Covering Bitcoin, the Blockchain, Altcoins, and Fintech
One of our investments — which we talked about a few weeks ago on this post — is a token called $KIMCHI.
Let’s say that our loss is your gain: we didn’t take a bath, but we did lose. The loss is “impermanent,” as we explain here.
We need to let our Kimchi…uh…ferment.
We saw this one coming a mile away: Apy.center was what is known as a “rug pull.” Investors saw the rug pulled out from under them, and, unless you were one of the early ones, your money is pretty much gone.
So…what happened?
It launched sometime early in the morning Friday, October 2, as a yield farm on steroids. In the interest of public service — we should note that we’ve done a few experiments like this during our three years blogging here — we decided to gamble what amounted to a family fast food meal on the Uniswap Pool behind $CAPY. We were also investing in a platform that was roughly 12 hours old.
We were 12 hours too late.
Here was the interest rate promised when we got in:
And here was the interest rate just two hours later:
This is where everyone who was recruited into this fast-growing pool saw stars in their eyes: your money is locked for 72 hours. You can’t get any of the gains out til then, so you have no choice but to watch and wait and hope and pray that the rug won’t get pulled out from under you.
New money was indeed flowing in, to the tune of a half-million TVL (total value locked) by Saturday morning (36 hours after launch).
One of the fastest-growing Telegram channels we’ve ever seen served as an additional recruitment tool, with more money flowing in and, at around the same time of the above snapshot, interest rates promised that were still huge.
The clock/time bomb was ticking, but Sunday still saw huge POTENTIAL returns:
With the first investors just a few hours away from being able to take their investments out, it was just a matter of time. Here’s a TVL snapshot from Sunday evening, US Central Time:
And here’s this morning’s post-rug-pull TVL snapshot (we slept in til 6:15, since we were powerless to stop any movement; our funds were locked so the only potential gains, all on paper, weren’t real):
AND, just moments ago, 9:25 a.m. Central Time in the US:
Chasing quick returns? That’s human nature. Looking at nutty interest rates that seem impossible, you may have succumbed to the masses: “I want some of that.”
The creators of this mystery coin set it up in such a way that, while the code appeared to be air-tight, there was no possible way to make any money unless you were one of the first users. No one in their right mind was going to hold onto their gains for any longer than they had to, and the new money that went in was obviously going to pay the old money that was in first. The first few investors — who were likely also the creators of this coin — played psychology, word-of-mouth marketing, and the lure of insane, out-of-this-world returns to get new investors on board fast enough to ensure that maybe the first 5 investors were getting mass profits.
It’s a classic Ponzi scheme.
Be careful out there, folks.
“In these Uncertain Times” is the phrase that sets my 18-year-old daughter off in fits of eye-rolling. They aren’t fits of rage — as, let’s be honest, when you’re 18 and a college Freshman, your rage is aimed at other things — but genuine reenactments of the Michael Jordan “Stop it” meme.
Everyone has gotten into the “In these Uncertain Times” act. Jan from Toyota — appearing in ads festooned as Jan from Toyota, but, of course, from what might be her home office — tells us that Toyota is there for us. Because auto makers and car dealers are the first thing we think of when we enter a global pandemic.
Jan from Toyota is joined In These Uncertain Times by a newly branded “The More You Know” series from the networks of NBCUniversal. Hey, we don’t know what we’re getting into either, but you should know that we’re here for you. In these Uncertain Times.
In any event, the eye-rolling is warranted. It’s not a specific “stop the spread” or “flatten the curve” catchphrase; those ask for a little bit of explanation about why they are important platitudes. How, exactly, do we “stop the spread?” What, exactly, is this “curve” that we must, together, “flatten?”
We want our mantras to be non-specific and our buzz phrases to be amorphous. “In these Uncertain Times” works. Because nobody knows what the hell will happen next. Thus the eye-rolling.
If you’re new to this site, we mostly cover cryptocurrencies like Bitcoin and how and if they’re weaving their way into modern life. But, as we’ve discussed in the past…well…In these Uncertain Times, Bitcoin doesn’t have a decades-old history to point to. There are no parallels to the Great Ethereum Bounce of 1976, or the Binance Bottom of 2003.
Which brings us to the overall topic of this article — whether or not anyone knows what in Sam Hill will happen to the economy when and if there’s a magic switch that gets flipped and everyone goes back to work.
Those six data points above need no explanation. To say they suck is putting it mildly; the wind came out of the economic sails on March 11, and we are not going back any time soon.
The “V-shaped recovery” crowd doesn’t necessarily think there will be an immediate switch-flipping exercise, but they do think that the “Trough of Suck” will be rather short-lived. (More on the Trough of Suck below.)
An overly simplified version of what the V-shaped folks think will happen is here:
The assumptions within a V-shaped recovery are too numerous — like dropping a quarter from space and trying to hit a shot glass in a field in Texas — but here’s a quick synopsis of how that could work:
If you take a look at the blue line up there, it’s sorta kinda meandering downward, and then comes up a little bit — THE NEW NORMAL — and then we all figure out how to manage. Which is much more likely.
Gartner has a concept called “Trough of Disillusionment.” I’ll let you Google that — type in “Hype Cycle” and learn more about how analysts think about the launch of tech products — but I’ve decided to apply that thinking to something I’m calling the “Trough of Suck.”
In short, the V-shaped crowd may say “it’s going to suck for a little while” and then they think that the switch magically flips and we’re back to where we were before.
There’s also a “U-shaped Recovery” crowd, and they think there will be a bit of an extended period of pain and then gradually things come back.
But neither of these buts “The New Normal” up against the stark realities of that unemployment chart above and gets a real, actual, “Trough of Suck.”
What we’ve done over the past six weeks is unprecedented — and, dare we dip our toes into the “do you want to save your Grandma or do you want to go back to work?” argument, we’re about to enter into a Trough of Suck phase that will last for YEARS.
Take a look at this jobless claims article from Yahoo: we’ve sent 22 million people into the unemployment lines. How many of those will be able to go straight back to work?
Allow me, your fearless prognosticator, to hazard a few guesses about what’s next as it pertains to you and your own microeconomy.
Though this danse macabre will continue, the list of essential services will expand. Because it has to — yesterday’s Michigand Yeet Fest was evidence that the Governor has overstepped her bounds by at least an order of magnitude and the seeds of discontent were long-since sown.
I was deemed non-essential ages ago and Lord knows I’m going to be doing a metric crapton of soul-searching about what I get to do next. (I can write about Bitcoin until the cows come home; eventually, I may have to learn how to milk said cows. Writers are non-essential — this runs counter to what the talking heads will tell you about how important the arts are In These Uncertain Times — but if I write content and that content doesn’t actually move the needle they’ve been talking about for years (in no small part because you can’t move any needles if those needles are tied to dollars an no one has either needles OR dollars), I’m going to have to find actual gainful employ.)
We’re not just trying to put the toothpaste back in the tube; we’ve asked everyone to brush and spit out and don’t swallow the toothpaste AND we’re trying to put that back in the tube.
Price of Bitcoin? Price of gold? Price of eggs, value of dollars in RMB, cost of goods sold…your guess is as good as mine as to what will happen to ANY of those things.
I’ve dumped a lot at you in this article; thanks for reading so far. If I’ve got an ask, it’s that we stop looking at this as a binary question.
The President was actually right when he talked about the human cost of shutting down the economy. Lives will be lost to the virus — but will more lives be lost to those “deaths of dispair” that people really don’t want to talk about?
The President likes to give the impression that he has a magic on/off switch for the economy; Congress likes to think that its Herculean efforts to get the CARES Act signed into law supplied the direct current for that on/off switch.
The reality — with the “will the recovery be ‘V-shaped'” and the “when can I go back to work?” and the “is it safe enough to be out in public?” crowds — is that these arguments are much more nuanced. The give-and-take that’s playing out in public is not as simple as “go back to work and Grandma dies.”
Stop playing that game. Please.
And pray for a shorter duration of the Trough of Suck.
When the first Financial Crisis hit, we discovered the brilliant Australian satirists Clarke & Dawe. Their take on the European Debt Crisis is worth a watch.
The perspective from Clarke’s character is a propos for today’s post: only losing 13% on a portfolio of crypto assets is, with all that is going on, not too bad.
We created our Balance Portfolio as an alternative to the BRED Portfolio (more on the 2020 version of that below). We didn’t create it as a panacea to cure market woes from the Coronavirus, though; as we discussed yesterday, we think it may very well get worse before it gets better.
Given all of what is going on, 13 percent isn’t bad, right?
Granted, lots of green numbers appear on the screen today, so had we done this yesterday, it would possibly have looked 5 to 7 percent worse.
(One of my personal faves is VeChain (VET); note that it’s also the worst performer in our portfolio. Still bullish on this one, though.)
But, for a pleasant surprise, check the BRED performance so far this year:
DASH is slightly ahead of BSV as the winner here; though, with all of the noise that accompanied BSV and its founder — who claims that he’s Satoshi or something — BSV could drop any second now. Plus, the percentage at stake is tiny when compared to DASH, which started at 25% of the portfolio and is now more than one-third.
Probably not too much, yet. There’s a chance for more of a pullback, or there’s that possibility that the “flight to safety” will happen, still.
The question that remains: are crypto investors whistling past the graveyard, or — like the guy who did the webinar I watched who thinks he can make you rich; maybe he can, maybe he can’t, we don’t know — are there gems that will still pop (just not immediately)?
We made the bearish case yesterday — just for Bitcoin which, possibly, will drag the rest of the market downward with it — and it’s time to make a bullish case for a couple coins that we’ve picked up recently.
Well, this has been an interesting few weeks, huh?
It seems, at least to this reporter, that every time you look up someone is saying “this is the LAST TIME you’ll see Bitcoin under $10,000! BUY NOW! HODL!”
Well, then…this *is* quite the development, in that the $10,000 resistance level is something that CT (“Crypto Twitter”) will tell you is really really important for short-term price spikes. So maybe there is something to be said for the fact that once BTC goes above $10,000, it holds for a little and then swings downward and then who knows what happens next?
As you know, we’re less about trading crypto and more about investing in crypto. It’s about long-term projects — you can find a whole host of others who will tell you about short-term gains — and we did what we thought was a pretty decent post called Playing the Long Game a few months ago.
In the interest of talking about those long-term investments, we told you a few weeks back about the 2020 Balance Portfolio. Today, we’re curious about that portfolio, how it’s doing, and whether or not it stacks up against BRED, the stalwart we started tracking in 2017.
Actually, before we do that, two things. ONE: THIS IS NOT INVESTMENT ADVICE. DYOR = DO YOUR OWN RESEARCH. We’re not responsible for your success or failure or anything in between. TWO: HERE IS A SPONSORED LINK: If you haven’t gotten yourself some crypto, we highly recommend Crypto.com. That’s our affiliate link and you can get a bonus by using it if you make a qualifying purchase.
A little foreshadowing: when we wrote the post on the Balance Portfolio a couple weeks back, we didn’t think we’d see the results that we’re seeing. We thought both would be up a little — but we didn’t think we’d see the winner that we saw.
First, the 2020 Crypto Balance Portfolio:
Two rather pleasant surprises here: ONE is that ETH has nearly doubled. (And, if you were following over the weekend, it had more than doubled before pulling back; prices were north of $280 a couple of times.) TWO is a big wow around EOS. That’s a little crazy, right?
So yeah, if you had invested $10,000 in this Balance Portfolio, you’d have nearly $15,000.
And you would have lost this little contest to the BRED Portfolio.
This one popped because of two factors: ETH (nearly doubled) and Dash (nearly tripled).
Another “Wait, WHAT?” moment was the fact that a $10,000 investment would have given you an 88 percent ROI.
Not one asset in either portfolio is down Year To Date. Not one.
The worst performer of any of the assets was PAXG, which is tied to the price of gold.
What can we learn from all this? Not much, actually — it’s a Bull Market and stuff is up six weeks into the year. Some of the stuff is way up.
Might be time for the “Crypto Dartboard Portfolio:” we’re not going to tell ourselves we’re any better at this than someone randomly selecting crypto projects — but maybe there’s SOMETHING to picking a few potential winners, sticking with some old stalwarts, and hoping for a positive outcome?
As always, maybe staying interested in long-haul opportunities is really the way to go.