

As long-time subscribers know, I’m a fan of Alessio Rastani’s videos. He usually shares data or perspective nobody else does.

In this video, he looks at one measure of uncertainty, fear, and panic—a metric that spiked with the Russia/Ukraine conflict. Interesting to see what it shows.

BTW I do not believe in the notion of “don’t follow the herd.” We are all part of a herd. Sometimes we’re part of the bigger herd, sometimes we’re part of the smaller herd.

Relax and enjoy the ride!

If the embedded audio narration isn’t working properly or doesn’t sound good, tap this button to switch over to the podcast version.

Bitcoin’s price went 6% higher in November 2021 than it did in April 2021. Its lowest price in January 2022 went 15% higher than its lowest price in June 2021.

By crypto logic, that means our next all-time high will come at $73,000 in June 2022, 6% higher than our November 2021 high. After that, our next low will come at $38,000 in August 2022, 15% higher than our January 2022 low.

Like so:

How did I come to that conclusion?

Cycles, fractals, maths, and squiggles. I looked at one input and one output, then projected that into the future. The last time bitcoin did this, we got the same result, therefore it has to happen the same way again, right?

While that kind of thinking can open your eyes to realistic outcomes, it can also create a false sense of hope, despair, or certainty. You might psyche yourself into believing something that probably doesn’t exist. You might convince yourself of something that probably won’t happen.

Dismiss the past at your own peril. When you project trends into the future, you sometimes see potential outcomes you would have never expected.

The question is, what will you do about it?

In October 2021, you probably thought I was joking when I asked you what you’d do if bitcoin’s price dropped from $65,000 to $42,000 and took four months to recover. You may have thought I was crazy in November when I told you bitcoin’s price could go from $65,000 to $100,000 by the end of the year.

“Mark, those outcomes are the literal opposites of each other.”

Yes. That’s the point.

Today, any price between $20,000 and $150,000 fits within bitcoin’s normal range of volatility. We’ve seen this market make similar moves in similar circumstances before. Just when you think it has to go higher, it tanks. Just when you think it has to go lower, it zooms.

Nothing fundamentally changes, just the price.

Maybe think less about price, more about opportunity. Less about trading charts, more about human behaviors. Less about downsides, more about risks.

Take it all into account, not just the bits that pop up on your feed or get circulated in your chat group.

Ground floor looking up

When you entered this market, you found a lot of excitement. Data models predicted riches. YouTube and Twitter told you the market would explode to the upside.

It doesn’t feel that way today, but it should.

Since last summer, you’ve stood on the ground floor of the next leg up, and it’s a whole different experience. Scary. Exciting. Frustrating. Terrifying. Stressful. Hopeful. A mix of emotions.

Big upswings, big downswings. Supercycles and bear markets. Laser eyes and death crosses.

Crypto remains a wealth-creation machine, a generational opportunity to build lasting, durable wealth from owning a stake in the financial networks of the future.

It is also a cruel and vicious market. Only the most courageous and persistent survive.

To paraphrase a US general, you may have thought crypto is all glory, but I assure you, it is all hell.

In 2019, the market did 4x in six months to kick-start a three-year parabolic run, with upswings of 500% and downswings of +60% along the way. Do the swings of the past six months seem any more extreme?

When the market zooms for three months, you feel a sense of ecstasy and excitement. You can’t help but put money in—and everybody’s telling you to do just that.

When the market drops for three months, you feel a sense of terror and loss. You can’t help but take money out—and everybody’s telling you to do just that.

Both times, it feels like the right decision. Traders will insist it is.

And if you act on those instincts, you will never get ahead in this market. In other markets, maybe, but not crypto.

Do you feel let down?

The past few months may seem confusing and uncertain.

You thought you’d get a repeat of 2017. Then, Twitter said you’d get a repeat of 2013. Now, you might end up with a repeat of 2012 or 2019.

How could so many people promise so many things that never came true? How could so many people who were so wrong so many times in the past, now be right?

Maybe it’s impossible to be right or wrong about the future.

If nobody knows what’s going to happen, how can anybody be right or wrong? And even if somebody is right or wrong, how do you know it’s anything more than a coincidence or a lucky guess?

Priya in the park yells “bear market” every time the price dips 5% or more and begs you to sell every upswing. Tony on the TV yells “supercycle” every time the price pumps 5% or more and begs you to buy every downswing.

Eventually, they’re going to be right.

Does it even matter? In 2019, bitcoin’s price ended more than 100% higher than it started. In 2020, its price tripled from start to end.

And most people finished down on their investment.

They chased the market. Meanwhile, people who bought in 2018 sold to these newcomers after the price went up.

Last month, I published an article begging people to stop dollar-cost averaging blindly. While there’s never a bad time to buy bitcoin, some times are better than others. Just make the most of those opportunities and chill when the opportunities pass.

This is baked into my plan.

With that plan, you’re down as much as 26% but probably closer to even, possibly up 600% or more.

(For altcoins, you may have a far wider range of returns. I’m down +99% on some altcoins and up more than 5,000% on others.)

Over the long run, gamblers and competent traders might do better. Dollar-cost averagers will probably do worse.

Mark, you still call it a bull market. Why?

Like Richard Nixon did with his dog, I just want to say this right now, that regardless of what they say about my plan’s name, I’m going to keep it. You can call it whatever you want—I’m sure you can think of some choice words to describe it. (Some with only four letters.)

With my plan, you don’t have to time the market, take profits, or buy the peaks. Ideally, you will never sell (though you probably will have to at some point).

And you will never have to think about right or wrong, bull or bear, short or long. You will simply take advantage of opportunities as they come and let the market do its thing.

Predictions for fun

But nobody likes that.

As a content creator, it’s hard to get people to care about possibilities or take calculated risks. “Just tell me what’s going to happen, Mark!”

Sure. We will all die. Much like my prediction of bitcoin’s market cycle peak.

Do you think predictions are fun?

I hope so.

Food for thought? Even better.

Information you should incorporate into your plans or expectations?

Maybe. When you force yourself to think about what could happen in the future, sometimes you can identify potential outcomes and get a better sense of what might need to happen in order for those outcomes to come true.

That way, you get a little bit more perspective about your expectations and what you need to look for as we move forward. Seemingly impossible outcomes become realistic. A path that seems intuitive and certain becomes unlikely.

You can choose to feel let down when the future doesn’t play out as you expect. That’s natural, we all do that.

The question is, what will you do about it?

Wait for the bottom?

In October’s monthly issue, when bitcoin’s price hit $65,000 and altcoins started popping off, I asked you to think about what would happen if the market dropped to $42,000. What will you do when everybody tells you “don’t catch a falling knife,” China bans everything again, social media algorithms plaster your feeds with bearish content, and the price seems like it keeps going down forever?

Here we are.

Do you wait for the market to bottom? If so, how will you know when the bottom comes? At what price?

What will you do if the market starts to zoom, as it has so many times before in the same circumstances as we find ourselves in today? What if bitcoin’s price rises to $52,000? $62,000? $72,000? What will you do?

When Billy the neighbor tells you he flipped a microcap altcoin for a quick 2x? When another country makes bitcoin legal tender, social media algorithms plaster your feeds with bullish content, and the price seems like it keeps going up forever?

You might just get that. We’ve seen bitcoin’s price go up 100% in worse conditions than today’s. Pumps of 25-50% are normal in all market conditions. When bitcoin goes up, the rest of the market comes along for the ride.

Experts may tell you that’s impossible.

Are these the same experts who told you institutions will never sell, whales are accumulating, data models predict $288,000, and price must go up because the balance of bitcoins on exchanges went down?

Knowledge is not expertise

I still get nasty-grams and snarky comments about my 50/50 analysis and ambivalence about the swings in this market.

Guilty.

I do perspective, not expertise. I’m the guy who says “embrace uncertainty,” basically the opposite of what you want when you seek out somebody’s expertise.

The wider crypto community has such massive brainpower, you don’t need me to start throwing my intellectual weight around. Look hard enough and you’ll find people who have the answers you’re looking for.

From what I can tell, once you learn about crypto, you suddenly become an expert in geopolitics, macroeconomics, monetary policy, epidemiology, psychology, public health, US constitutional law, securities regulations, history, investing, criminal justice, logistics, computer science, international finance, and financial planning.

It happens seemingly instantly, all at once, and in proportion to how many followers you have on social media.

For an industry birthed out of frustration with the so-called experts who run the global financial system, it seems odd to place so much faith in so-called experts who only just learned about whatever they’re talking about. Aren’t we supposed to be anti-authority?

I guess it’s true: cryptocurrency unlocks all of humanity’s potential.

Mark, you’re an expert, don’t be a hypocrite.

Knowledge and expertise are different things.

I’m happy to share my knowledge. It’s the reason I started this newsletter—so many people asked my opinion on things, it made sense to start a newsletter to share my opinions and my reasons for those opinions.

Sadly, I have no expertise in any of those fields I mentioned above. I spent my 20s working in Congressional politics and now I work for the US government bureaucracy. In college, I studied economics, history, and political science.

I know some topics better than others (and some not at all). I also don’t have a lot of followers on social media.

But I have something more powerful than followers and expertise: an opinion and a platform through which to share it.

You do, too. With the internet, you can say anything you want and as long as people listen, you’ll be heard. You don’t have to be an expert to have a valid opinion and a useful viewpoint.

Sometimes it’s better that you’re not. Some of the best ideas seemed foolish when first suggested. Some of the finest insights came from people who didn’t know any better.

Some of the worst analysis comes from some of the best-known personalities.

Too soon to tell

In any event, how can you have expertise in a technology that has existed for barely more than a decade?

Looking for an expert in cryptocurrency is like looking for an expert on electricity in 1842, an expert on flying in 1909, or an expert on the Internet in 1983. Better than doing it yourself, but it’s not like you’re going to find Master Yoda.

At best, you’re talking to somebody who has a few years of experience with a rapidly changing, experimental technology.

At worse, you’re dealing with a quack.

Does that mean you shouldn’t seek out knowledgeable people?

No, quite the opposite. Just recognize that you might know more than the people you’re following!

We’re all feeling ourselves out in this new world of crypto, in an environment where the regulations are not clear, the technology changes all the time, and some of the most basic concepts and principles have yet to be proven. In crypto, as in the real world, everything can change in an instant.

The question is, what will you do about it?

If you had to guess . . .

Sometimes I take calls from people who want to consult or get my advice. Do you know what question I dread the most?

Mark, what do you think will happen?

I’m happy to answer and appreciate the confidence you have in my opinion, but does it really matter?

This market offers such a wide range of outcomes at any one time, how could I narrow it down to only one potential result? Especially when the “normal” range is almost certainly wider than any sane person would expect.

Sometimes, it feels odd saying price is going sideways when it’s actually going up and down 20% each week, but then you look at the chart and the line clearly goes sideways.

Crazy market, this.

Sometimes, history or data shows us a fairly clear direction. Trends, patterns, and behaviors align in plain and obvious ways.

Other times, those trends, patterns, and behaviors suggest something very different than the prevailing sentiment seems to agree on.

Usually, we have no such guides. We just need to let the market do its thing and plan for several outcomes, knowing only one outcome can possibly result.

Perhaps that’s why traders have taken to fractals on gold from the 1970s to 1990s, Amazon charts from 1998-2000 (for the bears) and 2010 (for the bulls), astrologers, NASDAQ, and extrapolated price patterns from arbitrary points in history.

When you can’t find anything else, you take what you can get.

I even found a three-month correlation between bitcoin’s price and the temperature in my neighborhood.

Plan for more than one outcome so you don’t have to guess. Whatever those outcomes are, act decisively in spite of your uncertainty. The market will tell you what it wants to do when it’s ready—and not on your terms.

What say ye, data models?

Some think 2021 killed data models.

Not likely.

Perhaps 2021 killed blind faith in speculative theories, but the data models still persist. Dismiss them at your peril.

Over the course of history, bitcoin’s price has gone 400% higher and 70% lower than S2F’s predicted prices for months at a time—including over the past few months. That model is as valid now as it ever was.

Halving cycles show almost no similarities in the timing or extent of price movements from one cycle to the next.

The expanding cycle theory fits all of the peaks and bottoms—depending on what you consider a “peak” and “bottom.”

Four-year cycles can be left- or right-translated. In other words, peaks and bottoms can come at any time or price.

Maybe you’re reading too much into the data models?

Death of data models is greatly exaggerated

Does it feel a little naughty to talk about peaks and bottoms?

Hey, some people are into that kind of thing. No wonder bitcoin seems mad all the time. How would you feel if every time you went down on somebody, they kept trying to find your bottom?

My point: data models allow for so much deviation, you can’t disregard them just because the market strays from expectations. They’re all basically guessing about the future. Appreciate them for what they are and the insights they provide.

When the market goes up a lot and then drops, people think it’s a peak. When the market drops a lot and then goes up, people think it’s a bottom. How do you know?

Data models don’t really matter, you get to believe whatever you want.

What if there are no peaks and bottoms, only opportunities and risks?

Imagine no more bull or bear markets, only the ebbs and flows of a new and volatile asset. Do any data models account for that?

And what about the changes in market-making mechanisms and technology? With custodial accounts, multi-sig wallets, investment products, private deals, lightning network, and mixers, on-chain data gets less useful.

With smaller floats, low balances on exchanges, more leverage, and more people with access to quality market intelligence, technical analysis gets less useful.

Perhaps we can say the same about data models.

A new data model—U2R

Or not.

Do you know what’s cool about data models?

You can tell everybody that they’re just experimental and need constant recalibration, but they’ll still read into them whatever they want to. As a result, you can publish almost anything and some people will think it’s valid.

I figured if other people can do that, why can’t I do it, too? A lot of people think I do this already, with every post, so let’s prove them right.

With that thought, I created the “Up and to the Right” model, or U2R.

Is U2R accurate?

We shall see. It should be an interesting experiment.

At some point, somebody will create a data model that works. I know somebody who’s working on one, it’s already really good and I’m sure with a little more time, it will rival all of the others.

Until he’s finished that model, try U2R.

(Not financial advice.)

Too much can change

Just as data models can change, so can the world.

At the moment, lots of people worry about the conflict in Ukraine.

While that’s a pressing and urgent concern, what about the world’s other geopolitical hotspots?

What about the South China Sea or the Persian Gulf, two of the most important shipping areas in the world? Both regions are fraught with tensions among nations and ethnic groups. They could erupt at any time.

So could a volcano in Iceland (it happened last spring).

China’s debt-to-GDP ratio is perilously high and its financial sector remains stressed. The US dollar continues to rise, as it has all year, putting more stress on emerging markets that hold dollar-denominated debt.

Also think about local economic problems that could cause outsized damage to major economies. For example, what happens when the union contract for port workers on the US west coast expires in July? The last time that happened, ports shut down for four days and caused months of shipping backlogs. Can you imagine the same scenario today, with cargo shipments already backed up for months?

Or if China’s real estate sector implodes? Its second-largest developer has no money and the growth in property values has fallen for months.

Inflation’s on a tear pretty much everywhere. For how long?

People worry the US central bank will raise rates and sell assets, but its balance sheet keeps getting bigger and I’m skeptical that a half-point rate hike can tame 7% inflation, even if the stock market plunges.

(And that assumes it raises rates at all.)

What about laws and regulations? Each month, more countries pass laws to let people buy, hold, and use crypto. Russia says it plans to create its own framework and the US has started to work on its own plans.

Technology changes, too.

In 2017, we had a few consensus algorithms and no usable apps. Since then, we’ve seen an explosion in token designs, consensus algorithms, and viable platforms.

Are you sure you can find somebody who can understand all of these issues, explain their implications, and offer a trustworthy prediction for how things might play out?

Embrace uncertainty

All of these complexities can seem overwhelming. Certainly not the “price go up” simplicity you felt when you first entered this space.

When the world seems like an uncertain or confusing place, you can choose to accept it. Without this uncertainty, you would not have this investment opportunity.

Consider yourself lucky. Most people will not discover crypto until the investment opportunity has passed.

But it’s a tough row to hoe.

Sometimes, you will try to make sense of something that makes no sense. You may read too much into a single fact or statement. You may grasp at fractals or past outcomes without appreciating the opportunities you have at this moment.

At all times, you have options.

* Exit. You lose out on every penny of growth that follows.

* Sell with the intent to buy lower. You risk never getting a chance to buy lower.

* Sell to get some cash out of the market. You risk giving up an asset that gets more valuable over time for an asset that gets less valuable over time.

* Rebalance from crypto to a different investment. You risk getting a lower reward for the risk you’re taking.

* Buy. If you’re buying bitcoin, your investment will go up over time (possibly immediately, probably down at first). If you’re buying altcoins, some will do quite well, most will not.

That’s just five options. You can find many more.

The question is, what will you do about it?

Winning fixes everything

One thing I can assure you: crypto will not succeed because of inflation, governments, war, peace, freedom, tyranny, adoption, censorship, or any monetary, political, or ideological movement.

Those are narratives. They all play a role in shaping opinions, defining the contours of debate, and offering reasons for people to invest their time, energy, and money into this asset and its technology.

At the end of the day, all that matters is whether the price goes up. Justifications come later.

So it goes with every financial asset—stocks, bonds, commodities, and all of the others.

Once the price goes up long enough for people to think it will keep going up, they will trade their government’s money for access to that asset. Some will keep enough money in the market for long enough to generate a positive return.

At that point, other people will start to emulate them. Businesses will pop up to serve those who want to invest. The asset will get less volatile and more popular. Eventually, people will see it as safe, normal, and possibly necessary.

Your job?

Make sure you get into the market before that happens.

Plan accordingly

Why does my plan force us to wait until everybody’s bearish? When we see bearish trading patterns and all of the trading indicators turn south?

Because those are prime buying opportunities.

Why don’t I take profits?

Because you never want to trade a rising asset for a declining asset. Once you pay taxes and fees, you end up with a lot less than you expected. You also miss out on 100% of the future growth.

Why not wait until the bottom?

If I knew where the bottom was, I would. Only Twitter psychics know that, and they won’t tell us.

Why not wait until the market turns bullish?

It’s just too risky. Most trading signals play out only 50% of the time, and if you wait for the market to confirm a bullish signal—or even a bullish bias—you might watch the price rise 50% before you get confirmation. At that point, you’re stuck chasing after the market as it goes up—for an asset you already planned to buy.

Why sell only in extreme conditions?

Because this market is volatile and the swings are crazy. When “normal” prices can go up 100% in bear markets and drop 50% in bull markets, you don’t want to pull out too early.

Give my plan a shot. Three lines on a chart tell you when to buy. Sell only when the market forces you to sell. No timing the market, trading in and out, or taking profits. “Buy low and grow.”

Today, that means buying. Tomorrow, who knows?

Mark, it’s a bear market. Why do I need a “bull market” plan?

You don’t.

Bear markets are easy—just buy. Easiest decision you’ll ever make. Buy and keep buying as you have more money to put into the market.

You get the same risks as you get in a bull market, but with more upside.

When the price goes too high, stop buying and enjoy whatever comes next.

If the price goes below a certain level, throw in the towel and move on.

With my plan, you will get to a point where you will stop buying, either because bitcoin’s price goes too low or too high. This can happen in bull or bear markets.

At last year’s all-time high, I said it was reasonable to expect bitcoin’s price to double before the market cycle peak. For altcoins, 5x on your entire portfolio seemed fair. Most of your altcoins would pace or trail the market, a handful would do 10x or more.

Now, you can double those expectations. Bitcoin can still realistically hit $150,000, the total altcoin market can still reach $4 trillion, and now a few of your altcoins can give you gains of 20x before the market cycle peak, whenever that comes.

Wen moon?

Wait, Mark, are you saying we haven’t seen the peak of this market cycle?

Right. We haven’t seen the peak of this market cycle.

What about April 2021, October 2021, and November 2021?

Not peaks.

Some people like to call every downtrend a “bear market.” Some say every 20% decline is a bear market. Others say whenever the price falls below a certain moving average or trading level, it’s a bear market.

Pretty much anything that fits whatever definition of bear market they choose.

Some say 2019 was a bear market because the price went down after it went up.

Was it, though?

Bitcoin’s price more than doubled that year. Plot the bear market on a chart, and it looks like the first leg of a bull market.

I saw one analyst say our present bear market started in February 2021 (that’s not a joke, and I regret not saving the tweet to my bookmarks). Can you have three new all-time highs during bear markets?

I’ve also heard some people talk about “mini bear markets.” Does that mean we’ve had four bear markets since 2019?

I’ll defer to the experts on that.

Defy labels

Maybe it’s ok to appreciate the larger trends and dynamics around you, without forcing labels onto them?

Bull market or bear market, this market gives you all sorts of opportunities, often when you least expect it.

Since the summer of 2021, this market has gathered itself for the next leg up. We saw clear, textbook consolidation among market participants even as bitcoin’s price doubled from its June low of $28,500.

In November and December, we shed some institutions and summer tourists. In December and January, we shed some whales and leveraged traders. This month, we’re shedding defensive profit-takers as institutions trickle back in, some buyers re-enter, and diamond hands gobble up whatever remains.

Altcoins continue to pace bitcoin, as they have since last fall.

No worries if you bought in October or November. You’ll be fine, possibly sooner than you might think. Try to push through the terror of the moment. Eventually, you will find the ecstasy you seek.

It’s not good, fun, or anything like what you signed up for—but in this market, terror brings opportunity.

How much longer will that opportunity last?

We shall see.

Premium subscribers, I will keep you up-to-date about what I’m seeing and how the plan changes over time. If you’re not on the premium plan, subscribe now.

Relax and enjoy the ride!

On top of that, this two-day death cross came after a cross down on the monthly MAC-D, another trading indicator.

If you don’t know what that means, you might not want to trade this market. I don’t trade, either.

Fortunately, the last time both of these trading signals happened in the same order, bitcoin’s price went slightly lower two weeks later, then up forever. It was the generational bottom.

Unfortunately, the time before that, bitcoin’s price dropped for months afterwards.

One time the price went up, another time the price went down. Enjoy your technical analysis!

Premium subscribers, make you you caught my updates from this week.

* Bitcoin Market Update—on-chain behaviors, “bear market” views, geopolitics

* Altcoin Market Update—non-ETH altcoin trends, NFTs, DeFi, BTC/altcoin dominance

Last week’s poll asked “What theory do you think fits the market best?”

Halving cycles won 27% of the vote. Four-year cycles and expanding cycles each got 21% while 26% said no theory fits the market.

Stock-to-flow (and S2Fx) got only 4% which is interesting.

I’m with the 26% who don’t think any of those theories fit the market best but some of them make sense to me. It’s interesting to see how they play out over time.

Scroll down for an article, two videos, and a meme you may enjoy.

National Football League has been lobbying the SEC on blockchain technology

Bottom line: the US’s biggest sport league wants to do NFTs and crypto-related activities but worries US regulators will zap them for doing so. They hired government insiders to check in with government officials last year.

My take: in last week’s rundown, I shared an article about how the NFL takes a cautious approach to crypto-related business opportunities. Lobbyists can gather intelligence, provide analysis, and make connections with key players in advance of new ventures. I used to do this for a Fortune 500 company. Sometimes it leads to nothing, sometimes it clears the path for businesses to move forward. This article is about a sports league but you’ll find the same practice across pretty much every industry in the US.

Why we care: appearances can be deceiving. When it comes to business and government, you never know what’s going on behind the scenes unless you look. (Though it’s usually a lot more boring and far less evil than you think.)

Some people worry about regulations changing crypto. Which begs the question, how can governments or financial institutions control a decentralized, permissionless technology?

Heidi from Crypto Tips gives a great answer (it’s about people not tech).

I also posted some QAs on YouTube. In this video, I answer a few questions and address concerns about volatility and expectations for this market.

Last, a meme drawn from one my favorite movies.

Relax and enjoy the ride!

In my most recent update for premium subscribers, I pointed about a big, sudden drop in the number of wallets with more than 10 bitcoins, right at the beginning of February. Roughly 2,000 whale wallets shipped off their bitcoins over roughly one day.

While this continues a trend we’ve seen for months, the drop came out of nowhere. Even smoothed out on a seven-day moving average, you can see it falls off a cliff:

After that update, I discovered that the Bitfinex “hackers” had spread their coins across more than 2,000 wallets. Around the beginning of February, US authorities seized those wallets and emptied out the contents. It’s safe to assume that’s why the number of large wallets fell abruptly, seemingly out of nowhere.

Does this matter for us?

No. One piece of data means nothing and you can interpret this a dozen ways. We knew whales have trimmed for a while. The absolute levels matter less than the trends and behaviors they reveal. I’ll talk about this and other metrics in my next update, possibly two this week (no promises).

Scroll down for a poll and two articles you may enjoy.

Poll: what crypto market theory do you think fits best?

* Four-Year Cycles

* Expanding Cycles

* Stock to Flow (and S2Fx)

* Halving Cycles

* None

123-Year-Old Hydroelectric Plant Sees New Life Mining Bitcoin — Revenue 3x Higher Than Selling to the Grid

Bottom line: after a disagreement with the local utility company, an old power plant sold its renewal energy to bitcoin miners.

My take: that’s great but somebody’s going to get mad that the plant’s power went to magic internet money instead of their houses and businesses. They won’t realize that the energy that went to bitcoin would have never reached their houses or businesses in the first place.

Why we care: bitcoin miners can operate anywhere, which means they can run off of any power source. Whether that means renewable energy or waste from oil drilling sites, bitcoin miners fill inefficiencies in the energy market. While some see that as a public benefit and a good use of wasted energy, others will get mad about it. Prepare accordingly.

The NFL on display this Super Bowl will seem like a crypto-happy league. It’s anything but.

Bottom line: even though some of its players advocate for crypto, crypto exchanges buy airtime on its programs, and some of its partners sell its NFTs, the National Football League plans to stay away from crypto. In contrast to the National Basketball Association, which has integrated crypto into its business plans.

My take: if that story came from a social media influencer, the headline might say “#1 US SPORTS LEAGUE WANTS TO KILL CRYPTO.” To the contrary, the article presents a range of views and perspectives on why the NFL remains cautious even as public interest and enthusiasm rises. When crypto brings potentially billions of dollars in reputational and operational risks, the NFL wants to tread lightly. That’s all there is to it.

Why we care: like fund managers who buy crypto with their personal funds while selling their clients’ crypto, or food workers who serve dishes they wouldn’t buy for themselves, people often act differently with their own money than with others’ money. There’s no reason to get worked up about the NFL shying away from crypto.

Relax and enjoy the ride!

Guess what I discovered?

Since the beginning of this year, at least 100 subscribers got cut off from this newsletter because their banks blocked their charges.

From a few people I talked to, it sounds like some banks flagged my newsletter as a risky purchase because it’s related to cryptocurrency (though certainly some people told their bank to block the charges because they didn’t want to subscribe anymore).

I’ve lost a lot of money because banks don’t like crypto. If your bank ever cuts off your subscription, email me mark@markhelfman.com so I know what’s going on.

But enough about me and banks. Doesn’t this market feel better when the prices go up?

Given the conditions I talked about in Friday’s altcoin market update, it’s possible this recent rally is a short squeeze, where speculators get liquidated in a way that pushes prices up.

Sometimes, these things pump the market for a heartbeat and then we go back to the start, sometimes these things mark a true shift in trend. We’ll see in the coming days and weeks.

In Monday’s update, I talked about the massive flow of stablecoins to exchanges since mid-January and a persistent stack of “buy” orders across all exchanges over roughly the same timeframe.

As of one week ago, money was getting ready to buy, not necessarily buying yet.

Perhaps that short squeeze caught a lot of these people by surprise? They planned to buy at lower prices, then changed their mind once the price started to run and bought higher than they had planned?

In my next update for paid subscribers, I’ll have some data about this.

In any event, we don’t need a short squeeze to send the price of bitcoin up or down 10% in any day or 30% in any month (30% to 60% for altcoins). That’s normal volatility. Welcome to crypto!

Scroll down for some interesting news and content.

Some of you have asked about Altcoin Insights, my research service.

When I closed Altcoin Insights on February 15, 2021, I extended all subscribers one year forward and kept that date as the subscription end for all new members. As such, I will close the service on February 15, 2022.

Watch this video to learn why I’m closing the service and one concern about the structure of altcoin funding now compared to when I started the service in 2020.

Altcoin Insights subscribers: on February 15, 2022, you will get a report with my updated thoughts and expectations about each recommendation, as well as a list of key news sources that you can follow to keep up with developments. Also, I will keep access to the reports open through November 1, 2022, though I will not update the recommendations.

For those who never subscribed to Altcoin Insights, I’m happy to give you the list of recommendations and the report on the same terms as everybody who already subscribed. Out of fairness to them, you will pay the same price as they did. Contact me directly using one of these methods (don’t reply to this post).

Email | Twitter | Telegram

Please note, while I will occasionally add new altcoins in my Altcoin Reports and will definitely post updates about the wider altcoin market regularly, I do not plan to make specific altcoins a focus of this newsletter moving forward.

While I certainly understand this may disappoint you, I hope you’ll stick around a little longer to see how things go.

Last week’s poll asked “When will bitcoin's price make a new all-time high?”

* 20% said before April 1, 2022

* 45% said between April 1, 2022 and September 1, 2022

* 35% said after September 1, 2022

Only 20% think bitcoin’s price can’t go up 66% in two months? Ye of little faith.

What’s my answer?

We shall see. All of those timeframes seem reasonable.

That said, I would not be surprised to see bitcoin’s price hit $70k before April 1, 2022. Outside of selling from institutions, some OGs and whales, and a lot of tourists, this market is very strong.

Of course, those people make up a significant portion of the market. Have they stopped selling yet? And if so, when will bitcoin’s price go high enough for the rest of the market to think it will keep going up?

Nobody knows so let’s not get ahead of ourselves with gloomy predictions or supercycles. We’ll have to see how people’s behaviors change as bitcoin’s price moves up or down.

I’m sticking to my plan.

Any price above $19,000 and below $150,000 fits into bitcoin’s “normal” range of prices.

In Win For Crypto Stakers, IRS Offers Refund on Untraded Token Rewards

Bottom line: US tax authorities said one couple does not have to pay taxes on their staking rewards until they move them. This may set a precedent for all stakers. The couple is taking their case to court anyway.

My take: expect more of these cases. Until policymakers create a regulatory framework that makes sense for crypto, the courts will have to intervene.

Why we care: US regulatory system is more nuanced and complicated than most people think. While you never want to dismiss bad laws or ideas—it’s better to advocate or vote—keep in mind that a lot can change from the first draft to enforcement.

I answered some reader questions about NFTs and money laundering, Ethereum, altcoins vs bitcoin, and churn among altcoin projects.

China banned cryptocurrencies, but it’s going all in on NFTs

Bottom line: China will let people mint and trade NFTs on its permissioned, centralized blockchain. This means NFTs will not trade freely or move to secondary markets, but will be available to businesses and creators who keep them on China’s Services Network.

My take: people in China still buy and sell crypto despite the ban. Do you think they won’t buy and sell NFTs outside of China’s blockchain? How long until they wrap their NFTs and sell them on OpenSea or any of the other marketplaces on other blockchains?

Why we care: one more reason NFTs might end up as crypto’s killer app and the gateway for adoption. Assuming NFTs have the popular appeal we think they will, the Chinese government has essentially mainstreamed Web 3.0—and I’m not sure they or their citizens realize it yet.

Watch this Coindesk video for some ideas on how investors should balance the risks involved with DAOs.

On the one hand, when you participate in a DAO, you put your trust in group of anonymous people who have no interest in your welfare. At the same time, code and community matter far more than founders and leaders. Where do you strike the balance?

Note, I do not endorse the Syndicate platform, I just think its founder raises some interesting points in this video.

On a closing note, I need suggestions for good podcasts. Any ideas?

Relax and enjoy the ride!

Happy Sunday!

A lot of people want to buy crypto, but aren’t doing it. I can tell from the migration of stablecoins to exchanges over the past week and a pile of buy orders stacked below $33,000 across all exchanges.

Do you have a bid that low, too?

Our drop below $40,000 confirmed a macro downtrend and sent bitcoin’s price below a key level. As a result, people calling for a bear market finally have a point. After years of saying “bear market” without actual evidence of a bear market, they now have evidence to back up their claims.

The question is, for how long?

Premium subscribers know what I’m doing and what I’m looking for. If you didn’t catch my most recent update, do it now.

I’ll have two updates this week, one for altcoins and another for bitcoin and the wider market.

Last week’s poll asked “is crypto in a bear market?” It was a split vote:

* Yes—37%

* No—32%

* I don't know—31%

My answer?

Let’s see what happens when the market turns up again. The next rally will clarify things. When will it come? How high will it go? What will people do with their crypto as prices go up again? Can we break $70,000 on the next go? And if we do, will anybody still consider this a bear market, as some people did the last time we hit a new all-time high?

Here’s another poll, plus an article and podcast you may enjoy. I’ll have a longer rundown next week!

Poll: when will bitcoin's price make a new all-time high?

* Before April 1, 2022

* Between April 1, 2022 and September 1, 2022

* After September 1, 2022

Banks form consortium to mint USDF stablecoins

Bottom line: small US banks banded together to create a stablecoin for instant settlement of transactions within their network and anybody who chooses to join it.

My take: people spend a lot of time and effort talking about central bank digital currencies, which will take many years to create and may not even work. Meanwhile, a consortium of banks figured out how to make stablecoins that come with deposit insurance, digital wallets, and compliance with anti-money laundering rules. One more way Wall Street will co-op crypto for its own benefit. I’m interested to see whether entrepreneurs and developers create better open source alternatives that can outcompete them.

Why we care: banks will not get “blockbustered,” they’ll adapt and innovate as they always have. As I discuss in Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency, legacy finance is far more nimble, savvy, and well-connected than you give them credit for. And they have a massive incentive to make crypto work for them. Just wait until governments around the world force you to use a regulated custodian for all crypto transactions. Who better than a bank to fill that role? Do you think their employees can’t learn how to use Uniswap, build an app to connect it to their customers’ wallets, then offer that service as a convenience (possibly for a small fee)?

DeFi may seem lame compared to NFTs and metaverses, but it’s no less valuable.

On a recent episode of The Defiant podcast, Kain Warwick, founder of Sythetix, talked about building in DeFi. Listen to the episode for a deep insight into the challenges that DeFi projects face as they build out their platforms.

Relax and enjoy the ride!

If the embedded audio narration isn’t working properly or doesn’t sound good, tap this button to switch over to the podcast version. My service provider, Substack, is having technical issues that may or may not affect your audio.

According to traders, the crypto market is about to fall off a cliff. Some say it already has. I’m still not changing the name of my bitcoin plan, even if I end up getting more hate mail.

When you look at the actual behaviors of people in this market, hardly anything changed from November to today. Institutions and some whales continue to trim their positions while new-ish HODLers sell and leveraged traders get liquidated.

What’s the difference now?

New money isn’t coming into the market and that’s freaking everybody out.

But Mark, we went down over 40% since November’s all-time high!

Yes, and we went up 40% in October. Healthy markets go up and down.

If you’re following my plan, you’re down as much as 30% but probably closer to even on your money. Some of you might have more than 650% gains, depending on when you started following me.

Why don’t I worry?

Because at this moment, only a small number of people dictate crypto prices. About 13% of bitcoins sit on exchanges and roughly one-third of those bitcoins exchange hands on any given day. Of $1.6 trillion worth of altcoins, less than $140 billion exchange hands on any given day (and that includes inflated volume from wash trading).

As a result, it doesn’t take much money to push prices up and down. We’re just not seeing enough new money enter the market to counter the selling.

Compare that to early 2021, when money came gushing in but we saw massive selling from strong hands, OGs, miners, institutions, and basically everybody but you.

Right now, bitcoin’s price can realistically drop to $19,000 or rise to $150,000 and still fit within its range of historical volatility.

Buckle up.

Until I see signs that this drop is more than a panic, there’s no reason to worry. Once I have a reason to worry, I’ll tell you.

Inflation is not your friend

Some people still bank on inflation to save the market.

Sure, inflation’s on a tear pretty much everywhere. Some think that’s good for crypto.

We shall see.

If you’re struggling to buy groceries and pay your rent because prices keep going up higher than your income does, it’s going to be hard for you to justify putting money into crypto.

While desperation can certainly force people to buy bitcoin, I’ll bet most people will seek refuge in something familiar and trustworthy, simply because that’s how humans tend to react when stressed. Bitcoin doesn’t fit the bill.

Also, when people put money into this market, there’s always somebody on the other end of the deal.

Let’s say people flock to crypto as a hedge against inflation. Prices will go up.

At that point, some whales, OGs, and insiders will see their portfolios double or triple, then sell. For them, supercycle means “sell super-fast when new money cycles in.” It’s hard to sustain upward momentum when the biggest players and so-called maximalists keep dumping on the market.

More than that, inflation is not guaranteed to continue. What if economies rebalance? If people find cheaper options? If businesses automate their wages lower? If central banks raise rates high enough? If some financial woe hits a major market?

You can’t bet on inflation always going up.

Yes, that’s the stated goal of all modern monetary systems, but they don’t always succeed. What happens if they fail? Did you think about what you might do if we get a deflationary or disinflationary economic regime?

Fear Not for COVID-19

Others think Omicron will crush the world’s economies, but this variant causes milder illness than other strains and essentially eradicates all competing variants. Vaccines make infections even milder.

Plus, doctors know how to treat those who catch the disease. Health specialists know how to prevent further spread. They continue to get better at it.

Once workers stop getting sick and go back to work, life will continue to return to normal. Many places went back to pre-pandemic life months ago. Some are only just getting there.

Could the new BA.2 strain upend this progress?

Nobody knows yet. New strains pop up all the time. On top of that, a different disease could create a new pandemic.

Same risks we’ve faced for the entirety of human history.

Unless something happens to make COVID-19 worse, it will continue to matter less and less with each passing day.

Don’t bank on a supply shock, er, squeeze

You may have heard analysts talk about illiquid supply, the portion of bitcoins located in places where they’re not easy to sell.

Illiquid supply remains high, over 75% as of this issue.

The thinking goes, when money flows into bitcoin, the price has to go up, because so much of the supply is locked up. This is the premise behind a so-called “supply shock,” a term some analysts use to describe a “supply squeeze,” a situation where supply can’t keep up with demand.

No.

At any time, all 19 million bitcoins can come to market. For the vast majority of bitcoiners, it takes a few taps on a smartphone or a few clicks on a keyboard.

Unlike other assets, bitcoin costs almost nothing to move and everybody can access the market anytime from anywhere.

Illiquid supply is a myth. There is no illiquid supply.

As a result, there is no such thing as a supply shock. Bitcoin’s price is a function of buyers and sellers. You’d be surprised how liquid those bitcoins get when the price goes up.

Bank on HODLers

We have something better than inflation, economic growth, and illiquid supply.

We have HODLers.

At least 65% of the market value of bitcoin sits in wallets whose owners tend to hoard them or send them to other people who hoard them. For 13 years, these wallets—and wallets that show the same behaviors—sell only when the price goes up.

Not when the price goes down.

Diamond hands, strong hands, true believers, call them what you want, they provide the floor for prices. They choose not to send their bitcoins to market. As a result, the market eventually runs out of people willing to sell bitcoin.

At that point, you just need buyers, and not many, to push the price up long enough for other people to think it will keep going up. At that point, everything else will take care of itself.

HODLers give the market room to go way higher, way faster than you could ever imagine—and it doesn’t matter where they keep their bitcoins.

Institutions don’t behave this way. They’ll swap crypto for cash as soon as their investment plans tell them to do so.

Some whales HODL but many will take profits on the way up or sell defensively when the price goes down.

Traders buy, sell, and get liquidated in all market conditions, regardless of which way the price goes.

Only HODLers keep this market from collapsing.

As more bitcoins flow to HODLers and newcomers who HODL after they buy, new money will stay captured on the bitcoin network, not traded away or sold for cash.

HODLers are the most important entity in crypto.

(Buyers are #2.)

As long as we see HODLers behave now as they have in similar past circumstances, we have nothing to worry about—even if the price goes down more.

For bear market types, go back to the bear markets of 2011, 2014, and 2018. Look at the movements of bitcoin and metrics built on those movements. You will find no comparison to today’s market.

If anything, today’s market looks more like what you see at the end of bear markets or the beginning of bull markets. Death crosses and bearish patterns on trading indictors. Most of bitcoin’s market cap sits in the hands of HODLers. Most sellers are capitulating at losses or taking profits from crypto they bought at much lower prices.

Price will go up after the price goes up

HODLers are great but they don’t push prices upward, they just set a floor for prices to fall. For prices to go up, we need more money coming into the market.

What will bring more money into the market?

Price just needs to go up.

Did you buy your first crypto with a clear investment thesis or understanding of crypto markets? Or did you buy because the price was going up and you felt the need to get in on it?

As economists have discovered in recent decades, people value financial assets purely on faith. People buy into the stock market because “it goes up,” bonds because “the payouts stay constant,” and houses because “they’re a good investment.”

When those things don’t work out the way they expect, they lose faith—usually, at the worst time. They rediscover their faith after only the assets behave in a way that again matches their beliefs.

The same principal applies to crypto. Once prices go up long enough for people to believe they’ll keep going up, they will come back.

As a content creator, I see this with every big upswing and big downswing. They leave after the price goes down. They come back after the price goes up.

That’s not a bad thing.

Better to feel good about what you’re doing than stress about this market. Life will give you plenty of opportunities to make money, you don’t need to buy crypto to do that.

Ok, Mark. You’re saying don’t buy until the prices go up?

No. Quite the opposite. But mental and psychological wellbeing have a value, too. This industry puts a lot of pressure on people to buy the peaks and sell the bottoms. Social media algorithms stoke your greed and feed your fear.

At the end of the day, we’re all going to make it. As long as you’re in now, you’ll be ok. Bitcoin will grow a lot. A handful of altcoins will do better.

Go at your own pace, a pace that feels comfortable for you. Nobody’s (yet) lost money on bitcoin from buying the peaks and HODLing until the next one. There’s never a bad time to buy bitcoin (though some times are better than others).

Just make sure you save some fresh cash to buy when bitcoin’s price goes into the buying zone of my plan, generally less than five non-consecutive months out of any given year.

Buying bitcoin below $50,000 in 2022 is like buying bitcoin below $10,000 in 2019. It’s the financial version of healthy diet and exercise. It feels bad in the moment, but gets better when you see the results. That takes time.

2019’s buyers don’t worry about buying at $7k or $10k, they’re just glad they did.

When you wait, you take a big risk of missing a prime opportunity to build wealth. Then, you end up chasing the market upward.

That can work out. With crypto, you can make money and build wealth—but rarely at the same time. I’ll let others give their perspective on making money. I’m more interested in building wealth.

To build wealth with crypto, you get the best results when you wait until after the market drops.

Not those 15-20% dips in the middle of an upswing, but those crashes of 20-50% that this market’s best known for. When “blood is in the streets,” as the saying goes.

Does that mean throw all of your money into the market as soon as the price crashes?

That’s up to you. Sometimes it works out, sometimes it doesn’t. I generally average into the market, with one limit-buy order slightly above a key price support level.

While occasionally that means I don’t get all of my money in when my plan says to buy, it lets me take advantage of further downside, if there is any. And whatever I don’t get up-front goes into a high-yield savings account earning 7-20% interest—dry powder for the next opportunity.

A little is better than nothing

The most important thing: get while the getting’s good, before the market goes up again. Do what you can, whether that’s a little or a lot. It’s more than 95% of the world is doing, and that’s good enough.

Bitcoin’s price went from $3,000 to $20,000 from the beginning of 2019 to the end of 2020. That’s 6x in less than two years.

Over that entire time, most people didn’t touch it. Chances are you didn’t, either.

When bitcoin’s price went from $20,000 to $65,000, you couldn’t help yourself but throw money into the market.

Who got a better deal?

Everybody who bought from $3,000 to $20,000. They had as much as 600% gains before you even set up your Binance account.

Ironically, looking at on-chain data, many of those people sold long ago. (I didn’t.) They probably sold to you!

It’s hard to sit on 600% gains without taking profits. For most people, a 50% gain is enough to trigger a sell order. Institutions and traders probably start peeling out after 20% gains.

And yet, if we didn’t have strong hands sitting on 600% gains, bitcoin’s price could not have gone up high enough for you to feel comfortable enough to enter this market. Too many would’ve sold too quickly. Prices would’ve taken too long to go parabolic. You would have been too bored or worried to put money into the market.

This same dynamic is playing out today. We had a crazy run from September 2020 to April 2021 with a long, healthy consolidation from May to November 2021. The gas tank’s full and ready to zoom.

The problem is, the riders have mostly disappeared.

Don’t let the letdown let you down

And for good reason.

When everybody promises you a supercycle in December 2021 or January 2022, they’d better deliver. Otherwise, you will feel let down.

They didn’t deliver.

Now those same experts who promised you a supercycle last year are talking about bear markets, expanding cycles, triple peaks, and the end of market cycles altogether.

Some of the same traders who told you to buy at $65k just told you to sell at $40k. I’ll bet those same traders set their stop-losses at $60k or $53k without telling you.

From the emails I’ve gotten over the past month or two—and posts from content creators I follow—everybody seems bearish. Everybody. Even permabulls have started qualifying their fractals. That was before a 10% mini-crash triggered mass capitulation a few days ago.

It’s absolutely justified.

The total crypto market cap fell 40% in two months. Bitcoin’s price did worse. Now you’re hearing about tether, scams, bans, crackdowns, and an unfilled CME gap at $9,600.

Who wouldn’t worry? Especially with the larger investment environment looking absolutely pathetic.

The thing is, those risks exist all the time, whether the market’s on a massive pump or crazy dump.

Crypto is a risky market. The larger investment environment has looked pathetic for months. Cash is losing value at the fastest rate in decades and you’re getting terrible risk/reward opportunities in every other asset that people like you and I can access.

While that’s a small consolation if you’re down 50% on your crypto, consider the alternative.

Crypto has a lot of room to grow, more than enough to compensate you for your risks.

Among legacy assets, safe investments essentially guarantee you will lose money and speculative investments carry more risks than ever.

Some traders say you should sell crypto to reduce your capital at risk.

I have news for you:

All of your capital is always at risk.

Even when you’re sitting in cash.

There are no good investments anymore, only guaranteed money-losers and high-cost gambles. Are you sure now is when you want to sell your crypto?

Bigger risks abound

In the US economy, unemployment fell to a level we only see before recessions. Take a look:

Last month’s retail sales dropped far more than expected. Manufacturing is slowing amidst supply chain disruptions and labor shortages while rising prices have put a dent in consumer confidence among all but the poorest workers.

Does that mean I expect a recession for the world’s financial engine and largest economy?

Yes, of course. It will happen eventually, the only question is when.

Hopefully, not any time soon. Unemployment can stay low for years before a recession. A few months of economic slowdown can do wonders for the overall health of an economy.

I’m not bearish on the US economy. In any event, recessions offer fantastic investment opportunities for anybody who has a job, cash, or disposable income.

But I’m not exactly popping bottles of champagne when I hear good economic news. The music has to stop sometime.

And what about other economies?

China had to lower banking reserves twice last year to preserve the solvency of its financial sector.

Japan and the EU face their own problems. A rising US dollar has put a pinch on emerging market debt.

Global equity markets remain dangerously overvalued. Trillions of dollars are locked in money-losing bonds. “Safe” investments cost more than ever and carry higher risks with every passing day.

Unlike the crypto market, when the stock, bond, and debt markets tank, the entire world suffers. Business fail. People lose jobs.

As it did in 2020, today’s crypto market may offer a lifeline for people who have no good choices for where to put their money.

You probably missed 2020. Now you might have a chance to make up for it.

We’ll see.

Crypto gets more risky as the price goes up

Maybe you don’t have money or you feel compelled to keep cash handy?

Maybe crypto prices are going down, which makes you think they’ll keep going down?

You have good company. Even the strongest bitcoin bulls believe it gets less risky to buy when its price goes up.

Just realize, when bitcoin’s price goes up, you pay more for the same opportunity you get when its price goes down.

When its price goes down, you get the same opportunity for a steep discount.

Think back to November 15, bitcoin’s all-time high. What expectations did you have for your portfolio? 3x? 5x? More?

Now add 66% to whatever result you thought you were going to get. That’s the power of buying after a 40% drop. You take all the same risks but play for a much bigger reward.

Does that mean you need to “think long-term?”

Not necessarily.

Bitcoin’s price can zoom in all market conditions, good or bad, bull or bear. Since the beginning of the 2018 bear market, we’ve seen 10 moves of 60% or more over two months or less:

* February 6, 2018 - February 20, 2018 (100% in 14 days)

* April 1, 2018 - May 5, 2018 (57% in 35 days—close enough)

* April 25, 2019 - May 30, 2019 (83% in 35 days)

* June 4, 2019 - June 26, 2019 (87% in 22 days)

* December 18, 2019 - February 12, 2020 (64% in 57 days)

* March 13, 2020 - May 7, 2020 (161% in 55 days)

* November 26, 2020 - Jan 8, 2021 (160% in 47 days)

* January 27, 2021 - February 7, 2021 (100% in 25 days)

* Jul 14, 2021 - September 4, 2021 (81% in 47 days)

* Sep 21, 2021 - November 10, 2021 (75% in 15 days)

Why can’t that happen now? Many of those zooms happened in circumstances just as bearish as today’s market.

Even trading signals suggest this is a realistic possibility. Many indicators show oversold conditions across many timeframes. We just had a one-day death cross. Of the seven previous death crosses, three marked generational bottoms and two saw prices skyrocket in the weeks that followed.

Next month we’ll get a two-day death cross. That’s a 50/50 shot—two times, the price never went lower, and the other two times, prices reached the generational bottom about three months later.

While there is zero correlation between previous death crosses and anything that happens today, you can’t say “the market has to keep going down.”

It’s gone up before in similar circumstances. Why can’t it happen again?

Decide now what you will do

When you entered the market, you found a lot of excitement. Data models predicted riches. YouTube and Twitter told you the market would explode to the upside.

It doesn’t feel that way today, but it should. You’re in at the ground floor of the next boom, and it’s a whole different experience. Scary. Exciting. Frustrating. Terrifying. Stressful. Hopeful. A mix of emotions.

Whatever you’re feeling, you will feel this way again and again. This is a cruel and vicious market.

It’s also a wealth-creation machine, a generational opportunity to build lasting, durable wealth from owning a stake in the financial networks of the future.

Yes, it’s a hard way to make easy money, but look at your portfolio.

Imagine in three months, it’s worth twice as much as it’s worth today. In a year, it’s worth three times as much. Some of your altcoins will never go higher than their price today, but some will do 10x or better.

In five years, you could have a portfolio worth five times more than it is today without adding a penny more.

How does that make you feel?

What will you do when bitcoin’s price starts to run and altcoins can’t keep pace? Will you sell your altcoins for bitcoin when Twitter and Reddit tell you they’re dead?

A few weeks later, when altcoins catch up to bitcoin, what will you do when the price of your favorite altcoin triples in one week? Will you take profits? Sell out before the “real” bear market? Trade it for more bitcoin? Trade it for another altcoin? Take back your original investment and let the rest ride? Buy more?

When will you sell? Will you sell at all? What happens when you “take profits” on that 3x winner, only to watch it triple above where you sold it, while the rest of the market seems to run away from you?

What do you consider a “dip” worth buying? Is it a 10% drop? What about a 30% drop? Is 50% too much? Do you wait for that dip? If so, what will you do if the market doubles before that dip hits? Will you buy at that higher price or wait longer, in the hopes that the price falls back to where you expected it would drop in the first place?

How high will you let the fees go before you decide it’s not worth buying more crypto? Do you spend $50 in fees to buy $50 worth of crypto? If you need to sell, have you considered fees and taxes?

These scenarios seem insane and unrealistic, but you probably already lived through them. Everybody who came to this market in 2021 went through this at least once, possibly twice.

Do you remember July 2021, September 2020, March 2020, April 2019, and at least a dozen other times in bitcoin’s history, during bear markets and bull markets, when everything seemed dead and then sprung back to life?

My plan may help you navigate these decisions. Three lines on a chart tell you when to buy. Sell only when the market forces you to do so.

Tortoise or hare?

Sometimes people think my plan is too conservative and my analysis is too equivocal. Backwards, even.

Understandable.

If it seems backwards, consider whether we share the same goals. I want to use my government’s money to get more crypto. Most people want to use their crypto to get more of their government’s money.

Different goals deserve different strategies.

What do you want to get out of this market?

Decide now and pick a plan that fits your goals. A winning strategy for one person is a losing strategy for another. Plan for the outcome you want. Do it now, before the market picks up again or drops lower.

I created my plan because it can grow your crypto portfolio without a lot of risk or effort. “Squeeze the most juice" out of the market, not necessarily get the best prices or time the swings just right.

More tortoise, less hare.

Usually, that means buying only when the market’s in distress.

As a result, sometimes my portfolio goes bonkers—way higher, way faster than even I ever thought possible, or way lower, way faster than I’d like.

While my portfolio may go up or down a lot, my returns consistently go up. No trading, taking profits, or timing the market. When I’m down, it’s not by that much for that long (much = 50% or less, long = a few months or less, which seems crazy, but not for this market).

Think out of both sides of your head

I realize the wider world of content creators sells you “strong convictions loosely held.” Pick a bias, make a prediction, and then change your mind once the market tells you whether you’re right or not.

Nice work if you can find it. You could also let the market do its thing and take advantage of opportunities as they come. Why psyche yourself into one outcome or another?

Read my previous monthly issues and you will see a common theme: the embrace of uncertainty.

Sometimes, you need 50/50 analysis. At least then you get perspective.

I realize a lot of people think that’s bad. The old “one-handed economist” routine.

That’s ok. My analysis may be 50/50, but my decisions never are. When it comes to my decisions, I follow my plan.

You can still do fractals, data models, and predictions. I’ve been known to look at fractals and data models now and then. I’ve also published some predictions.

Food for thought, not a reason to act.

Just as a few months ago, I saw people calling for the bull market to peak at the end of 2021, Q1 2022, or summer 2022.

Now those same people are calling for a long bear market or a peak at the end of 2022 or 2023. Expanding cycles, triple peaks, domed houses, CME gaps, etc. Some say we started a bear market in February 2021.

Think twice before you dismiss these outlandish statements. They’re all useful perspective and I’m certain as we get more extremes, we will get more models and more people talking about when this thing will end (bear market or bull market).

Don’t worry about it. This market will go up, down, and sideways until you feel like you can’t take it anymore.

Take advantage of opportunities when they present themselves. You’ll do ok. Courage is not the absence of fear, but the ability to act in spite of it.

Be courageous.

Relax and enjoy the ride!

To the people who say I called the drop below $40k in my last update, thanks but that wasn’t my intent nor do I think I said that, even if it may have come across that way. I was just pointing out market dynamics that I’ve talked about in previous updates, risks and circumstances we see fairly often.

If anything I say comes to pass, assume it’s a coincidence or you misunderstood me. At any time the range of realistic outcomes is way wider than you think. Almost anything I talk about can come true.

That’s the point—this is a volatile and uncertain market, a hard market in many ways, and the goal of this newsletter is to step outside the day-to-day and get some perspective that can help us navigate the market.

Likewise, if you’re mad that you read my most recent update a day or two after I sent it, please note most of that update covered things I’ve talked about in previous updates. It mostly checked in on trends, patterns, risks, and observations we’ve tracked for months, and I offered my take on what I’m seeing.

At the end of the day, I make all decisions based on my plan.

To understand my mindset at this moment, read or listen to the November monthly issue.

Yes, my mindset is the same now as it was in November, and if you’re a new subscriber, you might be surprised to discover what my mindset is. (Maybe.)

Read on for some content you may enjoy.

If you appreciate my work, please vote for me in any of the Hacker Noon award categories I’m nominated in:

* HackerNoon Altcoin Champion of 2021

* HackerNoon Contributor of the Year - Money

* Best Crypto-Journalist in 2021

Poll: is crypto in a bear market?

* Yes

* No

* I don't know

Check out a real-life use of NFTs.

New York City’s exclusive FlyFish Club turned its membership program into NFTs. To get into the restaurant, you have to hold an NFT or lease it from an NFT holder. Visit the website for more information.

Time will tell whether FlyFish Club NFTs will be new yellow taxi medallions or the vanguard proprietor of a new membership model. Cool to see somebody giving it a go.

Should I launch an NFT for Crypto is Easy?

Sometimes I get questions from different readers along similar lines. Watch this 7-minute video for my answers to a few of those questions, in case you’re wondering the same things as other people.

Walmart to Launch its own Crypto and Collection of NFTs

Bottom line: Walmart filed trademarks for crypto and crypto-related products and services. Note, there is no evidence they plan to launch their own crypto and collection of NFTs, only that they’re protecting whatever IP and branding assets that might go along with a potential launch, should they move forward.

My take: sounds like a regulatory mess but the more businesses that see profit in crypto, the more allies we will have in US Congress. Do you think Texas Senator Ted Cruz turned into a bitcoin-lover because he read the whitepaper? It’s possible. More likely, Texas’s big gas and oil lobbyists told him they can make a lot of money on crypto.

Why we care: the world’s largest retailer is eyeing the Metaverse, possibly with crypto as a part of its venture. That’s a big deal if it happens.

Fraud, Funding Woes and a President Who Won’t Quit: El Salvador’s Bitcoin Experiment

Bottom line: El Salvador’s adoption of bitcoin isn’t going very well. So far, it’s an unpopular money-loser that most people don’t want any part of.

My take: hard to pass judgment on any effort after only four months of trying. More importantly, El Salvador’s bitcoin experiment is a no-lose proposition for everybody except El Salvadorans, their families, and their trading partners. If Bukele fails, nothing changes. Haters still hate, maximalists still maximalize, and no opinions change. If he succeeds, hearts and minds might change. Although it would be ironic if a bad bitcoin investment caused the fall of a wanna-be dictator who spies on journalists and raises money from criminal gangs. Would that be good or bad for freedom?Why we care: from an investment standpoint, El Salvador’s actions don’t matter for the wider market. Its economy is small, its bitcoin hand-outs totaled less than $200 million, and its government holds only about $50-60 million worth of BTC. But it’s a fascinating experiment and worth keeping track of.

Relax and enjoy the ride!

Some think inflation’s good for crypto. I’m skeptical. If you’re struggling to buy groceries and pay your rent because prices keep going up higher than your income does, it’s going to be hard for you to justify putting money into crypto.

That will change once prices go up long enough for people to think they’ll keep going up. At that point, more people will buy into the “inflation hedge” narrative.

Whether it’s true or not? We’ll see.

Also, that assumes inflation will continue. What happens when prices stabilize? Interesting times.

From what I can tell, crypto’s still fighting against institutional flight and profit-taking from whales who bought this summer.

Until those groups finish selling, we just need to let the market do its thing. Eventually, they’ll run out of crypto to sell.

Meanwhile, we see accumulation, growth, and strong positive behaviors on many levels. It’s been this way for many weeks. If that changes, I’ll let you know. Unless that changes, I can’t be bearish on this market.

In any event, I stick to my plan.

Catch my two updates from earlier this week:

* Altcoin Market Update—January 13, 2022

* Market Update—January 11, 2022

Read below for three articles you might enjoy. I’ll have a poll in the next rundown.

If you appreciate my work, please vote for me in any of the Hacker Noon award categories I’m nominated in:

* HackerNoon Altcoin Champion of 2021

* HackerNoon Contributor of the Year - Money

* Best Crypto-Journalist in 2021

What if we fund artists the way we fund startups?

I saw an interesting piece from Elle Griffin in her newsletter, The Novelist, raising a *novel* idea:

What if artists raised funds the same way businesses do—solicit from a few large, early backers, then open subsequent rounds to fans, supporters, and “retail” investors?

She proposes an angel investment fund that will directly fund artists, providing a minimum salary so that they can quit their day jobs and create art, but with the caveat that those artists also have to also produce a salary on their own from contributing to the creator economy. The investors will earn a share of those profits depending on what percentage they own of the artist’s art.

With technology like NFTs or branded tokens, creators can instantly monetize everything they create. At the same time, supporters get the benefits of their investments in those assets, potentially royalties, rights, perks, and gains from the future appreciation of those assets.

As developers and entrepreneurs build more DAOs, smart contracts, and marketplaces to support the exchange of these assets, you can expect a lot of different funding strategies will pop up. Elle’s article walks through a few approaches.

Iran to Permit Use of Cryptocurrencies in International Settlements, Reports Reveal

Bottom line: within weeks, Iran’s government will let businesses use crypto to settle transactions with foreign merchants.

My take: I’m sure the US government is not very happy about this. Iran already lets people use locally-mined crypto to get around sanctions. Now, its businesses can get into that act, too. We have enough anti-crypto people in my country, we don’t need to give them another talking point.

Why we care: some celebrate Iran’s use of crypto and its larger effort to build a legal framework for the technology. Let’s hope the geopolitical ramifications don’t come back to hurt us.

Bitcoin hash rate jumps to ATH as Jack Dorsey confirms Block’s mining system

Bottom line: bitcoin’s hash rate reached a new all-time high, signaling massive participation in mining bitcoin.

My take: I don’t see how Jack Dorsey has anything to do with the hash rate, but it’s cool to see the resilience of bitcoin’s network. Can’t keep a good coin down. People want to mine bitcoin and invest in the equipment and skills necessary to do that. Let’s just hope those miners don’t start dumping their rewards on the market!

Why we care: hash rate has no correlation to bitcoin’s price or market conditions, but it’s tough to buy into narratives of crypto winter, bear market, failing network, etc when the world is putting so much effort into competing for block rewards.

Relax and enjoy the ride!

Are you stressed? Excited? Happy? Sad?

Keep in mind, the amount of bitcoin on exchanges is at its lowest in years. As a result, proportionately fewer buyers and sellers determine the price now than in recent history. It doesn’t take much to move the price in either direction, even if the market’s bigger than it’s been in previous years.

Recently, that direction’s been down. Leveraged longs keep getting wiped out while institutions, whales, and people who bought during the summer cash out some or all of their investment.

Until this stops OR more money comes in, we’re just going to have to let the market work itself out. Premium subscribers know what I’m doing now.

And altcoins?

Until somebody shows me any evidence to the contrary, I will continue to believe they follow bitcoin up or down. Some may go in a different direction now and then, but generally this market goes wherever bitcoin goes.

If you have time, please read or listen to my monthly issues from June through November 2021. Those issues lay out my general sentiment and mindset about this market.

* June

* July

* August

* September

* October

* November

In my next subscriber update, I’ll share some interesting behavior from whales and talk about this week’s coming death cross, a specific trading signal. Bitcoin’s price chart has printed eight death crosses in its history. Four of those times, its price went down for months after. Four of those times, its price went up for months after.

Yes, 50/50 analysis, but it’s nice to know which lines are crossing on a price chart, especially when those lines will almost certainly cross before my next rundown.

Scroll down for some articles and videos you may enjoy.

What you missed in December

* Monthly Issue for December

* Buy/Sell Alert - December 3, 2021

* Market Updates

* December 7, 2021

* December 10, 2021

* December 16, 2021

* December 21, 2021

* December 28, 2021

* December 30, 2021

* Weekly Rundowns

* December 5, 2021

* December 12, 2021

* December 19, 2021

* December 26, 2021

Moving Beyond The Right-Click Save NFT Culture

* Bottom Line: NFTs are the only way to instantly, globally verify ownership of anything and the rights and privileges that conveys. Saving a copy of an NFT does you no good, it’s useless.

* My take: works of art gain value from their rarity, authenticity, and association with a particular artist or community. Proving those elements can turn a $10 doodle into a million-dollar masterpiece. You can copy the image, but you will never capture its value.

* Why we care: as a concept, NFTs will revolutionize the way people monetize the web and license creative works (including music, inventions, and public performances). Imagine your NFT gave you a share of royalties for an artist’s subsequent works? Invite-only membership to VIP clubs and exclusive events? A line of credit or cut of the revenue from merchandise and promotions related to collections and business ventures built around your NFT?

‘Blockchain Rock’: Gibraltar moves to become world’s first cryptocurrency hub

* Bottom Line: a blockchain company plans to buy Gibraltar’s stock exchange. Europe is très not happy.

* My take: some say Gibraltar is a magnet for money launderers, oligarchs, and tax cheats, but I’m not sure they have enough investment banks and real estate companies to compete with the EU, China, and USA on that measure. In any event, some governments worry the arrangement will open the floodgates for dirty money and tax evasion. They should probably worry more about Gibraltar attracting massive amounts of capital and talent from its embrace of 21st century finance.

* Why we care: crypto can’t catch a break but it’s one more reminder of how far this industry needs to go before it can reach the mainstream. From a regulatory standpoint, the struggle is real and it certainly keeps crypto from succeeding. That said, as Gibraltar and other countries show they can function and prosper with this technology, hearts and minds will change.

Last, some gallows humor.

I’m not a big fan of dollar-cost averaging or trying to time the market, but I found this video funny and thought you might, too, though I apologize if you find it offensive, that is not my intent.

Relax and enjoy the ride!

While that’s a relief for some, I would suggest we not get ahead of ourselves. In other markets, you rarely see prices go up 8% in one week. In this market, 8% upswings happen often enough that you can’t read too much into them.

From the data I look at, nothing about this market has substantially changed in the past few months, only the price.

Did you get my December monthly issue? If not, tap this button to read or listen to it:

Also, if you enjoy the content, please vote for me in any of the Hacker Noon categories I’m nominated in:

* HackerNoon Altcoin Champion of 2021

* HackerNoon Contributor of the Year - Money

* Best Crypto-Journalist in 2021

Last week’s poll asked “do you believe in trading charts and technical analysis?”

60% of you said yes.

My answer?

It has its place but too many people use it as a predictive tool. I have only a very basic understanding of some simple TA concepts. I don’t trade. Price can always go up or down, the range of outcomes is normally very wide, and TA can provide some perspective on how wide that range realistically is and whether it’s worth worrying or getting excited about any particular move.

For the 6% who didn’t know what TA means, I’m referring to the analysis of price movements and various formulas traders use to identify entries, exits, stop-losses, and profit-taking opportunities.

No poll this week. Next week for sure! Read below for some interesting tidbits. Light issue because of holidays here in the US.

Arsenal adverts for cryptocurrency ‘fan tokens’ banned

Bottom line: the British government banned an English football team from advertising its NFTs. Regulators felt the team should have warned buyers that the NFTs constituted an investment in crypto assets.

My take: no good deed goes unpunished. Seems like regulators do not understand what an “NFT” is, but I don’t know whether Arsenal had an obligation to disclaim any financial consequences. If it’s any consolation, regulators also zapped a cider company for making alcohol seem cool and several influencers for not telling people they get paid to influence. Rules are rules!

Why we care: no matter how popular crypto gets, it’s not mainstream until the Boomers start using it. At that point, the rules will swing in our favor. In the US, marijuana was illegal everywhere until Boomers got political and economic power. Now it’s legal in almost every state. Some say the laws changed from scientific discovery, criminal justice reform, or the need for new sources of tax revenue. I’m pretty sure the laws changed because Boomers like doing weed.

The Biggest Threat to Trust in Cryptocurrency: Rug Pulls Put 2021 Scam Revenue Close to All-time Highs

Bottom line: 2021 was a good year for rug pulls and ponzi schemes.

My take: I’m surprised 2019 topped 2021. From researching altcoins, I can assure you scams abound and there are terrible people associated with some of the biggest, most successful projects (and a lot of the little ones, too). I would have thought the amount would be higher than $8 billion.

Why we care: this is a dangerous market. Yes, the report says *only* about $8 billion worth of scams, but those scams all target you.

For those who celebrate Christmas, a heartwarming story to leave you with. Watch this video:

Relax and enjoy the ride!

If the embedded audio narration isn’t working properly or doesn’t sound good, tap this button to switch over to the podcast version.

Did you buy bitcoin above $60,000?

No worries. In a few years—possibly a few weeks—you will feel the same way about buying at $60,000 as others feel about buying at $10,000. In time, you’ll feel better about it.

This may not make sense now, with gloom surrounding you and fear gripping the market, but it will become more clear the longer you stay in this market. Today’s market conditions are the same as they were last month and the month before. Only the price has changed.

For the traders who dominate social media, price means everything. As a result, they look at 2021 and see bear markets everywhere. How many so far this year? Two? Three? Five?

I look at 2021 and see a market that was running out of fuel for the first four months, had a healthy crash, then made higher highs and higher lows for the rest of the year. Today, its total market cap is 185% higher than where it started.

That’s the opposite of what you’re supposed to see during bear markets.

Perhaps that’s why everybody who follows my plan is down 3% at most and possibly up more than 900% on their bitcoin.

Primacy and Recency

Does that mean we won’t get a bear market?

No. Crypto can go into a bear market from any price at any time. It can also stay in a bull market from any price at any time.

Just as it can drop way faster than you would ever expect, it can also go way higher, way faster than you could ever imagine.

In October’s issue, I talked about the three-year parabolic rise of bitcoin’s price and said one of two things will happen: either the parabola will break or the market will melt up to its ultimate peak.

If the parabola breaks, it will bring terror. If the market melts up, it will bring ecstasy.

Terror or ecstasy.

The parabola broke. We got terror.

And because of that, the bull market continues.

Bull market terror?

Yes, sometimes bull markets bring terror.

Read Confessions of a Cryptocurrency Millionaire so you can see how terrifying the 2016-2017 bull market was.

Yes, that bull market, the stuff of legends, that millionaire-making event that brought crypto into the mainstream, a bull market so celebrated that most analysts base their assumptions on that one, brief stretch of time, often to the exclusion of anything that happened in any of the other 11 years of bitcoin’s history.

In that book, Dan Conway shares how he struggled with anxiety and stress as his $100,000 investment in Ethereum in 2016 grew to $20 million, punctuated by several drops of 50% along the way (including one immediately after he bought his first batch of ETH).

This guy had a nervous breakdown in the middle of a raging bull market. Several times, he questioned and doubted his conviction.

How did he come out ahead?

He bought when the opportunity came and persisted through the ups and downs that followed. He didn’t buy more as the price went up, try to time each move, or take profits. Instinctively, he knew what he wanted from his investment and had the fortitude and courage to see it through.

Such is the price of glory. It’s no fun to ride the inevitable dips and drops that come your way. Far more exciting to buy when everybody thinks the market can only go up, never down.

While you can do well when the price goes up, remember what Warren Buffett says. You pay a high price for a cheery consensus.

Last month, everybody expected a supercycle to culminate in a market cycle peak.

That’s an oxymoron—by definition, you can’t have a supercycle and a market cycle peak—but that’s what people said. Don’t take it literally. They were just trying to say “prices will go up a lot, quickly.”

That was a realistic expectation. So was a drop below $50,000.

Both outcomes would have made sense and fit historical patterns of behavior.

Only one outcome could have sustained this bull market.

We got that outcome.

But Twitter says . . .

Yea, I know what Twitter says. Bear market. I’m on Twitter, too.

Social media gives you lots of great info. Sometimes, it’s just presented in a way that feeds a certain narrative or optimizes for readership. Social media algorithms give you whatever the algorithm thinks you’re looking for. Your feed generally matches your thoughts and feelings. Your whole experience fits your worldview.

Especially when it comes to traders sharing charts. Bullish here, bearish there, with such certainty about what it means.

The problem is, bullish and bearish data don’t necessarily tell you what you think they do.

For example, NVT, an on-chain metric that displays bitcoin’s market cap relative to the number of transactions that settle on-chain. Here’s what it looks like on the bottom of a price chart:

Traders say when the NVT turns black, that’s bearish. When the NVT turns red, that’s bullish.

Yet, if all you did was buy the day after it turns black and sell the day after it turns red, you’d make money on almost every trade.

If you do the opposite of the traders, you’re practically guaranteed to make money off of the NVT.

Pull up a chart and see for yourself. I can’t show it here because it’s too messy and unreadable, but it has a success rate of like 80% (though some of the gains are so trivial that it’s hardly worth the effort).

Oddly enough, if you buy the day after it turns red and sell the day after it turns black, you’d do well, too. While you lose a lot more often, you catch some massive upswings that more than make up for the losses.

Maybe NVT doesn’t matter in the way you think it matters?

Another pattern the traders talk about is the “three peaks and a domed house.”

They say it’s a bearish pattern but when you look at the textbook, template format for this pattern, it’s wildly bullish. In fact, if that pattern plays out, bitcoin’s price will explode next year. Take a look at what the projection would look like:

Why do so many traders say this is bearish?

I don’t know, I don’t trade. I don’t even see how the pattern matches the price movements. We had four peaks at the beginning, not three, and no waffling on the way up from the basement, and the domed house hasn’t even happened yet.

Maybe we need to wait for the pattern to play out, but if we have to wait until it’s complete, what good is speculating about it now?

Also consider the famous death cross, when bitcoin’s 50-day moving average drops below the 200-day moving average on a price chart.

That sounds bad, but bitcoin’s price usually goes up after death crosses. If you only bought at the death crosses, your returns would beat everybody who only bought at the golden crosses, supposedly super-bullish events that see those moving averages flip.

We need traders

At the end of the day, it’s irrelevant for us. Traders use these patterns and data to identify entries, exits, stop-losses, and hedges. If you can do that well, you can probably do great in this market, even after paying fees and taxes.

Will you beat dollar-cost averaging? Can you get a better result than people who buy at opportune moments, then HODL, stake, and use their crypto?

Lots of people come to this market to build long-term, durable wealth, not trade crypto for more of their government’s money. People like us.

For us, traders provide a valuable service. They give us opportunities to get in at a discount without sending the market too high, too fast. They help us “buy low.”

And, if we ever need to exit, traders give us the liquidity to scale out quickly without crashing prices. They help us protect our gains.

As a bonus, they like to borrow bitcoin, altcoins, and stablecoins to fund their bets. This means we have an opportunity to make extra money off of our idle crypto by depositing it into savings platforms that lend to traders.

Thanks to traders, you can get 3-5% interest on your bitcoin, potentially more from altcoins, and 7-20% on stablecoins. Tap this button for referral links that give you some free crypto on top of the interest you get on your deposits.

Also, you can learn a lot from traders about some of the ways markets move and some potential risks and opportunities that come from those movements.

Traders bring immense value to the market. They’re bearish now, but the moment price goes up for a bit, they’ll switch their bias in a heartbeat.

Wait for greed and you’ll get it

Once the market turns bullish again, you’ll find your feed flooded with bullish signals.

Sometimes that’s fine. Since May, this market’s shown increasing strength and momentum, with higher highs and higher lows since June.

Today’s price is higher than the last swing low, which was higher than the one before that. Meanwhile, each swing high gets higher.

The trading chart doesn’t lie:

On-chain data show persistent accumulation and traction on many metrics and measures, despite the recent drop in bitcoin’s price.

While on-chain activity doesn’t cause prices to go up—it only tells you about people who are already in the market, not new money that enters—there’s no reason bitcoin’s price couldn’t have gone to $100,000 this month. The conditions were rife, far more similar to what you see at the beginning of bull markets, not the end of them.

While $100k won’t happen this month, let’s not assume it won’t happen soon.

Over the past month, some whales, institutions, and recent buyers moved bitcoins to the wallets of long-term investors with a history of keeping bitcoin to themselves or sending it to other long-term investors who don’t cash out.

That selling pressure drove prices down, but also put more crypto in the hands of people who really value it and have shown little intention to sell unless the price goes much higher.

Meanwhile, stablecoins continue to pile up on exchanges and in private wallets.

Of course, some of those stablecoins represent proceeds from selling crypto, but they’re not getting cashed out. Meanwhile, more stablecoins continue to come into the market. People want stablecoins, not cash.

Whether that’s for deposit on a savings platform, yield farming, or a limit-buy order, it’s all dry powder for buying more crypto.

Once the price goes up long enough for people to think it will keep going up, people will sell those stablecoins for more crypto. Some will move even more money from their bank accounts onto a crypto exchange.

To a certain extent, that’s already happened. After all, somebody bought all that bitcoin the institutions and speculators dumped over the past four weeks.

Fear forever?

While you may think fear will rule the market forever, consider the circumstances.

Institutions that bought at $30k pared back their exposure in November, as did some people who bought since the May 2021 crash. We can tell from the movement of bitcoins and cash across funds, exchanges, and the blockchain.

When you have 50-100% gain, you tend to scoop some cream off the top. “House money” as they say.

Also, a lot of fast-money traders got zapped in a massive liquidation event on December 3, 2021 and some OGs shipped off bitcoins they’d held for years.

At the same time, strong hands gobbled up that bitcoin while normal people like you and me added a little more to our portfolios. New money continues to flow into exchanges.

Accumulation and healthy churn.

Evidence of this activity will never get captured in trading charts. For that reason, I cover this data for premium subscribers.

In bear markets, you see different patterns.

Over the entirety of 2011, 2014, and 2018, the biggest wallets kept dumping on the market almost constantly. Price went up and down, but instead of making higher highs and higher lows, it trended downward for weeks and months. You couldn’t find evidence of new money coming in with any force. Market participants HOLDed—they didn’t accumulate.

The market sank until there was nobody left to sell.

Today, whales mostly continue to accumulate, with some dumping from individual whales every now and then. Same with small and new wallets.

Moreover, HODL patterns show a lot of those “sold” bitcoins went to wallets that did not cash it out. Bitcoin deposits into DeFi platforms continue to grow. Miners continue to sell at roughly the same pace they have for months—a far slower pace than they did last year and the beginning of this year.

Healthy churn. Price on an upward trend since June. Each time sellers have tried to push the market down, they push the price down less each time. Each time buyers lift the market up, they push it higher than before.

This will change eventually—nothing lasts forever—but until then, don’t psych yourself into or out of any decision. Accept that prices go down even in bull markets. Understand that bear markets can start from any price. Realize that shifts in momentum take time to play out.

Until you see a change in the overall trend or direction of the market, you have nothing to worry about. Appreciate the ebbs and flows. Healthy markets don’t go straight up.

Peak, where are ye?

For all of 2021, you heard influencers talk about the market cycle peak. In February, “up forever.” In May, “the peak is in.” In August, “we’re going to get TWO peaks like we did in 2013.” In October, “we’re going to hit $135,000 before Christmas.”

The most b******t, I mean, bullish scenarios projected over $200,000 by the end of the year, possibly as high as $288,000.

Funny thing is, as outlandish as those predictions sound now, they were all plausible at that moment. (Except “up forever,” don’t ever fall for that.)

Do you wanna know my most bullish scenario?

Never a topping out. No market cycle peaks. No bear markets. No bull markets.

Up a lot, down a lot, sometimes sideways, gradually, forever, with fewer extremes over time. Give the world a chance to buy, sell, and use crypto without feeling scared about the consequences. Let the natural evolution of this technology bring you new opportunities to create a better life for yourself and your family.

In my perfect world, we will never have four-your cycles, hash cycles, expanding cycles, Elliot waves, stochastic RSIs, or any of that. Just organic growth, technical progress, and healthy, rising prices along the way.

That’s a nice thought, but I’m not one to bet against history.

At a certain point, the market will get so greedy and people so reckless that the prices will go so high, so fast, the market will collapse 80% or more, with a year or two of bleeding before the next bull market cycle starts.

We’ve seen this happen with every financial asset ever created. We’ve already seen this three or four times with crypto, depending on how you classify 2013’s double peak.

You may feel compelled to wait to see which way the price goes before you decide what to do about it.

When it goes up, you buy until it starts going back down. Then you sell.

When it goes down, you wait until it starts going back up, then buy.

You might also feel compelled to dollar-cost average, listen to astrologists, or follow data models.

You can do well with all of those approaches. The problem is, when you wait for the market to confirm your bias, you usually miss the opportunity. You end up selling lower or buying higher than you need to.

Sometimes, you buy the top and sell the bottom. You rarely get the outcomes you’re promised.

As an alternative, you could wait for great opportunities, take advantage of them, and not worry about the day-to-day movements in price, bear markets, bull markets, data models or trading indicators. Keep all those things in the back of your mind, definitely don’t dismiss them, but acknowledge that opportunity does not care what price comes with it. Price and opportunity are different things.

Sometimes, this will work against you.

Often, it will put you ahead of everybody else.

Same risks, lower price

Mark, that’s too risky. Never catch a falling knife. Always take profits on the way up.

No.

Today, you face the same risks you had last month when bitcoin’s price was $69,000. Those are the same risks you had in October when bitcoin’s price was $65,000.

What’s the difference?

Today, you get a much better price for taking the same risks, with a lot more upside. Why wait for prices to go back up again? Catch the knife.

Once prices go up again, there’s no reason to sell unless you have to. Why pay taxes and fees to trade an asset that has massive growth potential for an asset that’s designed to lose value forever? Do you have that much faith in other assets that you’d get rid of your crypto and all of its future gains to get more of your government’s money?

China’s second-largest real estate company can’t pay its debts. China’s banks are so short of capital that the government dropped reserve requirements twice this year. As a country, its debt-to-GDP ratio tops 300% and its financial system shows cracks all over.

This is the #2 economy in the world and most countries’ largest trading partner.

What about the S&P 500? It’s gone straight up for over a year. That can’t last forever. Other stock indices remain flat or falling. Omicron’s sweeping the country. Almost half of US corporations make no profits.

Do you really want to put money into the US stock market?

The US central bank says it will cut back on monetary stimulus. Gold has trended down for 18 months. Prices of almost everything have gone up almost everywhere on earth at near-record rates over the past year.

Emerging markets have trillions of dollars in debt that they have to repay with US dollars. The price of a US dollar has gone up almost all year. As a result, those debts continue to get more and more expensive to pay. It’s tough to grow an economy when your debt payments keep rising.

Over $14 trillion of the world’s capital sits in sovereign bonds that are designed to lose money. Another $7 trillion in corporate bonds from businesses that have no profits. Even more money sits as cash on a bank’s ledger, losing value even more quickly.

People joke about $36 billion locked in a smart contract contingent on an ETH 2.0 upgrade that may never happen and may not even work.

Is that really any worse than locking 500x more money into investment contracts that are guaranteed to lose money? At least that ETH 2.0 pays decent interest.

Fortune favors the bold

Let’s level with ourselves.

There are no safe investments anymore. There are only guaranteed money-losers or speculative gambles that barely compensate you for your risks.

And yet, life will give you many opportunities to make money. You don’t have to use crypto to do that. You can put your time, talent, energy, and natural skills into all sorts of ventures that can reward you way more than this market will.

Good luck finding an asset that has as much potential to grow and protect your wealth.

You can choose to worry about the risks or accept them. Weigh those risks against the rewards of owning a stake in the financial networks that will power the world’s economies in the coming decades.

To paraphrase US civil war general William T. Sherman, some think crypto is all glory, but I assure you, it is all hell.

This market is cruel, its participants are callous, and its swings are horribly violent.

I said this when bitcoin’s price was $16,000. I said it when bitcoin’s price was $60,000. I say it again today. I will say it when bitcoin’s price hits $100,000, $200,000, and every price beyond, whether that’s on an upswing or a downswing.

The moment you think it has to go up, it drops. The moment you think it has to go down, it zooms.

Substantively, nothing has changed in the past month. Some big holders took profits. Leveraged traders got liquidated. Last week, some OGs cashed our their old wallets. We see this clearly from multiple sources of data.

Bitcoin’s price is only 45% higher than it was six months ago, only 11% higher than it was at the start of October, and down 10% on the month.

The investment opportunity is the same now as it was then. Only the price has changed.

All the behavioral patterns that carried this market from May to November still hold:

* Accumulation among market participants of all types and sizes.

* Historically low rate of selling from miners, whales, and OGs.

* Steady flow of bitcoins from “young” wallets and speculators to wallets of people who rarely cash out even after unrealized gains of 300% or more.

* Growing interest from the legacy financial system (i.e., more businesses want to make money on crypto).

Sometimes, this market gets a little ahead of itself. Your expectations get so high that this market can’t help but let you down. Terror ensues.

Prices can change direction at the drop of a hat, up, down, or sideways. Altcoins fail. Protocols get hacked. Governments fuss.

The market persists.

Bold, however you define it

Whatever you want from this market, you can get it. All the opportunities you had last month? You still have them today.

Probably more.

You can chase fast money for quick profits or build wealth from owning a stake in a new financial network.

Yes, you can do both.

But not at the same time.

Decide which one of those things you want and act accordingly.

Fast money? Wait for prices to go up high enough that you feel comfortable getting into the market. Then dive in and hope for the best.

Just keep in mind, fast money is hard money—hard to find, hard to get, hard to keep.

Wealth? Act decisively when the time’s right and let a rising market grow the value of your investments.

It’s slow money, but it’s easy money. While everybody else is down on their investment or out of the market, you’re roughly even or way ahead. Once the market turns around, you can sit on your hands and enjoy your good fortune while everybody else tries to catch up to a market that’s running away from them.

No wonder so many people feel like they need to hustle and take excessive risks. It’s hard to get ahead of the market.

It’s easier to buy when the market demands you do so, then let time take care of the rest.

(At least buy until my plan tells you to stop, which could happen sooner than you think.)

While it may not feel as good as chasing the hype train to FOMOtown, you may find it’s far more rewarding in the end. Good things come to those who wait. Sometimes, better things come to those who act.

Relax and enjoy the ride!

BTW more reports out of China that its shadow banking system may have more cracks in it than anybody expected. Not the kind of rumors you want to hear out of the world’s #2 largest economy and most countries’ largest trading partner.

Yet as far as crypto goes, the evidence shows strong accumulation patterns and healthy churn among people holding and using bitcoins. In the bear markets of 2011, 2014, and 2018, we saw the opposite.

That should make next month’s death cross very interesting.

Last week’s poll asked “When will bitcoin’s price go above its all-time high of $69,058?”

Check out the responses: